Yahoo Acquires DialPad VoIP Service

Word leaked out late Tuesday that Yahoo has purchased DialPad, a company that offers software for making telephone calls over the Internet. A Yahoo spokesperson confirmed the deal closed Monday, but would not disclose financial details. The company plans to integrate the DialPad service into its product lines.

Yahoo's interest in Internet telephony -- otherwise known as voice over IP (VoIP) -- is no secret; rumors the company was in acquisition talks with Skype surfaced late last week. Yahoo has also focused on voice communication using VoIP in the forthcoming version 7 update to Yahoo! Messenger, which entered beta last month.

DialPad offers subscription plans for placing calls, with individual to 200 countries calls costing as little as 1.7 cents per minute. The company currently boasts 14 million customers, far short of Skype's 40 million users, but still a prime target for Yahoo's interest.

Yahoo says it plans to integrate DialPad's technology into its software within a few months, but did not offer any specific plans. Yahoo did say that its acquisition of DialPad would not sour a bundling relationship it has with SBC for standard telephone service.

PC-to-PC calling was first added to Yahoo! Messenger back in 1999, but the feature was not a hit among users at the time and was soon removed. However, Yahoo now sees VoIP as the current "killer application" the could replace instant messaging with text.