Microsoft is preparing to enable computer users to make a normal phone call from their PC.
Teleo is a leading player in phone calls over the internet
The computer giant has increased its presence in the fast-growing internet phone sector by purchasing leading player Teleo for an undisclosed sum.
Microsoft and rivals AOL, Google and Yahoo all currently allow phone calls between computers, but not yet to a domestic or mobile handset.
Teleo's technology allows computers to make and receive standard phone calls.
Yahoo is also in the process of introducing such a system, after it bought internet phone company Dialpad two months ago.
Microsoft currently uses Voice over Internet Protocol (VoIP) technology in a number of its products, including its instant-messaging service.
The US software firm said it planned to incorporate California-based Teleo's telephone service into its instant messaging service.
Microsoft said it hoped to achieve this by the end of the year.