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Microsoft takes Swiss route into online calls

Management at media-streams are excited about the deal with Microsoft.

(media-streams)

Software giant Microsoft is to buy a Swiss firm which develops technology for making telephone calls through the internet.

The company, which is the world's largest software maker, said on Thursday that it intended to integrate technology developed by Zurich-based media-streams into its Office software.

Neither company would disclose the purchase price of media-streams, which is a private company employing 23 people in Zurich.

Microsoft said media-streams' technology would eventually enable it to offer software that allows users to host teleconferences for people in different locations by routing calls through the internet.

The Swiss company makes so-called voice-over-IP (VoIP) software, which already works with Microsoft's email program, Outlook Express. In the future, it will be integrated into new desktop products sold by Microsoft.

"We are acquiring media-streams for its technology and the talent of its teams," Microsoft's director of VoIP strategies, Ed Wadbrook, told swissinfo. "Their development skills are an essential part of the acquisition and we are looking forward to having them as employees of Microsoft."

Media-streams' CEO and co-founder, Erich Gebhardt, told swissinfo the firm had not been actively seeking a buyer, and declined to comment on whether he had received any counter-bids.

Reducing prices

VoIP is an increasingly popular application because, by routing phone calls over the internet, it bypasses fixed networks and incumbent telephone service providers, such as Swisscom, dramatically reducing prices.

Because VoIP phone calls are carried over internet networks rather than circuits they are also easier to integrate into software systems.

The two firms have been working together since 2003, with representatives from both selling to Microsoft customers in the European, Middle East, and Asian markets since 2003.

"It was through positive feedback from our sales channel that we started to hear about media-streams," said Wadbrook.

The firms' technology is also compatible. According to Gebhardt, media-streams' telephony software requires the latest operating system from Microsoft and it requires users to have the latest version of Microsoft server software.

Creating demand

In other words, it creates demand for Microsoft's products, which helps the United States company maintain its dominance as the industry standard among corporate PC users.

Media-streams was founded in 2002 by a team of engineers who had been working on VoIP systems for Siemens Switzerland.

In an interview in 2002, Gebhardt said the Siemens PBX group in Munich was "unsupportive" of the VoIP development and that this was the reason he decided to break away and create his own company.

Gebhardt told swissinfo on Thursday that Zurich was an ideal place for software firms to be based.

"Zurich is a perfect location. Running a company here means lean administration, not a lot of bureaucracy, and there is a good supply of highly qualified software engineers coming out the Swiss Federal Institute of Technology and the universities."

Media-streams is Microsoft's second VoIP acquisition in recent months. It also owns Teleo, a San Francisco based startup, which provides technology for Microsoft's consumer-oriented instant messaging platform, dubbed MSN.

Unlike Teleo, media-streams' software is targeted at the corporate market.

In September, online auction firm Ebay announced it would buy VoIP provider, Skype, for $4.1 billion (SFr5.25 billion). It plans to add free internet-routed phone calls to its online auctions.

swissinfo

Key facts

VoIP software enables phone calls to be made over the internet, bypassing traditional telecommunications providers.
VoIP phone calls are also easier to integrate into software systems because they are carried over internet networks rather than circuits.

end of infobox

In brief

Media-streams was founded in 2002 by a team of engineers who had been working for Siemens Switzerland.

They raised about SFr6 million in start-up capital to launch the company.

Microsoft already sells and markets media-streams' technology in Europe and the Gulf states.

end of infobox


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