Microsoft, Verizon Release Their Skype-Killer
TelecomWeb

Microsoft unveiled a public beta version of the long-expected next 
generation of its instant-messaging software, replete with advanced 
VoIP capabilities. As expected, it is teaming with Verizon to let 
users call standard telephones at roughly the same rate that eBay 
subsidiary Skype charges.

With Microsoft claiming 230 million instant-messaging users, all of 
whom are expected to eventually upgrade to the new Windows Live 
Messenger, the threat to Skype is obvious.

As reported earlier (TelecomWeb news break, Dec. 13, 2005), Microsoft 
has hooked its new messenger to what's being called the "Verizon Web 
Calling" service (as an aside, it was MCI back in December, when 
Microsoft's new software went into an invitation-only beta). The 
service offers calls as cheap as 2.3 cents per minutes - almost 
exactly the same price Skype charges for outgoing calls - to 
landlines in most of Europe, parts of South America and China. Calls 
to all other parts of the world and to cellular phones in many 
countries appear to be priced competitively with Skype and other 
competing VoIP services.

As with Skype's "SkypeOut" service, the Microsoft/Verizon service is 
prepaid, with users required to deposit $5, $10 or $25 in advance. 
The two also are offering a promo of one hour of free calling for 
those who sign up via Microsoft's new instant-messaging software - an 
offer that sounds neat but actually translates to a tiny $1.38 credit 
(enough for 60 minutes at 2.3 cents).

So far, Microsoft is not offering incoming phone numbers, but rumor 
has it that it's just a matter of time. However, Microsoft has cut 
pacts with Uniden and Philips to offer standard cordless-telephone 
handsets that support both the new VoIP service and PSTN calls. Those 
phones will cost about $100. The move is identical to what Skype 
offers. Indeed, Microsoft is also will ink a deal with Logitech for a 
Windows Live Messenger-branded webcam. The deal is just like the one 
Logitech signed with Skype (TelecomWeb news break, Dec. 1, 2005), 
which is hardly a surprise because Logitech's goal is to sell webcams 
that support every service in the world.

Microsoft and Verizon say their VoIP service is available immediately 
to users in the United States, the U.K., Germany, France and Spain. 
Next week, the VoIP calling service will be released in localized 
languages and currencies for six more markets: Austria, Belgium, 
Finland, Ireland, Italy and the Netherlands. Microsoft did not 
disclose rollout plans beyond that.

Although technically a beta, what Microsoft is offering is close to 
finished software. Such public betas typically are done mainly for 
marketing purposes. In addition to the VoIP feature, the newest 
version of the messenger software has the expected laundry list of 
"new and improved" features. In particular, it has increased support 
for video chats, and it offer a new feature called "off-line 
messaging," which lets users send messages to contacts who are 
offline for eventual delivery whenever the recipients log on.

It's also Microsoft's second attempt at PC-to-phone calling. An 
offering years ago in an early version of its messenger was an abject 
failure, and the feature disappeared from the IM service.

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Duane Whittingham (N9SSN) - Producer
Tom and Darryl Radio Shows
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