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Gmail phone service takes on Skype

Free calls in the US to start with

Google has announced it is offering US and Canada users the ability to make free phone calls over the internet via its popular Gmail service.

Unlike Google's nearly two-year-old Gmail voice and video chat, which gives users an audio and visual experience online, the new calling feature allows users to dial phone numbers. With this move, Google is competing with Skype, which has long dominated this area.

"Starting today, you can call any phone right from Gmail," wrote Robin Schriebman, a Google software engineer in a blog post. "We've been testing this feature internally and have found it to be useful in a lot of situations, ranging from making a quick call to a restaurant, to placing a call when you're in an area with bad reception."

Schriebman explained that making a phone call through Gmail works just like a normal phone. Users can click "Call phone" at the top of their chat list and enter a number or a contact name. She added that calls to anyone in the US and Canada will be free "at least for the rest of the year". She said "very low rates" have been set up for calls to other countries. These charges will help pay for the free US and Canada service, Google said.

So, does Google have the muscle to make Gmail a Skype killer?

Skype, a 7-year-old company, is used by individuals and companies to make video and voice calls over the internet. According to Skype, its users made 6.4 billion minutes of calls in the first half of 2010.

While Google may be starting out behind in this competition, it has the benefit of its large Gmail user base.

"Skype could get hurt by this," said Dan Olds, an analyst with The Gabriel Consulting Group. "Skype has been offering the ability to call land lines and cell phones for years now. But having it integrated into Google's Gmail and, assumedly, their other offerings down the road, is quite an extension for Google."

Olds added that Google, always on the lookout for new streams of revenue, is looking to expand its reach over their customers and to move into complementary markets that will draw more revenue.

"Adding voice calls to their existing product set enhances the user experience and keeps people using Google apps longer and more frequently," Olds said. "It also keeps people from using another service like Skype, and it certainly may prompt some defections from Skype. Google definitely has the scale and reach to put a big dent in Skype if Google can deliver on the service side."

The voice calling feature is expected to be rolled out to US-based users over the next few days, according to Google. Users will need to install Google's voice and video plug-in and watch for the "Call Phones" button to appear on their chat list.


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