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Phoning Home with Microsoft MSN Messenger
By Ben Charny
May 8, 2006

Two new cordless home phones from major electronics makers that went on sale May 8 are helping Microsoft's MSN Messenger leap from the PC and into more office cubicles and living rooms.

Each phone comes preloaded with the latest test version of the instant messenger, MSN Messenger, Microsoft said.

As a result, the Win 1200 home phone from manufacturer Uniden and the VOIP433 phone from Royal Philips Electronics are both capable of making Internet phone calls via MSN Messenger.

That means that once connected to the Internet, MSN Messenger users can pick up their phones and call each other for free. They can also call cell phones or traditional landlines for a few pennies a minute through a relationship Microsoft has with No. 2 local phone service provider Verizon Communications, of New York City.

Both phones are now for sale, Microsoft said. The Uniden is $99 and available at Best Buy.

PointerRead more here about how VOIP is spreading to cell phones, PDAs and elsewhere.

The alchemy Microsoft is seeking here involves VOIP (voice over IP), a freely-available software for making phone calls using an Internet connection.

VOIP is considered a burgeoning industry. There are about 1.5 million VOIP users now, but that will blossom in 2010 to about 18 million, or about $4 billion a year in revenue, some analysts believe.

The expected growth is largely from major U.S. cable operators that are now using Internet phone services to battle major telephone operators.

The new, beta version of MSN Messenger also comes laden with other VOIP improvements, including video calling (which requires a Web cam) and an arrangement available to call cell or landlines in 11 countries for a few pennies a minute. The older MSN test version was restricted to a half dozen nations.

PointerRead more here about how Verizon's own VOIP plans have been having trouble finding an audience.

But the Uniden and Philips phones are perhaps the most important of the lot. Internet telephony is usually restricted to the PC, where it's a growing success, but at the same time constricting its potential audience by requiring a PC.

The same leap has been made by more established Internet phone players, including Vonage Holdings, of Holmdel, N.J., and Skype, a division eBay, of San Jose, Calif., but not others.

So Microsoft's move brings it inline with these firms, which are among the top in the industry in terms of subscribers and minutes of phone calls served up.

Skype users can now make free SkypeOut calls to traditional landline and mobile phones in the U.S. and Canada until the end of the year, the company announced Monday.

Skype, which offers software that allows people to talk over an Internet connection using their PCs, is trying to get more people in North America to use its SkypeOut service, which typically charges people to make calls to a traditional or mobile phone. Skype calls made between PCs are free.

Skype, owned by online auctioneer eBay, doesn't break out the number of people using its premium services such as SkypeOut. But as of the end of April, it claimed to have more than 100 million registered users, nearly double the number of registered users it had in September 2005. About 6 million of those consumers are in the U.S., said a company spokeswoman. By comparison, China has 13 million registered users and Germany has 5 million.

"Millions of consumers around the world are flocking to Skype every month," Henry Gomez, general manager for Skype in North America, said in a statement. "And we believe free SkypeOut calling will rapidly accelerate Skype adoption in the U.S. and Canada."

While Skype executives are hoping to drum up more business with this promotion, SkypeOut calling is free only until the end of 2006. What's more, calls made to and within all countries other than the U.S. and Canada will continue to incur charges at current rates.

The free SkypeOut promotion comes at a time when competitors such as Yahoo and AOL are integrating more call features into their instant-messaging clients. Starting Tuesday, AOL instant-messaging users will be able to use AIM Phoneline, a new service that allows people to make calls from their IM client to regular phones. AOL's service lets subscribers get free incoming calls from regular phones. But it charges a monthly fee to make calls to regular phones or cell phones.

While the SkypeOut service will allow free calling to regular phones, the company will continue to charge people to get calls using a service it calls SkypeIn, which costs about $38 for an unlimited 12-month subscription. Consumers can get the service for three months for about $12.80.

Skype is also trying to attract new users by enhancing its services. Last week, it released a new test version of its software that adds more features and functionality to the service.
For example, it's adding a feature called Skypecasts, which are live, moderated discussions that allow groups of Skype users to discuss shared interests. The company also added SMS (Short Message Service), integration with Outlook e-mail contact lists, and shared contact lists.