By Maggie Shiels
Technology reporter, BBC News, Silicon Valley
The new service will be available to existing users first
Google has strengthened its mobile services with the debut of a service called Voice that could be a challenge to Skype and other phone firms.
It lets customers make cheap international calls and gives them a speech-to-text feature for voicemail.
The services are available thanks to Google's acquisition of phone firm GrandCentral which gives users a lifelong universal phone number.
"This could be big. Google is seen as disruptive," said analyst Jon Arnold.
"They are a wild card in telecoms and wireless but this is Google and they are very smart at what they do.
"The core of Google's business is search and for a long time the industry was concerned about the GrandCentral acquisition. What was the fit? What was the motivation? It will be interesting to see where they ultimately go with this," said Mr Arnold, principal of analyst firm J Arnold & Associates.
Google Voice is the first major update to GrandCentral, which Google bought for an undisclosed sum, thought to be $50m (£36m) in 2007.
The service gives subscribers one number that lets them route all their phones through - home, office and mobile.
Users also get a single voicemail account regardless of which phone messages are left on.
Skype says it expects to double its revenue to over $1billion in 2011
Google Voice is the latest attempt by the company to reach out beyond online search and advertising.
Domestic calls will be free but international calls will require users to set up a Google Checkout account. Calls to landlines in the UK will cost 2 cents per minute.
EBay's Skype offers free domestic and international calls made over the internet from one computer to another, but there is a charge to landlines and mobile phones.
Skype president Josh Silverman told analysts and investors that "chat and voice will become table stakes". He also revealed that the company is adding 350,000 new users a day and is on track to do more than 100 billion calling minutes in 2009 alone.
Google does not view the service as a threat to Skype or other telecom companies any more than its Google Talk offering, which lets users chat over the internet for free.
"This is about allowing your existing phone to work better," said Craig Walker, now group product manager for real time communications at Google and co-founder of GrandCentral.
"It's not that we are replacing your phone, we are giving [it] the ability to work better," he said.
He declined to say how many users had signed up. Google Voice is currently only available to former GrandCentral users.
Google Voice also allows all voice messages to be turned into text which will then be sent either through an e-mail or an sms.
"Voicemail can be a pretty negative experience for a lot of people," said Mr Walker.
"Now it's about putting the user in control. We will transcribe voicemails and convert it into text and put it in your inbox so that it's searchable and you will always have a record of that voicemail.
"Voicemail need no longer be the chore it has been in the past," he declared.
Mr Walker demonstrated its search capabilities by displaying the 1,000 or so voicemails he had accumulated while testing the system over the past few months.
By typing "pool man" in a search box, he located an old voicemail from December 2008. Returned results were in both text and audio form.
"I would never have been able to find that number. The phone company deletes everything for you after a couple of weeks and the scrap of paper I wrote the number on is long gone. This feature makes your voicemail a pretty powerful tool," said Mr Walker.
Google boss Eric Schmidt said he viewed mobile as the next big opportunity.
At the recent Morgan Stanley Technology Conference in San Francisco, Mr Schmidt said he believed mobile search revenues would over take those on a PC within a few years
"The fact of the matter is that mobile devices are going to be the majority of the way that people get information," he said.
A report in February by the Kelsey Group suggested that "about 20% of U.S. cell phone subscribers are on the mobile web right now and only about 5.2 million are doing searches".
Mr Arnold said that if Google perfected its speech-to-text feature to other languages, all bets were off.
"This could be very powerful given the globalisation of markets. Language is another barrier and when you break that down, the world of communications opens up and globally this has exciting opportunities," he said.