Yahoo is expanding its reach in the fast-growing Internet calling market, offering a service that will allow people to make and receive low-cost computer calls to and from regular phones.
The long-expected move could make the Sunnyvale company one of the biggest players in the Internet phone-calling market, along with eBay-owned Skype Technologies, Vonage and others.
Called Phone Out and Phone In, the new VoIP services are part of Yahoo Messenger with Voice.
With the new service, the estimated 82 million people worldwide who use Yahoo instant messenger will be able to call any traditional fixed or wireless phone number in 180 countries. They will also be able to purchase a phone number with which to receive calls. The service comes with a free voicemail box.
Although the calls will not be free, they will be extraordinarily inexpensive -- a penny a minute to anywhere in the United States and less than 2 cents a minute to more than 30 countries, including China, Japan and Sweden.
These prices, in most cases, offer dramatic reductions over other competitors out there, said Jeff Bonforte, senior director of voice product management for Yahoo.
The Phone Out service will enable users to make calls from a PC to traditional or mobile phones in more than 180 countries. Calls will cost $0.01 per minute to the U.S. and less than $0.02 per minute to more than 30 international countries, including Argentina, Australia, China, France, Germany, Italy, Japan and Korea. Pre-paid credit plans will be available in $10 and $25 increments.
The Phone In service will enable users to receive calls on a PC from traditional or mobile phones for $2.99 a month or $29.90 a year. Users can have multiple phone numbers to use when they travel. They also can choose a phone number in a different country so that people who call them from that area will be charged only for a local phone call.
Bonforte, president of SIPphone before joining Yahoo earlier this year, said that even with the low pricing, Yahoo should enjoy a nice profit margin. Because of its size, Yahoo was able to negotiate appealing prices for the calling minutes it needs to buy from phone companies.
Yahoo has long allowed people who use its Yahoo Messenger service to make free, computer-to-computer voice calls to each other. But that market is limited.
A new Contact Search Bar will allow users to easily find their contacts and communicate with them through instant text message, voice calling, e-mail or mobile text message. An Open Talk feature will maintain a constant direct connection so with the click of an icon, people can instantly start PC-to-PC voice conversations.
Yahoo Messenger and MSN Messenger offer free PC-to-PC calling and the ability to communicate with each others' networks. Yahoo also offers PC-to-PC video calling, which eBay's Skype unveiled lately.
The beta version of the new services will launch simultaneously in seven localized versions within countries including the United States, Spain, Hong Kong, Italy, Singapore and Germany, but a Yahoo representative could not say when.
The number of companies offering Internet calling -- also known as Voice over Internet protocol, or VoIP -- has soared in recent years as high-speed Internet use becomes more common. Most companies’ charge a monthly rate and their services are designed to be used as regular phones, except that the phone plugs into an Internet connection instead of a traditional phone network.
AT&T, Vonage, Comcast, AOL and Packet8 are among the myriad companies with VoIP calling plans.
Sony launched a free VoIP service last month with video calling and America Online launched PC-to-phone capabilities in October. Google launched its PC-to-PC call-enabled Google Talk instant messenger program in August.
Skype, which eBay recently acquired for about $2.6 billion, would appear to face the most immediate potential threat from Yahoo's new product.
Despite all its advantages, Yahoo will face challenges marketing its service. Americans have still not embraced computer phone calling in large numbers. And most U.S. mobile phone plans offer free domestic long-distance phone calls.
We expect the attractiveness of rates, the quality of the service and the Yahoo brand to make it appealing, Bonforte said.