Yahoos Voice Over IM Targets Skype

Yahoo introduces PC-to-PC calling and drag-and-drop photo sharing in a new beta version of its instant messaging service.

Looking to cash in on the growing buzz around PC-to-PC voice over IP services, Yahoo on Wednesday added voice calling capabilities to a new beta of its instant messaging client.

The Yahoo Messenger makeover puts the Sunnyvale, Calif.-based Web portal up against startups Skype Technologies S.A. and Teleo Inc., two companies that have found success by offering IM and voice connection services from a downloadable application.

While Skype and Teleo provide users with the ability to make and receive calls from and to traditional telephone lines, Yahoo Inc.s will be limited to PC-to-PC calling to contacts on the messenger buddy list.

Frazier Miller, director of product management for Yahoo Messenger, said the landscape of consumer VOIP technology has changed dramatically since voice-chat capabilities were first embedded in the IM client in the late 1990s.

"Back then, the hype around VOIP didnt quite pan out because most users were on dial-up connections and the technology wasnt solid," Miller said in an interview with Ziff Davis Internet News. "It was a walkie-talkie-type implementation that didnt work well for everyone."

"With this beta, weve ripped out that plumbing and redone the infrastructure to add full duplex capabilities and let both users talk at the same time," Miller said.

Yahoos VOIP addition will offer firewall/NAT (Network Address Translation) penetration and support for low-bandwidth customers, he added.

Miller acknowledged that the buzz around Skype played into Yahoos decision-making and said Yahoos marketing strength is a significant advantage that should help push VOIP to "soccer moms in the Midwest."

/zimages/2/28571.gifSkype offers a free API for developers. Read more here.

"Certainly, the Skypes of the world have helped prove out the market. Skype drove this second wave of PC-to-PC calling, and thats something weve watched with interest. At Yahoo, our real core strength is to take niche nascent technologies and embed them in a communications product that we can scale out to millions and millions of users," Miller said.

Miller declined to discuss long-terms plan to monetize the VOIP service but hinted that it was unlikely that inbound-outbound calls away from the buddy list would be added. "This is the second step in our voice strategy. These communications technologies play a strategic role, to bring users into the Yahoo fold and introduce them to other areas."

"For the foreseeable future, PC-to-PC calling is where we feel theres real adoption," he said. "In the long term, there will be many ways to drive direct value."

Yahoos strategy of integrating portal services such as Internet radio, Web search and online address books began last year when Yahoo Messenger rolled out with a major cross-marketing connectivity focus.

/zimages/2/28571.gifClick here to read more about the redesigned Yahoo Messenger.

The new beta also adds an interactive photo-sharing experience that lets buddies drag-and-drop images directly into the chat interface. Both users can drag-and-drop images simultaneously and create film strips that sync in real time. Previously, photo sharing was limited to file transfers.

"When we looked at the usage data, file transfer was one of the most used features. We also found that 80 percent of all file transfers were photos, so this is a significant improvement that users will like," Miller said.

New additions also include the ability to update the Yahoo 360 social network/Weblog service in real time, directly from the IM client; protection from spam, virus and phishing attacks; and upgrades to the contact/address book interface.

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