- Gates’ group buys Swiss VOIP software supplier
- Strategy shift to services is gathering momentum
Microsoft Corp. recently announced the acquisition of Media-Streams.com AG, a 23-person company based in Zurich that develops business applications based on VOIP technology.
The acquisition of Zurich-based Media-streams.com AG will give Microsoft engineering talent, technology, and intellectual property it can apply to products for Internet phone calls that work in conjunction with E-mail, Web conferencing, and SMS software, according to Microsoft. Media-stream’s apps integrate Internet calls with Microsoft’s Outlook and Exchange E-mail software, a spokesman for Microsoft said.
The latest acquisition follows swiftly on the announcement by Microsoft co-founder Bill Gates that the software maker would push more aggressively into the development of online services, a move he described as the most important shift in five years.
The deal puts further pressure on conventional telecom companies that are facing a potentially deadly threat from the emergence of voice over internet protocol services VoIP. It also again raises the stakes among technology companies including Yahoo, Google, eBay, and America Online that appear to be rapidly converging in many of the same spaces.
At a press conference in San Francisco, Mr. Gates unveiled "Live" online services to complement its core Windows and Office software products, sold with 90%-95% of personal computers. Windows Live and Office Live will allow the delivery of key products and services from office software to e-mail, web design tools and instant messaging online.
The basic services will be free for users and advertising supported, although the company will try and upgrade customers to more feature-rich and advanced offerings. Mr. Gates described the services as ‘a revolution in how we think about software’.
Financial terms of the deal were not disclosed.
Voice over the internet has become one of the mostly hotly contested battlegrounds. In September, Microsoft announced plans to develop an internet phone service for consumers following the acquisition of Teleo, a small San Francisco VoIP firm. Later that month EBay announced the $4.1bn takeover of the largest of the consumer VoIP services, Skype. It offers free calls between computers and a subscription service for calls to regular phones. EBay said it hoped to lessen the friction between transactions on its auction site. Google this summer rolled out free Google Talk software for online phone calls.
Yahoo recently bought a firm called Dialpad with the aim of adding voice calls to its online portal that can connect to traditional phones. Google launched Google Talk, a limited offering allowing users to send instant messages and hold live voice conversations with other PC users. AOL has also announced a voice service.
The strategy is a landmark change for Microsoft, which has traditionally done business by selling software on disks and licensing its software to corporate customers. But it has come under pressure to rethink its model. It seems likely that Google played a part when it recently announced a deal with Sun Microsystems, to explore means of offering its OpenOffice software, a rival to Microsoft, over the internet.
Microsoft has been beaten to market before and still used its muscle to end up in a dominant position. Still, the internet is shifting the ground beneath the company at rapid rates, especially with the spread of broadband.
Zig Sarafin, general manager of Microsoft’s real-time collaboration unit, said the acquisition would enable the company to accelerate its plans of offering one common communications experience for users. It is the coming together of voice, data and video into something that is much more intuitive, he said.
There are an estimated 3m people using VoIP services in the biggest market, the United States. IDC, the telecom consultancy, forecasts that will rise to 27m by 2009. Microsoft is not only facing rivals in telephony as Silicon Valley plays out its own version of keeping up with the Joneses.
Microsoft is competing with Yahoo and Google on internet search and in other areas such as maps and the effort to put the world’s libraries on line.