Microsoft Corp. today announced it has acquired Teleo Inc., a provider of voice over Internet protocol (VoIP) software and services that enable the placement of phone calls from PCs to traditional phones and that deliver this technology in unique ways through a variety of software and Web applications. Microsoft expects to combine the technology and expertise of Teleo with the existing VoIP investments of MSN to further develop products and services that connect consumers to the people and information that most matter to them. Financial details were not disclosed.

Founded in 2003 and headquartered in San Francisco, Teleo is a privately held company whose initial planned service offering, also called Teleo, was designed to allow customers to use their PC to make phone calls to cell phones, regular phones or other PCs. Through its integration with Microsoft® Outlook® and Microsoft Internet Explorer, the Teleo service was designed to facilitate click-to-call dialing of any telephone number that appears on-screen, for example through a Web site or via search results or e-mail.

VoIP technology already is prominently featured in MSN® Messenger as well as other Microsoft products and services. Microsoft plans to incorporate and expand upon Teleo technologies, integrating them into the infrastructure that supports MSN and ultimately projects delivering new VoIP consumer applications in future releases of MSN services.

Microsoft has its eyes set on something more like Net phone company Skype's service, however. A key part of Teleo's technology is focused on making calls from a computer to an ordinary telephone, a feature that company executives said would start finding its way into MSN Messenger before the end of 2005.