Microsoft acquires Internet voice startup

Microsoft Corp. said Tuesday it had acquired Teleo Inc., a small San Francisco startup whose software lets people make calls from computers to traditional telephones.

The deal for privately held Teleo, which closed Monday, could allow Redmond-based Microsoft to gain a competitive edge in the growing market for Internet-based calling services. Terms were not disclosed. (MSNBC is a Microsoft - NBC joint venture.)

Microsoft already uses Voice over Internet Protocol (VoIP) technology in some products, including its instant-messaging program.

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But Teleo's technology, still in development, is notable for such features as click-to-call: a user can click on a phone number — listed, say, on a Web page — and immediately reach someone with a regular phone number on the circuit-switched network.

Blake Irving, a corporate vice president with Microsoft's MSN Internet division, said Microsoft hopes to incorporate Teleo's technology into such consumer products as its instant-messaging program.

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The company also is looking at other options, such as making it part of a localized search engine offering. A person looking for a nearby restaurant could, for example, search for area eateries and then use the technology to call and make a reservation.

Irving said Microsoft plans to charge for some services using Teleo's technology while others will be free.

A test version of the product is expected to come out sometime this year, he said, and details such as how much services would cost have yet to be worked out.