John Delaney, principle analyst, Ovum, the telecoms and technology specialists:

"Microsoft’s acquisition of Teleo is best seen as one piece in a rapidly expanding puzzle. Does it mean that Microsoft is becoming a telecoms company?

"No – or not yet, at least.

"First in the puzzle comes the large traditional internet portals – Yahoo, Microsoft’s MSN and AOL – which have largely been built on non-voice communications such as Microsoft’s Hotmail e-mail service and its MSN instant text messaging service.

"Google is changing that. Its principal service has been search, but through its Gmail e-mail service and Google Talk, it has moved into communications. It has also beome an important portal in its own right. Conversely, led by MSN, the traditional players have been moving into search.

"The significant thing is that none of these companies has yet reached a dominant position in the market for voice calls made between PCs – the market into which Microsoft will most probably expand through its acquisition of Teleo.

"It is useful to realise that using the services on offer here does not really feel like making a traditional telephone call. Google Talk, for example, does not let you call somebody who is using a regular landline. Rather, the call has to be made between two computers.

"This is why these services will not step on BT’s toes - for the time being at least. They do not offer the same level of service as traditional telecoms companies, which allow people to make conventional calls from landlines to mobile phones and so on.

"That said, BT does play a part in the puzzle. Its 21CN programme is about rebuilding the telecoms network using VoIP (voice over internet protocol) technology – the system that allows packets of data to be transferred over the internet.

"The third part of the puzzle come in the shape of Skype – which, unlike Google and Microsoft, does allow people to make calls from their computer to a regular landline. The fourth is Vonage, a company which already uses VoIP technology to allow people to make telephone calls from and to conventional handsets and which probably poses the greatest threat to BT at present.

"All of these companies are coming from slightly different directions and could all play a part in the future of telecoms."

"Companies such as Google and Microsoft don’t pose an immediate threat to incumbent players such as BT, but they do have powerful brands and could encroach on BT’s turf in years to come.

Ian Fogg, senior analyst at Jupiter Research:

"The acquisition of Teleo is a significant step for Microsoft, but it is not a massive jump. Microsoft has been pushing products that will organise e-mails, addresses, diaries and notes on your PC and will then synchronise with a handheld device such as a PDA for several years.

"The acquisition of Teleo looks like a natural extension of this thinking. Users of the new products will probably be able to click on a contact name on a PC and make a voice call over the internet. Where in the past Microsoft has focussed on marketing these types of products to businesses, now it appears to be turning to consumers.

"In part, this is a recognition that the game is changing. AOL, Yahoo and MSN have for some time featured audio and video messaging but have not pushed them as hard as they could have. Now we are seeing a renewed impetus in the wake of a trail blazed by Skype, a VoIP service provider.

"Skype has succeeded in attaching its name to the idea of telecoms. When consumers think of Skype, they think of voice calls. When they hear about MSN, AOL or Yahoo, they think of text-based systems.

"There is a need for these large internet portals to reposition themselves. It is very likely that users of Google Talk and Skype have actually already got access to voice messaging services from Yahoo and MSN on their machines, but have been unaware of them."

Interviews by Rhys Blakely

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