• BusinessWeek, Monday, July 20, 2009 2:33 PM

Google's latest push into the Web phone-calling market is a direct challenge to eBay's Skype as well as the online calling software businesses of Microsoft and Cisco, writes BusinessWeek's Olga Kharif. Last week, the search giant released a downloadable Google Voice application for phones running its Android operating system as well as Research in Motion's BlackBerry line of smartphones, moves which could make the voice service more popular. Google Voice allows users to make Internet phone calls, listen to voice messages and read transcripts, in addition to supplying a universal phone number that can track down messages based on what phone users are near.

The company is taking a somewhat friendlier stance towards wireless service providers than voice-over-Internet-protocol competitors like Skype: "Our point is to make your existing services better, not to replace them," says Google product manager Craig Walker, who founded GrandCentral, the company Google acquired in 2007 that serves as the basis for its Voice software.

Mobile phones have long been viewed as the next frontier by Skype, which seeks to step up its revenue growth as it prepares for an initial public offering next year. "(Google Voice is) probably the biggest current threat to Skype," says Sanford Bernstein analyst Jeffrey Lindsay, who adds that the VoIP market "could be a duopoly" between the two. He says Google could end up holding as much as 60% of that market.

According to Jon Arnold, principal at tech consultancy J. Arnold & Associates, Google's free Voice software could also compete with unified communications software from Cisco and Microsoft, which tie together companies' phone and e-mail systems.

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