August 30, 2005 5:30 PM PDT

MSN buys into Net-calling future

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Microsoft announced on Tuesday that it has purchased a small Internet calling start-up called Teleo, as part of a move to expand the capabilities of MSN Messenger.

The move comes as all the major portal and IM companies are moving more heavily into Internet calling. Last week, Google launched its own instant-messaging service, dubbed Google Talk, with a focus on voice chatting.

Microsoft has its eyes set on something more like Net phone company Skype's service, however. A key part of Teleo's technology is focused on making calls from a computer to an ordinary telephone, a feature that company executives said would start finding its way into MSN Messenger before the end of 2005.

"We've been making a lot of investments in voice, but as we looked at continuing...we had that build or buy discussion," said Brooke Richardson, lead product manager for MSN's communication services division. "We decided that if we wanted to do things rapidly, Teleo was a good fit."

The acquisition underlines the growing importance of voice services, increasingly indistinguishable from an ordinary telephone, to the instant-message platforms that have been one of the Internet's most popular applications.

This has tracked the explosive growth of Net calling, or voice over Internet Protocol (VoIP) services over the past several years. Just as VoIP has been available for years to hobbyists and early technology adopters, voice chat has been an option inside most instant-messenger applications for some time.

However, the growing popularity of broadband Internet connections and improvements in VoIP infrastructure technology have helped boost the quality substantially. The growth of companies such as Vonage and Skype, and even AT&T's rival service, has helped put Net calling on the radar screen for more consumers.

"I think all (the IM companies) think that this is an idea whose time has finally come," said Jupiter Research analyst Joe Laszlo. "All of them realize that while voice chatting between IM users is a nice thing, what they really need to do longer term in order to make the platform more viable is make that connection out to the phone networks."

Adding features that call out to ordinary phones could also give the IM companies a new revenue stream, because people are used to paying for phone calls, Laszlo noted.

The Teleo technology will also let Microsoft build click-to-call links into the MSN service, so that local search results--for a pizza parlor or flower shop, for example--can include a link to let the computer call directly to the business.

The companies did not provide financial details on the acquisition. Richardson said the Teleo technology would be used primarily within MSN applications, rather than being integrated into the Windows operating system.

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We decided between Build or Buy, & Teleo seemed a good fit
Not one to be caught "late to the party" once more, with no
options other than buy and "bolt-on" another bundled feature
for Windows users. If you can manage to shut down the MSN
Messenger I guess you will be able to use another VOIP/SIP chat
client, but if history serves us a reminder, MSFT will make all
other chat apps be 2nd rate citizens on Windows. Of course
youll be offered the option to Join MSN at least 5 times, as it
does in a new XP install, but somehow I bet they will mopre
tightly tie users options to MS or None. They decided to buy,
knowing full well they cant build it, and whatever they can learn
about VOIP/SIP will be at the expense of Teleo, who had a nice
app until it gets ravaged by the montage of other bolt-ons that
will drag it into oblivion and disconnections galore. Wonder
when the first auto-dial virus will spring to life running up nasty
phone bills, sex dialers will have a field day.
Posted by educateme (101 comments )
Reply Link Flag
Another idea copied from Apple
Apple couldn't write an OS so they used BSD.

Microsoft couldn't write a VOIP programs so they bought one.
Posted by Andrew J Glina (1673 comments )
Link Flag
This seems like a "Me too!" kinda deal...
Funny how this comes out shortly after Google starts it's Google Talk service. lol! It doesn't matter anyway. The days of closed IM and VoIP services are soon to be over. I'm betting on Google this go around.
Posted by fireball74 (80 comments )
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To the editor John Borland...
To the editor John Borland...
So what's the big deal about this story, Microsoft and VoIP?

That they are late, that they finally found something that might work?
What you just read has been used for years and you can download your own communicator for free that can do exactly what you just described. Call from Australia, Mexico and Canada using your PC to any telephone, cell phone or business phone in the USA at NO COST to you.
Now that's worth a news story.... so turn it on and let's see whom else would want to give this service away for free.
Go to <a class="jive-link-external" href="http://www.adcallscommunicator.com," target="_newWindow">http://www.adcallscommunicator.com,</a> The World Is Calling, FOR FREE.
Posted by ntrsource (43 comments )
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What A Crock Of Sh*T
Adcallscommunicator, yeah right. Go to their web site and all there is is a download link for the software. Nothing about the company, no contact info, no product decription, nothing. Could be downloading spyware for all we know.

Look up the adcallscommunicator.com domain. It's registered through Godaddy. Google search on "adcallscommunicator" gives three hits - one to adcallscommunicator.com, and two to posters to CNET.

I suppose adcallscommunicator also sells seminars on how to buy real estate with no money down and how to burn fat with weightloss pills.
Posted by Stating (869 comments )
Link Flag
couldn't access
I couldn't access the adcallscommunicator link you provided.
Posted by bredffd (1 comment )
Link Flag
Innovation is M$oft's middle name
"Innovative" M$oft does it again!
Rip them off or acquire them is the name of the game.
Posted by Goose (93 comments )
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