Digital Phone vs. IP Phone: Which Phone System Suits Your Business Best?

The phone system you choose for your business can significantly impact your operations, customer experience, and bottom line. As a business owner, you should consider your diverse needs and priorities as well as relevant phone system-related factors such as scalability, cost-effectiveness, mobility, and infrastructure requirements.

We've decided to cut through the noise and help you pinpoint the right option for your organization. Here's what you need to know about digital and IP phones to make an informed decision.

» Check out the best VoIP providers and services to streamline your business communications.

What Is a Digital Phone?

A digital phone looks and operates like a conventional landline phone, but it converts the audio into digital format (ones and zeroes) before transmission, providing improved call clarity.

These phones are ideal for businesses with existing phone line infrastructure that don't need the advanced features offered by IP phones. For example, a small call center in a building with pre-installed phone lines could benefit from digital phones.

What Is an IP Phone?

An IP (Internet Protocol) phone is a digital device that sends data packets over the internet, like during a Skype video call. Unlike digital phones, IP phones don't require a dedicated phone line, just an internet connection.

These phones suit most modern businesses, as VoIP services are scalable, easy to maintain, and feature-rich. IP phones are likely the better choice if your business has a stable internet connection with ample bandwidth.

Digital Phone vs. IP Phone: Pricing

While digital phone lines were once more affordable than VoIP services, the costs today are roughly equivalent. IP phones may be slightly more expensive than digital phones, but they generally include additional features typically found in VoIP services.

Plus, if your business still needs to get phone lines, the cost of installing them would make digital phones more expensive than IP phones. According to Gartner, we can expect the cost of cloud-based phone systems to decline by 3% to 5% annually.

Winner: IP phone

Digital Phone vs. IP Phone: Mobility

Digital phones, like landline phones, are stationary due to their wired connection. IP phones, however, can operate anywhere with internet access, and some even offer smartphone compatibility.

The only caveat is that some IP phones require a wired Ethernet connection, which limits their mobility compared to Wi-Fi-enabled IP phones.

Winner: IP phone

Digital Phone vs. IP Phone: Bandwidth

Bandwidth is a non-issue for digital phones, as they transmit digitized audio over dedicated phone lines. IP phones share bandwidth with other devices in your office, which can lead to reduced call clarity or dropped calls during network congestion. This risk is significant for businesses with high call volume or low-bandwidth internet connections.

Winner: Digital phone

Digital Phone vs. IP Phone: Power

Power consumption matters when deploying equipment on a large scale. Digital phones require minimal power, while IP phones consume more but still less than desktop computers.

Neither type of phone will work during power outages without battery backups. Even with a battery backup, IP phones are unlikely to work if your ISP's local routers are also affected by the outage.

Winner: Digital phone

Digital Phone vs. IP Phone: Maintenance

A major benefit of IP phone systems is that they don't require any maintenance beyond what you already perform for your network. As long as the IP phone itself is functional and your network is operational, you don't need to worry about it (VoIP providers, like RingCentral, and Vonage, handle that on their end).

On the other hand, digital phones rely on phone line infrastructure in your building, which may require occasional maintenance.

Winner: IP phone

Finding Your Ideal Business Phone Solution

Most businesses would benefit more from IP phones than digital phones. The service costs are similar, but IP phones are more versatile and don't require additional infrastructure because you already have an internet connection and local network. As a general trend, digital phones are phasing out, and IP phones are becoming more common.

However, exceptions do exist. Because IP phones rely on internet access, oversaturated networks may lead to poor call quality and dropped calls. Consider your business's specific needs when choosing between digital and IP phones.