Google warms up for online voice calls

Google warms up for online voice calls

By David Litterick in New York and Dominic White (Filed: 25/08/2005)

Google yesterday opened a new front in the internet turf war with the launch of an instant messaging system that will allow users to make voice calls over the net.
The company is striving to expand its services beyond its search engine and hopes "Google Talk" will enable it to do so.
It will take on AOL, currently the US market leader in instant messaging with 41m people signed up, and Skype, tops in internet phone calls with 51m users worldwide.
Google dominates search - a position it hopes to translate into success in messaging and internet telephony.
However, analysts cautioned yesterday that persuading users to switch to Google from their current messaging system could meet inertia.
Users of Google Talk must have a Gmail account - Google's email service which marked its first foray into communications when it was launched last year. The service is only available through referrals from friends but Google yesterday said it would make it simpler to sign up.
Crucial to Google Talk's potential success is the boast that its "open model" will trump the closed systems of its rivals by enabling users to message the networks of other companies. Skype responded quickly yesterday by announcing it, too, was opening up its platform to others. Skype also retains the advantage that it allows users to make calls from PCs to land lines and mobile phones. Google Talk will initially only enable PC-to-PC communication.
Nevertheless, it backs up the assertion of Google chief Eric Schmidt who said "the only things that will matter on the internet are search and communication".
The launch of Google Talk, which will initially be free of adverts, is expected to drive adoption of Gmail, where Google makes money through the placing of ads targeted at the subject matter of an email.
The company announced last week that it planned to raise $4billion (£2.2billion) through a secondary share offering, prompting rumours it intended to buy its way into the market through the acquisition of a firm such as Skype.
Yahoo has also been in talks with the Luxembourg-based internet telephony leader which boasts 51m unique users, although talks broke down a month ago. Jerrome Buvat, strategic business consultant at CapGemini, said: "It is not surprising that Google is launching a voice over internet (VoIP) service given the very high growth of this market.
''The number of VoIP minutes is currently growing at a rate of 50pc a year."
In a timely reminder of the growth potential, the OECD yesterday said the growing popularity of internet telephony was posing a threat to the revenues of fixed-line and mobile operators.
The organisation said the number of fixed lines fell for the first time ever in 2003, and said Skype subscribers could make savings of 80pc on their telephone calls over users of traditional carriers.
Google has recently embarked on a blitz of new product launches as it attempts to win the PR battle with rivals and create a "one-stop-shop" on the net enabling users to manage their entire computer system from one website platform.