Yahoo Joins the VoIP Crowd

Yahoo has introduced Yahoo Messenger with Voice, its own offering in the burgeoning computer-to-phone space and Voice over IP race.

The service follows similar services by Skype, AOL and Microsoft MSN by allowing customers to make and receive voice calls through their PC to landlines and mobile phones.

Although it is arriving a little late in the game, the Sunnyvale, Calif.- based company believes it offers a better solution, positioning itself as a more feature-rich and less expensive alternative to its competitors.

Terrell Karlsten, a Yahoo spokesperson, told that the company plans to integrate PC-to-phone calling with its plethora of other services, including text instant messaging, PC-to-PC calling, e-mail, mobile text messaging, photo sharing and video.

Karlsten said that Yahoo has a strong understanding of Web-based consumer habits and can offer customers related services that its competitors can’t match.

“We offer the links between Yahoo Messenger and other Yahoo services, such as shared address books, [that] make it more attractive than rival offerings,” Karlsten said.

“It isn’t just about making phone calls,” she added. In addition to calling, the new Phone Out and Phone In services will feature free voicemail and a contact search bar, allowing consumers to integrate all contact information for their correspondents.

Industry analysts agree that adding voice capabilities to Yahoo’s platform is likely to increase customer retention.

“It’s something that makes the portal sticky,” said Ed Moran, director of the product innovation group at consulting firm Deloitte Services.

According to JupiterResearch, more than 20 million U.S. households (18 percent of all U.S. telephony households) will subscribe to a VoIP-based broadband solution by 2010.

But the larger implications may well be in business adoption of this solution. Moran noted that, while cost reduction is currently the primary driver for adoption of Voice over IP (VoIP), the technology offers inherent advantages to traditional telephony.

“It’s not just about the money,” he said.

Karlsten agreed that Yahoo sees “a real opportunity to integrate our voice platforms across networks, devices and applications.”

Moran noted that VoIP offers a new set of tools, changing the way a business is operated. He imagines a scenario where calls are digitized and forwarded to tech support without staff having to play the game of “telephone,” garbling the gist of an end-user’s problem.

“When you really drill down, it’s easy to miss the transformational nature of VoIP,” he said. “This could be a game-changer in terms of functions that you didn’t have previously.”

VoIP is dependent on broadband, and broadband penetration is higher in Europe than in the United States. Yahoo intends to seize opportunities beyond the U.S. consumer market. It introduced localized services in France, Germany, Spain, Italy, Hong Kong and Singapore in December 2005.

Country-based phone numbers are now available for consumers in France, the United States and the United Kingdom.

With “Phone Out,” calls within the U.S. and to some 30 other countries can be made for two U.S. cents a minute.

With “Phone In,” U.S. consumers can receive calls on their PCs from traditional and mobile phones. For $2.99 a month or $29.90 a year, people can select a personal phone number, and receive incoming calls at no additional charge.

Yahoo acquired VoIP-to-PSTN play Dialpad Communications in June and was expected to roll those features into its IM client, which it renamed Yahoo Messenger with Voice.

Yahoo Messenger with Voice uses VoiceEngine Multimedia, a voice and video processing technology from Global IP Sound’s (GIPS) that addresses quality issues typically found on VoIP calls, such as jitter delay, packet loss and acoustic echo.

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