UK newspaper The Times has reported that Microsoft has bought Teleo, a provider of Internet telephony software and services. Microsoft plans to 'incorporate and expand' on Teleo products, linking them into the software behind its MSN portal.
Microsoft could now add 'click-to-call' features to Outlook or Internet Explorer, its Internet browser, so users can call online contacts. Teleo also specialises in technology that allows users to make calls from their computers to ordinary telephones
Comment: Hard on the heels of last week's attention-grabbing announcements about Google Talk, here's a rapid riposte from Microsoft's MSN. This is all about 'anything you can do, I can do better'. Google Talk will let you use your PC to talk to other PC users over the Internet? Well OK, MSN will let you do that — and unlike Google, we might let you talk to people on their phones, too.
The rivalry between the big Internet portals is becoming increasingly intense. Google pushes into MSN territory in the form of Gmail and Google Talk. MSN pushes back into Google territory with MSN Search, and now with the new services that Teleo will enable. And there's definitely more of this jostling to come. Both MSN and Google make money by having a large number of users, which they can offer as an audience to advertisers, so they are both deeply motivated to grow at each other's expense
What about the implications for telcos? This is about voice communications, so are Google and MSN posing a threat to traditional phone service providers with these new services? Well no, not yet. Google Talk only supports PC-to-PC conversations. It looks like the MSN/Teleo service will also support PC-to-phone conversations. But neither service does phone-to-phone yet, so although these Internet services could take some calls that would otherwise have gone over telco networks, they don't offer a direct substitute for telco services.
Nevertheless, there's been excited talk for several years about whether or not Microsoft is aiming to become a telco, especially since the release of Windows XP (which had a SIP-based telephony client built in). Today's announcement doesn't go far enough in that direction for us to get excited about any telco-centred ambitions that Microsoft might have. However, I must admit that my heart skipped a beat this morning when I thought I heard a colleague tell me over the phone that 'Microsoft has just bought Telia'.
John Delaney is a Principal Analyst in Ovum's Consumer Group. The team analyses the consumer market for data and multimedia services on mobile networks and the Internet, including messaging, information and entertainment.
