Microsoft roars into VOIP market

Microsoft is accelerating its business IP telephony plans with the acquisition of software firm

The move follows similar acquisitions by Microsoft and its competitors in the consumer market, and bolsters a major strategic shift by Microsoft into online services -- the so-called "Live Software" program introduced earlier this week.

Microsoft and several other large IT players announced significant Voice over IP (VOIP) plans aimed at consumers over the summer. The string of deals showed that big companies such as AOL, Google, Microsoft, Yahoo and eBay believe consumer VOIP is a technology whose time has come.

Industry observers say the catalyst for this is Skype, purchased by eBay for nearly US$4 billion last month. Skype has quadrupled in size over the past year to 54 million users and adds 150,000 users per day, according to the company.

Microsoft's acquisition of Teleo in August was designed to add Skype-like services -- such as the ability to phone land-lines from a PC -- to MSN Messenger, Microsoft said. Yahoo has made a similar move in buying Dialpad, while Google recently launched Google Talk and AOL has announced its own VOIP service.

The purchase of takes the trend in a new direction, with applications designed specifically for businesses, Microsoft said. The company's technology will be integrated with Microsoft's corporate messaging products as well as the flagship Office suite.'s software could allow users to launch an IP voice call directly from an e-mail in Outlook, for example, and to handle more advanced functions such as conferencing.

"We are in lock-step with Microsoft's vision of bringing voice and data collaboration together, and we have built our business around delivering enhanced real-time communications for enterprise and small to mid-size customers," said chief executive Erich Gebhardt.

The technology will become part of Microsoft Office Live Communications Server, itself part of what Microsoft calls a major strategic shift toward online services. Microsoft chairman Bill Gates announced the "Live Software" plan earlier this week, introducing Windows Live and Office Live.

Microsoft chief technical officer Ray Ozzie said Live Software would see Microsoft offer a range of Web-based services that customers can use in conjunction with Microsoft software or on a standalone basis. "Microsoft's intent is to offer a general services platform," he said. "It will have a tremendous number of services within it, such as storage services, communication services, peer-to-peer connectivity and an identity mechanism."

The Windows Live plan appears to focus Microsoft's various efforts at competing with Google. The Windows Live portal -- -- sports a Google-like minimalistic search interface and will ultimately replace Microsoft's existing Web services such as Hotmail and messaging services. Windows Live also has a major advertising component, another page from Google's book. Office Live will include a variety of productivity tools, including CRM, all delivered online -- as Google has been doing since launch.

Microsoft took some big steps into the VOIP space in March this year when it launched a new IM client, Office Communicator 2005, and added enhancements to its Live Communications Server 2005 and Live Meeting Web conferencing service.

"VOIP is exploding," Bill Gates, Microsoft's chairman and chief software architect, said at the San Francisco launch of Communicator. "We want to enable the software richness on the PC to connect out to traditional PBXes."

The company followed the March show with a string of deals. In June, it formed tie-ups with AT&T, Amdocs and Sylantro Systems to work on various VOIP systems. In September, Microsoft said it planned to work with Qwest Communications International to provide VOIP services to SMBs.

As a result of the latest deal, will become part of Microsoft's real time collaboration business group, led by Microsoft corporate vice president Anoop Gupta. Microsoft will continue to offer's software on a standalone basis and existing customers should see no immediate impact from the acquisition, the management of the Swiss company said in a letter to customers, a copy of which was posted on its website.

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