Gmail offers free calls to landlines and mobiles

 

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By Reuters and Barry Collins

Posted on 26 Aug 2010 at 08:31

Google is giving Gmail users the ability to make free phone calls, pitching it into direct competition with the market-leading Skype.

While Google had already offered computer-to-computer voice and video chat services, it will now allow calls to home and mobile phones directly from Gmail for the first time, confirming yesterday's leaked reports.

This is a risk to Skype. It's a competitor with a pretty good brand name

Google promised free calls to US and Canadian phones from Gmail for the rest of this year and said it would charge low rates for calls made to other countries. For example it said calls to Britain, France, Germany, China and Japan would be as low as 2 cents per minute.

However, the service isn't yet available to British or other Gmail users outside of the US. "If you’re not a US based user - or if you’re using Google Apps for your school or business - then you won’t see it quite yet," reads an announcement on the Google blog. "We’re working on making this available more broadly - so stay tuned!"

Update: Find out how UK users can make free calls to the US and Canada on Gmail here

Skype threat

Analysts said the service would likely be a bigger competitive threat to services such as Skype's than to traditional phone companies, which have already been cutting their call prices in recent years in response to stiff competition.

"This is a risk to Skype. It's a competitor with a pretty good brand name," said Hudson Square analyst Todd Rethemeier.

Skype, which is owned by private equity firms and eBay and is currently planning a $100 million initial public offering, has long allowed consumers to make calls from computers to phones. Skype became popular by first offering free computer-to-computer voice and video services.

Like Skype, Rethemeier said the Google service will likely be much more popular among US consumers making international calls, than among people calling friends inside the country.

"Calling is so cheap already that I don't think it will attract a huge amount of domestic calling. It could take some of the international market," he said.

Another analyst, Steve Clement from Pacific Crest, said that anybody who is tempted by internet calling services has likely already disconnected their home phone. "The type of person who would use a service like that isn't the type of customer who still has a landline," Clement said.

Making a call through the Gmail service works like a normal phone, in that a user can click on the "call phone" option in their chat buddy list or type in the number.

Calls that cost money will be charged from an online account that users can top up with a credit card, Google said. The service will not be available for making outgoing calls on cell phones because other Google apps already cater to that market, the company added.