Microsoft has bought VoIP specialist Teleo for an undisclosed sum.

The software giant plans to incorporate Teleo's technology into its Web applications to upgrade online services at MSN, including MSN Messenger, but it gave no time frame for any upgrades.

Teleo, a fledgling San Francisco-based company, recently finished beta testing of a PC phone service that connects people via mobile phone, landlines and PCs over the Internet. It had shut off the service so its technicians could sift through feedback and improve the software before launching its VoIP service.

The company's software has some advantages over Skype, the most widespread Internet calling service. It relies on standards like SIP instead of proprietary protocols. It also integrated its software with Microsoft early on, so Office users are given a chance to "Call with Teleo" every time they highlight a phone number on their screen, even a phone number on a website in Internet Explorer. But unlike Skype, Teleo doesn't offer instant messaging or PDA support.

Teleo's software gives users a single phone number to receive calls from any telephone or device. When a user's PC is off, calls to the phone number can be forwarded to another number, including a mobile phone, so users can continue to get all their calls.

The deal could be a good fit because Teleo has already integrated its software with Microsoft's, and MSN has the instant messaging capabilities Teleo lacks.

Teleo's executive team will work with MSN following the acquisition, and a number of Teleo product developers are expected to join MSN's ranks, Microsoft said.