Yahoo Targets Skype With VoIP IM Service

Yahoo on Wednesday introduced a public beta of its instant messaging suite with voice capabilities. Consumers can now get a local telephone number in their city of choice for just US$2.99 a month.

Yahoo Messenger with Voice is going head to head with Skype with a monthly price tag that runs about $1 less than the eBay property’s fee. Yahoo will charge 2 cents a minute for domestic calls on top of the $2.99 fee. Per-minute charges to 180 other countries will vary.

Like Skype, Yahoo’s service leverages Voice over Internet Protocol technology to allow users to make calls from a PC to another PC, or a traditional or mobile phone. Yahoo will not charge to receive calls, and PC-to-PC calls are free.

“Yahoo’s top priority is to provide a stellar communications service through a variety of easy, fun and inexpensive ways to stay connected with others around the world,” said Brad Garlinghouse, vice president of communications products at Yahoo.

A Wide Open Market

Can Yahoo compete with the entrenched Skype? Certainly, analysts said. The Internet telephony market is still wide open. While the number of consumers adopting the technology is growing, the total population of VoIP callers is still very low, according to Gartner Research Vice President David Willis.

“The good news for Yahoo is that Skype — and eBay’s purchase of Skype — raises the visibility of the market overall and has customers intrigued about what this technology can do. So Yahoo can sort of ride along with eBay’s marketing of personal Internet telephony,” Willis told TechNewsWorld.

An Integrated Approach

Yahoo, of course, wants to do more than ride along. It wants to dominate the market.

While MSN is currently testing a PC-to-phone service and AOL plans to roll out its own product later this year, Yahoo is getting a jump start in the VoIP space. Yahoo believes its advantage is price and an integrated approach. Yahoo Messenger with Voice includes text IM, PC-to-PC calling, e-mail, mobile text messaging, photo sharing and video.

Consumers can choose to have multiple phone numbers, and wherever they travel, their phone numbers will follow them. Consumers can also take advantage of a free voicemail service with both their PC-to-PC inbound calls and incoming phone calls.

If consumers miss a call, they can retrieve the message at no additional cost. Additionally, Yahoo Mail includes links to Yahoo Messenger with Voice to enable people to check their voicemail directly from Yahoo Mail.

Consumers Win

The Internet telephony market is changing quickly, Willis noted, and it’s a great time for consumers to adopt VoIP services. It’s easy to move between clients and to adopt multiple clients. Since PC-to-PC calling is free among callers who use the same branded software, analysts said consumers may indeed adopt multiple clients.

“It’s only when you get into the intersections between the clients that it actually costs you money. So if there’s no cost of adding yet another client, then people will do that until the point where it becomes so complex and the industry starts to consolidate, just as we saw in the IM market,” Willis noted.

High Speed Calling

Yahoo’s new PC-based calling features were initially introduced to international users in December 2005, and will continue to be rolled out in additional localized versions.

The enhanced Yahoo Messenger with Voice features will also be introduced into Yahoo’s co-branded Internet access services, including AT&T Yahoo High Speed Internet, in the coming months.

“We look forward to further incorporating voice features into Yahoo’s global services, from communications to search, to help simplify and improve the Internet experience for our hundreds of millions of users around the world,” Garlinghouse said.

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