Report: Google Planning Instant-Messaging System

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Google Inc. (GOOG) is set to introduce its own instant messaging system, the Los Angeles Times reported on Tuesday, marking the expansion by the Web search leader into not just text but also voice communications.

Citing unnamed sources "familiar with the service," the Los Angeles Times said that Google's Instant Messaging program would be called Google Talk and could be launched as early as Wednesday.

Google Talk goes beyond text-based instant messaging using a computer keyboard to let users hold voice conversations with other computer users, the newspaper quoted a source as saying.

A Google spokeswoman declined to comment on the company's product plans.

If confirmed, a combined computer text and voice-calling service would put Google Talk in competition with a similar service pioneered by Skype, which has attracted tens of millions of users, especially in Europe, to its own service.

The product push also comes as rivals Yahoo Inc. (YHOO), Microsoft Corp.'s MSN and Time Warner Inc.'s (TWX) AOL are all upgrading existing instant messaging systems and expanding into Internet phone-calling services of their own.

"We expect major Internet companies like Yahoo, Google and MSN to offer VOIP (Voice over Internet) service, possibly through a partnership" with telecom companies or other Internet-phone service providers," Piper Jaffray analyst Safa Rashtchy wrote in a note to investors earlier this week.

Recent moves by Google to expand beyond search into Web-based communications have prompted conflicting speculation over the company's intentions.

A $4 billion secondary offering of Google stock last week, together with $3 billion in cash on hand, has fueled debate among investors and Web pundits over whether Google is content to build its own technologies or is getting set to acquire.

Also last week, the company confirmed it had acquired Android Inc., a secretive Palo Alto, California start-up founded by a celebrated Silicon Valley engineer who was formerly CEO of mobile Internet device maker Danger Inc.

Google said in a short statement that it had acquired the company but provided no further details. "We acquired Android because of the talented engineers and great technology. We're thrilled to have them here," spokesman Barry Schnitt said.

A variety of analysts speculated that the deal points the way toward Google introducing mobile phone services that take advantage of location-aware services.

Business 2.0 writer Om Malik writing on his personal blog at pointed to technical clues that suggest Google is preparing to run an instant messaging service based on an open-source system known as Jabber.

Jabber technology would allow Google instant message users to connect with established IM systems that also work with Jabber, including America Online's ICQ and Apple Computer Inc.'s (AAPL) iChat, Malik said.

"This is the worst possible news for someone like Skype, because now they will be up against not two but three giants who want to offer a pale-version of Skype," he wrote.

Earlier this week, Google said it was branching out beyond pure search to help users manage e-mail, instant messages, news headlines and music with a program called Google Sidebar.

Meanwhile, in its core search business, Yahoo has boosted the use of sponsored advertising links on its search results pages, Jordan Rohan, an analyst with RBC Capital Markets said in a note to investors. The move appears aimed at shoring up weak revenue growth during the summer months, he said.