Microsoft has entered the phone game with a new speech recognition-enabled phone system designed to give small businesses an alternative to a public branch exchange (PBX).

Microsoft took the wraps off the product, the Microsoft Response Point phone system, at its second annual Small Business Summit.

The system includes software and phones, and was designed to be easy to install and manage, said Jeff Smith, a senior product manager at Microsoft. Three phones, the D-Link DVX-2000, Quanta Syspine and Uniden Evolo will be able to use the system. Also included in Response Point is a PC-based management console so anyone familiar with PCs can manage the system.

Speech recognition enters the picture when pressing a "Response Point" button on the phone and telling the system who you want to call. For example, a user could say "Call Jeff at work" and the system will dial that number based on the contact information entered into the Response Point directory, Smith said.

Response Point can be set up either as a VoIP system or one that uses traditional phone lines, he added.

One small business, home entertainment systems company Comenity, based in Bellevue, Washington, has been testing Response Point and found that it helps the company seem more professional and eases the process of setting up new workers in the office.

"We're constantly adding employees and moving things around the office," said Mark McCracken, CEO of Comenity, speaking on a recorded video shown at the Small Business Summit. With Response Point, a phone can be moved around the office and it immediately works the same from a new location, he said.

Also, using the auto attendant means that customers can make calls after hours and still get through to the employee they're looking for, he said.

Other features he likes include the pop-up box with caller ID information that appears in the corner of his computer screen when calls come in and the ability to allow expected phone calls to bypass the operator and reach him directly.

The team that built the Response Point system acted as an independently funded startup within Microsoft, which gave it the advantage of developing the product "from the ground up" for small businesses without having to work with other product teams, Smith said.

In addition, the team operated like a small startup company, allowing it to understand the needs of small businesses, said Bill Gates, Microsoft chairman, speaking on the video at the summit.

"What they found is that what small businesses need is the ability to simplify the steps it takes to accomplish every day tasks," he said. One example of how Response Point addresses that is the speech recognition feature, he said.

According to Smith, only about one-third of small businesses use PBXs or phone systems because they are expensive and difficult to install and manage. "You need a lot of technical expertise," he said.

Microsoft saw an opportunity to make phone systems as accessible to small businesses as PCs are, Smith said.

The Microsoft Response Point system will be available this year. Microsoft is not yet disclosing the pricing, but Smith said it would be "competitive." He said typical small-business PBXs cost from about $5,000 to more than $10,000.