Yahoo Adds Skype-Like Ability to IM Service

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NEW YORK (AP) -- Yahoo Inc. is entering a suddenly crowded field, offering Skype-like capabilities through its instant-messaging service that will let people dial regular phone numbers using their computers or receive calls from conventional phones.

The company has not set a firm date for the availability of the new paid features to the mostly free Yahoo Messenger service but indicated the launch was imminent.

Yahoo's addition of computer-to-phone capabilities follows a similar retooling of the rival AOL Instant Messenger service from Time Warner Inc. in October.

It also comes just as Skype is revamping its popular service with video calling, a feature that's been available through Yahoo Messenger for several years, though only for computer-to-computer calls.








In a similar vein, Sony Corp. introduced a free Internet-based phone service last month with an emphasis on visual calling that the company hopes will fuel sales of its video equipment.

Yahoo's new "Phone Out" option enables users to call regular and mobile phones for one cent per minute in the United States and two cents a minute to about 30 other countries, including calls to Argentina, Australia, China, France, Germany, Italy, Japan and Korea.

On the flip side, users can sign up for a traditional phone number to receive unlimited calls to their computers from anywhere for a monthly fee of $3 or an annual payment of about $30.

The same services at Skype, which was acquired by Internet auctioneer eBay Inc. for $2.6 billion in October, are 2.3 cents per minute for computer-to-phone calls to about 25 countries including the United States, and about $35 a year for a SkypeIn phone number to receive calls.

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Yahoo's new online phone calls near

Yahoo is expanding its reach in the fast-growing Internet calling market, offering a service that will allow people to make and receive low-cost computer calls to and from regular phones.

The long-expected move could make the Sunnyvale company one of the biggest players in the Internet phone-calling market, along with eBay-owned Skype Technologies, Vonage and others.

Yahoo would not say when it will launch the service, but the date is expected to be unveiled soon.

Yahoo has long allowed people who use its Yahoo Messenger service to make free, computer-to-computer voice calls to each other. But that market is limited.

With the new service, the estimated 82 million people worldwide who use Yahoo instant messenger will be able to call any traditional fixed or wireless phone number in 180 countries. They will also be able to purchase a phone number with which to receive calls. The service comes with a free voicemail box.

Although the calls will not be free, they will be extraordinarily inexpensive -- a penny a minute to anywhere in the United States and less than 2 cents a minute to more than 30 countries, including China, Japan and Sweden.

``These prices, in most cases, offer dramatic reductions over other competitors out there,'' said Jeff Bonforte, senior director of voice product management for Yahoo.

Bonforte, president of SIPphone before joining Yahoo earlier this year, said that even with the low pricing, Yahoo should enjoy a nice profit margin. Because of its size, Yahoo was able to negotiate appealing prices for the calling minutes it needs to buy from phone companies.

The company briefed media outlets on the news earlier this week under agreements that they would not publish it until the service launched. The Mercury News is publishing the news today because Yahoo said that another publication intended to break the news embargo.

The number of companies offering Internet calling -- also known as Voice over Internet protocol, or VoIP -- has soared in recent years as high-speed Internet use becomes more common. Most companies charge a monthly rate and their services are designed to be used as regular phones, except that the phone plugs into an Internet connection instead of a traditional phone network.

AT&T, Vonage, Comcast, AOL and Packet8 are among the myriad companies with VoIP calling plans.

Another class of VoIP services, which Yahoo is now entering, lets users make calls through their computers. Skype, with about 2 million users, has dominated this computer voice market, especially overseas, where international calling rates are expensive. But Google has recently entered the market with Google Talk, and there are a host of smaller companies that offer similar services.

Skype, which eBay recently acquired for about $2.6 billion, would appear to face the most immediate potential threat from Yahoo's new product.

Yahoo's rates are lower than Skype's, which charges about 2 cents a minute to make calls to most regular phones in the world. Yahoo will charge $30 a year to purchase a phone number for incoming calls; Skype charges $35.

VoIP consultant Andy Abramson said that Yahoo's deep pockets allow it to force Skype into a price war.

``Yahoo can toy with Skype,'' said Abramson, chief executive of Comunicano.

Abramson said Yahoo has another advantage -- the ability to integrate voice across many other parts of its vast network, from e-mail to music and gaming.

``Yahoo has all those community and content assets to lay into the voice thing,'' he said.

Despite all its advantages, Yahoo will face challenges marketing its service. Americans have still not embraced computer phone calling in large numbers. And most U.S. mobile phone plans offer free domestic long-distance phone calls.

But Abramson said the younger generation of Internet users are rapidly becoming accustomed to Internet phone calling. And Yahoo will able to use its popular Web site to promote the service.

``We expect the attractiveness of rates, the quality of the service and the Yahoo brand to make it appealing,'' Bonforte said.

http://www.mercurynews.com/mld/mercurynews/business/13347645.htm