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Microsoft lets IM speak for itself

The software company releases a voice-enabled version of its instant messenger, plugging a hole in its technology and leap-frogging rivals with new features.

Microsoft today released a voice-enabled version of its instant messenger, plugging a hole in its technology and leap-frogging rivals with new features, including PC-to-phone capabilities.

Dubbed MSN Messenger 3.0, the previously reported release plays catch-up to rivals that have long offered instant messaging voice service, including Yahoo and America Online. But Microsoft is going one step further, incorporating technology from Internet telephony provider Net2Phone to allow conversations between personal computers and telephones in addition to text messaging via pagers, fax and email.

The service also allows free long-distance calls over the Internet to the United States and Canada.

"They were quite a bit behind," said Rob Enderle, an analyst with Giga Information Group. "This brings them not quite up to parity but close?It's a horse race again."

By knitting together a host of communications devices through a single interface, Microsoft could put new pressure on companies offering competing IM products to agree on a technology standard--something that has proved elusive so far.

AOL is by far the leader in the IM market, with 91 million screen names on its AOL Instant Messenger product and 62 million registered users on ICQ, which it also owns.

Gartner analysts Eric Paulak and Jay Pultz say that Microsoft's announcement it has released a voice-enabled version of MSN Messenger 3.0 will be welcome news to many companies and individuals trying to reduce telephone costs.

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The company has refused to open its network to unauthorized rival networks, citing security concerns. But with its pending merger with Time Warner under close regulatory scrutiny, it has recently indicated it does not oppose interoperability in theory.

If nothing else, the announcement signals that Microsoft is getting its act together on the voice IM front. Several start-up messaging companies offer ways to talk and type with their IM "buddies," including Firetalk.

But in pushing IM beyond the PC, Microsoft has taken an important step, analysts said. AOL and Net2Phone announced a plan to offer a similar service last December, for example, but have yet to bring it off.

"Being able to drop in and out of conversations between PCs and regular phones is fairly unique and could give Microsoft a short-term advantage," Enderle said.

The deal is another You've got 
Time Warnerwin for Net2Phone, which is looking to differentiate itself from a slew of similar voice-over-Internet competitors by inking deals with top industry players. In March, Net2Phone and its parent company, IDT, agreed to sell a $1.4 billion stake in the company to an investment group led by AT&T. AOL also owns a 5.4 percent stake in the company.

That heavy backing has lent credibility to the company's nascent technology efforts, which have been criticized for uneven performance and complicated setup requirements.

Net2Phone, along with other players such as MediaRing and DialPad, has built a relatively small but loyal following of people who use the services to make cheap calls using their computers. The services have been most attractive to international callers because the Internet companies can offer far lower prices than the still-high overseas rates. But as the quality of Net calls has gone up, more people have begun using them for national long-distance service as well.

By including PC-phone capabilities in MSN Messenger, Microsoft hopes to create a convenient service for accessing many communications devices. MSN Messenger gives people Puppet masters: Who controls the Netthe option of including several contact points in their profiles including pager numbers, email addresses and phone numbers, thereby allowing their IM buddies alternate ways to get in touch when not everyone is online.

In another move aimed at convenience, MSN Messenger 3.0 lets people take email addresses as usernames.

"From new phone call capabilities that save users money to many integrated and personal ways to communicate all within MSN Messenger, we continue to deliver on our goal of helping people get more from the Web," Yusuf Mehdi, vice president of Microsoft's Consumer Group, said in a statement.