& cplSiteName &

Microsoft Buys Skype Rival

Light Reading
News Analysis
Light Reading

As if VOIP sector watchers didn't have enough to tax their brains at the moment, Microsoft Corp. (Nasdaq: MSFT) has added to the IP telephony frenzy by announcing the acquisition of privately held startup Teleo, which has developed VOIP technology very similar to that of Skype Technologies SA (see Microsoft Buys Teleo).

Financial details weren't disclosed.

The news follows hot on the heels of: last week's announcement of an online voice service from Google (Nasdaq: GOOG); talk that voice over broadband specialist Vonage Holdings Corp. is looking to cash in on its initial success; and wild estimations of Skype's value. (See Google Talks the Talk, Sources: Vonage Is Eyeing the Exits, and Readers Scoff at Skype Hype.)

It also follows Yahoo Inc.'s (Nasdaq: YHOO) acquisition of VOIP service provider Dialpad Communications Inc., announced in July (see Yahoo Enters VOIP Fray).

So what is Teleo? A very similar beast to Skype, in that it provides downloadable software that enables free, SIP-compatible Teleo-to-Teleo voice calls, and the ability to make calls to, and receive calls from, the PSTN from a PC. Earlier this year, VOIP industry commentator Irwin Lazar described Teleo as "Skype on steroids" and noted that Teleo's ability to integrate with Microsoft's Outlook and Internet Explorer applications, and the fact that each user is assigned a regular phone number, potentially make it an attractive option for business users. It also seems to have made it attractive to Microsoft.

Teleo offers its users the ability to route incoming calls to any phone, fixed or wireless, and includes a click-to-call function that allows users to make a call by right-clicking on phone numbers listed on Web pages.

However, Teleo is way behind Skype in terms of feature development -- for instance, it doesn't offer an instant messaging client. It also charges $4.95 per month, whereas using Skype is still free.

Teleo completed its beta testing in July and had wound down its service for further application developments and enhancements. Skype, meanwhile, is the P2P voice pioneer, with more than 50 million registered users and more than 2 million subscribers to its paid-for SkypeOut and SkypeIn services.

Microsoft isn't providing any detail about its future plans for Teleo, other than that it plans to integrate Teleo's capabilities into its MSN portal.

Skype founder Niklas Zennström had these comments in an email response to questions: "Internet giants are now looking to add voice services, recognizing the arrival of a global mass market in Internet voice. As the only pure-play global Internet communications company, Skype has been the trailblazer and just as we drove the Internet voice revolution, we are also driving the creation of a truly open Web... We believe consumers benefit from choice and competition, and delighting our rapidly-growing user base will help us maintain our strong position as the world leader."

— Ray Le Maistre, International News Editor, Light Reading

Make sure your company and services are listed free of charge in Light Reading's VOIP Services Directory, now being compiled, by completing this questionnaire.

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Light Beer
12/5/2012 | 3:03:43 AM
re: Microsoft Buys Skype Rival
Does this seem like a knee-jerk reaction to Yahoo and Google, or does it just look that way because of the timing of a long-planned announcement?

I would tend to the latter, though I have already seen 'industry commentary' that suggests this is an ill-thought and little planned response to Yahoo's DialPad acquisition and Google's Talk launch.
User Rank: Light Sabre
12/5/2012 | 3:03:41 AM
re: Microsoft Buys Skype Rival
So Microsoft wants to play in the peer-voice realm. Of course they have been there before: Isn't H.323 basically similar to their old NetMeeting? Alas, it was too ugly to really catch on.

Skype is proprietary and not interoperable. It makes up for that with first-mover advantage. In that sense it is like the IM networks that strive to lock each others' users out. For now, absent any strong competition, Skype's network effect keeps it going: Because it has the most users, it is the most valuable, and thus gains the most new users. (eBay has the same effect; the most buyers gets the most sellers.) To some extent this is like a natural monopoly, though not quite the same.

The only way to defeat Skype's hegemony would be to get a really large user base that doesn't depend on Skype's proprietary software. Microsoft might think it can do that, but the whole world is not made of Microsoft lovers, and when there are two proprietary solutions, the first mover advantage is quite powerful. On the other hand, if there were a standard, and everybody but Skype could play along and create one single interoperable network community, then Skype could have serious competition.

SIP is not quite the answer, even though it has been touted as such -- it ends up needing lots of SBCs and other things, and it isn't always so interoperable. Perhaps it will be the basis of the answer, vs. re-inventing the whole wheel. I see "SIP-based" in the article, but I don't know exactly what that means. Skype's proprietary solution brings a lot to the party, though, including a directory service and encryption.
Educational Resources
sponsor supplied content
Educational Resources Archive
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
Wednesday, October 26, 1:00PM EDT
Security: Tackling DDoS
Gary Sockrider, Principal Security Technologist, Arbor Networks
Friday, October 28, 1:00PM EDT
Security: The Plusses and Minuses of Open Source Software
Nick Feamster, Acting Director, Center for Information Technology Policy, Princeton University
Wednesday, November 16, 1:00PM EST
SDN 101
John Isch, Practice Director, Network & Voice, Orange Business Services
Friday, November 18, 1:00PM EST
SDN & Open Source
Christopher W. Rice, Senior Vice President of AT&T Labs, Domain 2.0 Architecture and Design
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Next-Generation Technology Beyond DOCSIS 3.1

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Liu Jianhua speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Hybrid Video Solutions to Change TV, Change Future

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Ian Locke speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei Future-Oriented Giga Coax Network

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Allen Wang speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei at SCTE 2016

10|20|16   |     |   (0) comments

Join Alan Breznick of Light Reading and take a sneak peek at the Huawei booth at SCTE 2016.
LRTV Custom TV
Assuring Network Quality in a Rapidly Changing Environment

10|20|16   |     |   (0) comments

As the rate of change and complexity increases in agile networks, the importance of introducing DevOps methodologies for integrating active test and assurance solutions throughout the full service lifecycle becomes critical to ensure that customers are experiencing the service quality they demand. The industry landscape is changing, and software-based test and ...
Telecom Innovators Video Showcase
A10 Networks on Service Providers' Industry Needs

10|20|16   |     |   (0) comments

Light Reading's Steve Saunders hears how A10 enables service providers to accelerate, secure and optimize their application delivery to drive down costs, enhance service availability, and better respond to customer requirements, so they can improve customer satisfaction, monetize their network, and grow revenues.
LRTV Custom TV
New NFV Use Cases for Cable TV

10|19|16   |     |   (0) comments

A large number of NFV use cases are focused on the enterprise domain, looking at virtualization of customer-premises equipment (CPE). To date, there has been little focus on the use cases and business case for virtualization of the video content delivery networks required to deliver unicast and streaming video to consumers. Amdocs commissioned Analysys Mason to ...
Women in Comms Introduction Videos
Meet the Future Workforce: New Faces, Expectations & Motivations

10|19|16   |   5:33   |   (1) comment

Millennials and their younger peers, Gen Z, expect more out of their network and more out of their work. Intel's Lynn Comp shares how the industry can prepare for this new generation of workers.
LRTV Custom TV
ZTE Global Services User Congress 2016 Highlights

10|19|16   |     |   (0) comments

ZTE held its 2nd Global Service User Conference in Dusseldorf on October 13-14. Representatives from network operators, leading industry analysts and ZTE senior expertsattended the event, exploring the best practice in managed services and the vision to transform network operations into the operations center of the future (OpCF) in the software-defined networking ...
LRTV Custom TV
Cliff Grossner on Cloud & Network Synergy From Carrier Service

10|18|16   |     |   (0) comments

Local carriers offer the collaborated cloud and network service that benefits from their understanding of the regulations operating in different vertical markets.
In this interview, Cliff Grossner from IHS Technology talks about how this advanced service can support business agility and flexibility.
LRTV Custom TV
VeEX: Live from SCTE Cable-Tec Expo 2016

10|17|16   |     |   (0) comments

Cyrille Morelle, VeEX's President and CEO, talks with Light Reading's Alan Breznick live from the SCTE Cable-Tec Expo 2016. They discuss DOCSIS 3.1 technology, deployments and early lessons learned. New products on display include the CX350s-D3.1, CX380s-D3.1, CX310, AT2500-3G, FX150 OTDR and MTT WiFI Air Expert.
LRTV Custom TV
Smith Micro's Carrier-Grade WiFi Component

10|17|16   |     |   (0) comments

Join Carol Wilson of Light Reading as she interviews the CTO of Smith Micro, Dave Sperling.
Upcoming Live Events
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
Attacks Have Major Internet Sites on the Ropes
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 10/21/2016
Trump: Dump AT&T/TW & Comcast/NBC
Alan Breznick, Cable/Video Practice Leader, Light Reading, 10/24/2016
Layer3 TV Comes to Town, Hints at Future
Mari Silbey, Senior Editor, Cable/Video, 10/21/2016
Verizon Wants More Data on Yahoo Breach
Alan Breznick, Cable/Video Practice Leader, Light Reading, 10/20/2016
WiCipedia: Grace Hopper Promotes Diversity, Girl Scouts Code & How to Thrive
Eryn Leavens, Special Features & Copy Editor, 10/21/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
Animals with Phones
Live Digital Audio

A vital part of increasing the number of women in comms is transforming the ways companies can support and empower women. While progressive company policies that support both men and women in achieving work-life balance are a step in the right direction, creating a company culture that supports those policies can at times be more challenging.

During this show, we'll talk to Lynn Comp, Senior Director of Industry and Sales Enabling (ISE) in the Network Platforms Group at Intel, about why those challenges exist and how companies can overcome them. She'll provide insight into how Intel has worked to create a culture that supports work-life balance, and provide steps and guidance for other companies wishing to do the same. We will also leave plenty of time to get your questions answered live on the air.