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Google to offer computer phone service Add to ...

Google Inc. has taken one more step in its march to be all things to all of its users by extending its reach in an old business: the phone business.

The world's largest Web search company said it will expand the capability of Gmail, its popular free e-mail service, to allow people to use their computers to call regular phone lines. In doing so, it is firing a warning shot to other providers of Internet-based phone services, such as Skype, as well as other e-mail software providers, such as Microsoft Corp., which offers both Hotmail and Outlook.

Google's move, announced Wednesday, highlights the manner in which the fight for control of the desktop is escalating. The company's goal is to aggregate all of the communication tools a customer would want - e-mail, phone, online instant messaging and video calling - into one place, in the hope of reasserting its position as the premier gateway to the Internet against challengers like Facebook Inc.

Google has already entered the voice market with its Google Voice application, which allows users in the United States to call phones and cellphones. But by merging the functions into its Gmail service, Google is betting its users will log-on to their computers and have reason to keep Gmail running the entire time.

"It's about saying, 'We want to be the window that's always open,' " said Duncan Stewart, an analyst with consulting firm Deloitte. "The point is that Google controls everything the user sees. That's the long-term goal of Google, to control everything the user has interaction with."

It's not the only company with that ambition, given the immense commercial value in amassing a broad, stable base of contented users for advertisers. Facebook already offers many of the same services in its own interface, from messaging functions to real-time chats. There is even a school of thought that, for at least some of its 500 million users, Facebook is the Internet: People log on, network, read articles posted by friends, view embedded videos, access Facebook through smart phones, and generally spend little online time outside the social networking site.

Vonage, a competing voice-over-internet provider, even offers an application that allows smart phone users to call online Facebook friends for free.

Google is not blind to these trends, which have been driving the company's hasty launch of social networking tools such Google Wave, which is being discontinued, and Google Buzz, which was integrated with Gmail but sparked a firestorm of privacy concerns.

The Web giant's new computer-to-phone calling service, which is now available to U.S. and some Canadian users, is also free "until at least the end of the year," unlike Skype, which offers free calls between computers but charges for those between computers and phones. Google's long-distance rates run from 2 cents a minute for a French land line to 19 cents to call a Mexican mobile.

The move is not necessarily a snub to traditional telecommunications providers, which have become accustomed to the erosion of long-distance revenue and fixed phone line losses. However, there is a risk, according to Canadian telecom consultant Mark Goldberg, that by expanding its presence in traditional telecommunications, Google could eventually be considered a telecom provider by the Canadian Radio-television and Telecommunications Commission - and subject to applicable taxes and regulation.

Deloitte's Mr. Stewart said it's only a matter of time before other technology companies make their interfaces even more inclusive. He expects Facebook to offer a similar embedded calling feature in the near future.

"It's part of the back and forth in the Google versus Facebook fight for supremacy for Internet users' time and attention," added Kaan Yigit, president of the Toronto-based Solutions Research Group consultancy. "It's a natural evolution."

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  • Updated July 24 4:00 PM EDT. Delayed by at least 15 minutes.

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