Because the new VOIP systems are built on Microsoft's Windows NT, they are simpler to manage than the proprietary telephone equipment that they have begun to replace. Their open architecture provides a silver bullet, for instance, to a logistical nightmare in business: the cost of changing phone numbers when an employee moves. Merrill pays the phone company from $100 to $150 to move, add, or change a number, which happens about 20,000 times a year.

"With VOIP, you unplug your phone and put it in a box with your family pictures," says McKinley. "When you get to your new location, you simply plug the phone into the wall, and it registers itself."

Before the Internet and telecommunications crash, such game-changing possibilities were admiringly known as "silicon economics": the promise of a huge leap in price-performance ratio, thanks to combinations of hardware and software that are based on common standards. It is the same principle that allowed PCs to push mainframe computers to the margins and put cell phones into the hands of millions. It is also the concept that launched a thousand dotcom business plans -- which is one reason you don't hear the term much these days. But silicon economics is alive and well in the form of VOIP, and it's following its customary pattern of disruption.

The heart of McKinley's business case for VOIP -- the big vision of what it will do for Merrill -- comes down to a bet that silicon economics will prevail.

The possibilities are truly dazzling. McKinley sees VOIP as a way to push key messages out to Merrill's troops: "We can flag our financial advisers, sales force, and senior management that a star tech analyst at Merrill just gave a talk about the latest developments in the instant-messaging war between AOL and Microsoft, for instance. Hit this button to tap into a replay of the call."

Eventually, when VOIP is picked up by banks, mutual-fund companies, institutional investors, and other customers, McKinley believes that the new technology will be a means for even faster, broader distribution of Merrill's intellectual property.

"We're a huge financial publisher, if you think about the eight hours of TV content and the couple of linear feet of research reports that we create every day," he explains. "So we have to start thinking like a new-media company, and one way to do that is to use VOIP as a platform. We can use it to call people's attention to our perspective on the financial markets and let them tap into Merrill's bit stream of information."

Merrill is hard at work on another application of VOIP that offers a tantalizing glimpse of its future. It will give McKinley the means to turn on a dime and reconfigure Merrill's operations even for short-term sales campaigns, something that would have been prohibitively expensive in the past. "When we send out a mailing to our customers about the new tax laws, for instance, we expect a spike in the number of inquiries from them," he says. "Using VOIP, we're able to spread the load of those calls to tax-specialist brokers around the country without breaking a sweat. That's very powerful. Ultimately, in today's world, the easiest companies to do business with will be the ones that win."

Paul C. Judge (pjudge@fastcompany.com) is a Fast Company senior editor. Contact John McKinley by email (jmckinley@exchange.ml.com).

Sidebar: Speed Dial

If you haven't made a phone call yet using voice over Internet protocol (VOIP), you will soon. Here's why.

Convergence at Last: Because VOIP uses the same standards as data communications, voice calls, email, and even video broadcasts can go through the same network. People can get voice mail on their PCs and check email with their phones.

Wherever You Go, There You Are: Using VOIP, people can log in from anywhere in the world to receive calls and get access to their own set of phone services. All it takes is an Internet connection. That degree of flexibility provides benefits across the board, from telecommuters to fast-growing operations overseas.

The Next Best Thing to a Digital Toaster: VOIP phones may be the first true information appliances: simple to use, loaded with power, and capable of opening a window to the Web with the push of a button. Merrill Lynch, for example, has quickly linked its VOIP phones to applications developed for the Web, such as a phone directory that searches for employees with certain skills.

Let a Thousand Features Bloom: Early adopters of VOIP are building their own applications, but the open architecture of VOIP is enticing dozens of companies to come up with programs to extend the phone's capabilities.