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Sitemap Sep-Archive-05 Microsoft Acquires VoIP Provider Teleo

Microsoft Acquires VoIP Provider Teleo  

Microsoft will incorporate Teleo's technology into its apps to upgrade services at MSN

The world's largest software maker plans to incorporate “Teleo's VoIP” Voice over Internet Protocol technology into its own software and Web applications to upgrade its online services at MSN, including MSN Messenger, Microsoft said in a statement. The company gave no time frame for any MSN or VoIP service upgrades.

Teleo has great technology to deliver superior VoIP quality and an excellent overall customer experience, said Blake Irving, corporate vice president of the MSN Communications Services and Member Platform group at Microsoft, in a statement. The acquisition creates infinite opportunities for Microsoft, he added.

The acquisition comes one week after Google released Google Talk, a downloadable Windows application for instant messaging and PC-to-PC voice calls. That same day, Microsoft disclosed an upgrade to MSN Messenger, version 7.5, that it says offers better voice-chat quality and some new features, including the ability to send a 15-second audio clip.

Users of Microsoft's MSN Messenger already can click on telephone numbers stored in Microsoft Outlook and Internet Explorer to make calls from PCs equipped with headsets or speakers and microphones. Teleo's technology offers more options for conducting voice communications, including the ability to place calls from PCs to traditional landline phones and cell phones, Microsoft says. Google Talk does not offer those options. ‘If you are a product manager at Google, AOL, or Yahoo, you have to be worried, said Jeff Pulver, a VoIP expert and creator of the Voice over Net conferences. If it chooses to, Microsoft could dominate consumer VoIP

Financial details of the transaction were not disclosed.

Teleo, a fledgling San Francisco-based company, recently finished beta testing of a PC phone service meant to connect people via mobile phone, land lines and PCs over the Internet. It had shut off the service so its technicians could sift through feedback and improve the software before launching its VoIP service, the company said on its Web site.

The company's software has some advantages over Skype Technologies’, the most widespread Internet calling service. Teleo's software relies on standards like SIP “Session Initiation Protocol” instead of proprietary protocols. It also integrated its software with Microsoft early on, so that Office users are given a chance to ‘Call with Teleo’ every time they highlight a phone number on their screen, even a phone number on a Web site in Internet Explorer. But unlike Skype, Teleo did not offer instant messaging or PDA “Personal Digital Assistant” support.

Teleo's software also gives users a single phone number to receive calls from any telephone or device. When a user's PC is off, calls to the phone number can be forwarded to another number, including a mobile phone, so users can continue to get all their calls.

Google vs Microsoft:
The battle over consumer VoIP is just the latest in a dizzying string of competitive product rollouts between the two companies. Recently, Google released Google Desktop 2, which updates its desktop-search software with personalization features.

In July, Microsoft launched a test version of a search engine that lets users search PCs and the Web with a single tool. Microsoft also unveiled a Google-esque MSN search site, eliminating paid advertising from main search results and introducing a simple, fast-loading design.

That same month, Microsoft launched Virtual Earth, a Web site that lets users scroll around a map of the United States that includes satellite photos of buildings and streets. That came a month after Google released Google Earth, which gives users 3-D maps with zoom-in, zoom-out capabilities.

The battle does not stop at technology. Microsoft sued Google and one of its former executives, Kai-Fu Lee, in July, claiming Lee was violating an agreement he signed five years ago barring him from working for a direct competitor in an area that overlapped with his roles at Microsoft. Google had recently hired Lee to head up its operations in China.

Now VoIP is in Microsoft's crosshairs, and other consumer technologies are ripe for the technology. For example, it makes sense as an option for Microsoft's Xbox or Xbox Live, says Drew Brosseau, managing director at equity firm SG Cowen & Co. LLC, who follows, but does not own, Microsoft stock. On Xbox Live, you can message back and forth while you are playing, and you can talk back and forth, but that is over a traditional telephone line, he says. Ultimately, that could all go through the same IP pipe.

The deal could be a good fit because Teleo has already integrated its software with Microsoft's, and MSN has the instant messaging capabilities Teleo lacks.

Teleo's executive team will work with MSN following the acquisition, and a number of Teleo product developers are expected to join MSN's ranks, Microsoft said.

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