Google makes bold move to battle Skype 
 
 Google has added a "Call phone" function to Gmail that will put Google in closer competition with Internet phone service Skype. 
 
 
 
 
 
 NEW YORK (CNNMoney.com) -- Google announced Wednesday that it will allow users to make phone calls over the Internet through its Gmail service, encroaching on territory that has thus far been dominated by Skype. 
 
 The service will appear in Gmail users' chat windows with a "Call phone" button. When clicked, a telephone dialer will pop up on the screen, and users can place calls using an internal microphone or connected headset. 
 
 Google (GOOG, Fortune 500) said calls to the U.S. and Canada will be free for at least the rest of 2010. The company said it will roll out the service to its U.S. users over the next several days. 
 
 Calls to other countries from the U.S. will be billed at Skype-like rates: Calls to the U.K., France, Germany, China, Japan, for instance, will be offered for 2 cents per minute. 
 
 Google also said it plans on making the service available for international users to initiate calls, but it didn't offer a timeline for when the service would be introduced abroad. 
 
 The company said the feature will be useful to make quick calls when a user is on a computer, or for placing calls in areas with poor reception. 
 
 "Given that most of us don't spend all day in front of our computers, we thought, 'wouldn't it be nice if you could call people directly on their phones?'" Robin Schriebman, Google software engineer wrote in a company blog post. 
 
 Customers who use Google Voice, Google's free telephone service, will be able to make calls in Gmail using their Google Voice numbers. They will also be able to receive calls made to their Google voice numbers inside Gmail if they choose. 
 
 The move positions the company in a battle with Skype. It won't be easy to overtake Skype, however: In its recent government filing for an initial public offering, Skype said it has 560 million registered users. That compares to nearly 200 million Gmail users, according to Google. 
 
 Still, Gmail is becoming a communications hub for its users. Prior to the phone service, Gmail already allowed users to e-mail, instant message and video chat on PCs. Users can also use Gmail to post to social networks through the service's Google Buzz feature. 
 
 Some analysts say the convenience factor could drive some would-be Skype users to Gmail's new phone service. 
 
 "Google Voice in Gmail will gain some traction, simply because it's there -- some people live in Gmail," said Vanessa Alvarez, analyst at Frost & Sullivan. "It will steal some share from Skype, but Skype has been in this space for a while, so it will be a long time before Google's share becomes significant." 
 
 As always, the question with any new Google product is how the company will make money on it. Like Skype, Google has an opportunity to sell its service to corporations. Google said a paid version for business customers will be coming out soon. 
 
 But Google hasn't had much success with business customers so far. Its Apps services are slow to be adopted by corporate customers, and the company recently killed its Wave collaborative tool for businesses. 
 
 With Voice in Gmail, some experts believe business adoption and revenue from the service will be equally poor. 
 
 "Google is taking the easy road of arming their army of fans and users with something just good enough to use -- but not necessarily good enough to meet enterprise requirements -- and standing back and watching to see how they can shape the market," said Tom Austin, Google applications analyst at Gartner. 
 
 As a result, Austin said he believes Google's paid revenue stream for the service will be quite small: just $20.3 million per quarter, or 0.3% of Google's second quarter revenue. 
 
 "How important can it be if it's so insignificant?" Austin asked. ||||| NEW YORK | 
 
 NEW YORK (Reuters) - Google Inc said users of Gmail will now be able to call telephones directly from their email, putting it in direct competition with Web calling service Skype and more traditional operators such as AT&T Inc and Verizon Communications. 
 
 While Google had already offered computer-to-computer voice and video chat services, it said that starting on Wednesday it will now allow calls to home phones and mobile phones directly from Gmail for the first time. 
 
 Google promised free calls to U.S. 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. 
 
 Analysts said the service would likely be a bigger competitive threat to services like 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 owned by private equity firms and eBay Inc and 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 U.S. 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. 
 
 Google said making a call through its service works like a normal phone in that a user could click on the "call phone" option in their chat buddy list in Gmail and type in the number or enter a contact's name. 
 
 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. 
 
 Google shares closed up $3.23, or 0.72 percent, at $454.62 on the Nasdaq, while the shares of eBay rose 29 cents, or 1.27 percent, to $23.16, also on the Nasdaq. 
 
 (Reporting by Sinead Carew; Additional reporting by Bill Rigby; editing by Andre Grenon and Steve Orlofsky)
– Google took a bold stride onto Skype's turf yesterday, announcing that Gmail users will now be able to call landline and cell phones directly from their email. The company says Gmail users will be allowed to call phones in the US and Canada free for at least the rest of this year, Reuters reports. Calls to other countries will be billed at low, Skype-like rates. The service will be rolled out over the next few days. Analysts say that while the service probably won't be a major earner for Google, Skype's marketshare is likely to suffer. "Google Voice in Gmail will gain some traction, simply because it's there—some people live in Gmail," a communications analyst at Frost & Sullivan tells CNN. "It will steal some share from Skype, but Skype has been in this space for a while, so it will be a long time before Google's share becomes significant."