Microsoft acquires VoIP provider Teleo

Microsoft Corp. said Tuesday it acquired Teleo Inc., a developer of services and technology that allow users to make and receive voice phone calls on their PCs via the Internet.

The world’s largest software maker plans to incorporate Teleo’s VoIP (Voice over Internet Protocol) technology into its own software and Web applications to upgrade its online services at MSN, including MSN Messenger, Microsoft said in a statement. The company gave no time frame for any MSN or VoIP service upgrades.

Financial details of the transaction were not disclosed.

Teleo, a fledgeling San Francisco-based company, recently finished beta testing of a PC phone service meant to connect people via mobile phone, land lines and PCs over the Internet. It had shut off the service so its technicians could sift through feedback and improve the software before launching its VoIP service, the company said on its Web site.

The company’s software has some advantages over Skype Technologies SA’s Skype, the most widespread Internet calling service. Teleo’s software relies on standards like SIP (Session Initiation Protocol) instead of proprietary protocols. It also integrated its software with Microsoft early on, so that Office users are given a chance to “Call with Teleo” every time they highlight a phone number on their screen, even a phone number on a Web site in Internet Explorer. But unlike Skype, Teleo didn’t offer instant messaging or PDA (personal digital assistant) support.

Teleo’s software also gives users a single phone number to receive calls from any telephone or device. When a user’s PC is off, calls to the phone number can be forwarded to another number, including a mobile phone, so users can continue to get all their calls.

The deal could be a good fit because Teleo has already integrated its software with Microsoft’s, and MSN has the instant messaging capabilities Teleo lacks.

Teleo’s executive team will work with MSN following the acquisition, and a number of Teleo product developers are expected to join MSN’s ranks, Microsoft said.