"We are going to enter the voice over IP market the beginning of next year." That's what Microsoft CEO Steve Ballmer told a Microsoft partner conference in Tokyo on Monday.

Web telephoning or Voice over IP (VoIP) is the digitisation of voice sounds, sending them as ordinary data packets over an IP network. As a result, it is much cheaper than traditional analogue voice telephony and enables the convergence of voice and data traffic onto a single network.

Ballmer said Microsoft will group VoIP, email, video-conferencing and Instant Messaging into a single communications facility that will be incorporated into desktop and server applications as well as the Vista OS.

However actual details of how VoIP technology will be included in Vista are not available, suggesting it is only a recent decision to include the technology. From what little information there is, it seems Microsoft Outlook, part of Office 2007, will offer the consolidated communications technology.

Microsoft already offers point VoIP functionality. For example Windows Live Messenger has PC-to-PC calling using VoIP and users can call out to external telephones too. This is in response to Skype, the fully-owned eBay subsidiary, which is the current leader in PC VoIP and offers free software to Windows users. Skype claims to have 100 million users worldwide. Recently there have been over 5 million downloads of Skype for the PocketPC alone.

Suppliers such as VocalScape have already integrated Outlook contact information into their VoIP products.

It seems likely that Microsoft is reacting to the growing VoIP trend by this last-minute addition of VoIP to Vista. As recently as August its Vista partner presentations said nothing about VoIP.

Microsoft is evangelising VoIP on its developer network, particularly for embedded devices running Windows CE, and has produced a VoIP white paper.