• by Shankar Gupta , December 14, 2005

Microsoft Tuesday announced a major partnership with phone company MCI to provide software and services to Windows Live users that will allow computer-to-phone calls to be made through Windows Live Messenger, the upcoming successor to MSN Messenger.

The service is currently being tested in a closed beta in the United States only, and will soon expand to France, Germany, Spain, and the U.K. within the next few weeks. The service will allow users to place calls from their PCs to and from about 220 countries. Rates during the beta testing period will start at 23 cents per minute for calls made in Western Europe, the United States, and Canada. The product is slated to launch officially during 2006.

Earlier this month, Microsoft rival Yahoo! announced a similar plan, which aims to offer Yahoo! Messenger users an Internet telephony service that will deliver U.S. calls to its users at half the price of Skype, a major, low-cost VoIP service recently purchased by eBay. Piper Jaffray Analyst Safa Rashtchy lauded Yahoo!'s plan, stating in a report that the company's "aggressive pricing" strategies and established user base "give the company a solid base upon which to start building a critical mass for this service." Piper Jaffray also estimated that Yahoo! could generate between $10 million and $30 million in revenue just from this service within the next two years.