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Story URL: http://www.silicon.com/research/specialreports/voip/0,3800004463,39151224,00.htm

Yahoo! moves into IM phone calls
And beefs up messenger web search...

By Reuters

Published: Wednesday 10 August 2005

Yahoo! has begun allowing users to make telephone calls and search the internet via its instant messaging system instead of relying only on web browsers or email, the company said on Monday.

Joe Laslo, an analyst with Jupiter Research in New York, said: "IM is becoming the hub of the internet experience for teens and tweens", describing how teenagers and "tweens" - children between the ages of nine and 12 years old - are making IM the focus of their online activities.

The upgrade of Yahoo!'s instant messaging service is designed to attract and hold a youthful audience accustomed to using broadband web connections, while fending off rival moves in voice calling, analysts said.

The focus on voice and other enhancements in Yahoo!'s instant messaging service follows similar improvements that competitor AOL has made in its AIM service. Yahoo! is number two, behind AIM, according to ComScore Media Metrix data.

Yahoo!, of Sunnyvale, California, is also trying to head off the rising popularity of the internet phone service Skype, which has caught fire among young users across Europe and now boasts around 48 million registered users around the world.

Laslo said: "Skype is approaching IM from the voice-based communications world. It is clearly on a collision course with the big three of IM (AIM, Yahoo! and Microsoft Messenger) who have focused on text communications."

The new Yahoo! service, renamed "Yahoo! Messenger with Voice", boasts high-quality voice calling capabilities allowing consumers to make phone calls between personal computers to friends and family anywhere in the world.

Fraizer Miller, Yahoo!'s director of messaging services, said in an interview: "We feel like we are doing a great job of listening to our users... by taking PC-to-PC voice-calling technology and turning it [into] a really easy user experience."

Yahoo! Messenger incorporates a version of Yahoo!'s search system into instant messaging conversation. Users can highlight a term from an IM conversation and quickly view the search results, or news headlines tied to that term of phrase.

The service, called "LiveWords", allows IM users to search for background on, for example, actor Clint Eastwood, or a stock quote, like YHOO. LiveWords focuses on news, sports, entertainment, education and financial terms, Miller said.

In addition, Yahoo! Messenger with Voice will include free voice mail, photo sharing and greater spam protection.

Yahoo! is also making it easier for instant messaging users to share blog postings, photos, movie and music rankings and personal profiles in a further example of how IM is moving to the centre of the Yahoo! user's universe.

Outside the US, Yahoo! Messenger with Voice is available in 18 localised versions for Argentina, Australia, Brazil, Canada, China, France, Hong Kong, Italy, Germany, Korea, Mexico, Russia, Spain, south Asia, Taiwan, UK and across Latin America, with Yahoo! en Espanol.

Yahoo! said that since it launched final testing, millions of users have begun testing the new service.