Microsoft has purchased software vendor Colloquis and is offering the company's technology as a new Windows Live hosted service that lets businesses use digital language-processing to interact with customers online.

Colloquis' technology uses natural-language processing to give companies a way to do automated customer-service online through chat without the need for a human customer-service agent.

Microsoft completed the purchase Thursday, the same day it renamed the Colloquis technology Windows Live Service Agents and began selling it as a hosted service under the Windows Live brand.

This software will also be integrated into Microsoft's call-center agent software, Customer Care Framework, said Clinton Cickey, group product manager for Microsoft. That software currently requires interaction with a customer-service agent, but eventually it will let companies to do online chat with customers without an human, he said.

Cickey characterized the deal as an extension of Microsoft's hosted services strategy, which the company introduced last November under the Windows Live brand. Microsoft has been busy building a portfolio of Web-based and hosted services to compete with companies such as Google and Yahoo for its share of Web-based advertising revenue and other financial opportunities driven by the popularity of the Internet.

Colloquis's 36 employees will remain the company's New York and Sunnyvale, California, locations, said Michael O'Hara, a Microsoft general manager.

Microsoft eventually will use speech-recognition technology to extend what it has acquired from Colloquis to enhance how businesses do automated customer service, he said.

"We want to drive it beyond text to look at speech and other things that have to do with the understanding of conversational language [through technology]," O'Hara said.

With its purchase of Colloquis, Microsoft also acquires about 25 customers that are currently using the language-processing technology. They include Cingular Wireless, Comcast, Cox Communications, Panasonic of North America, Time Warner Cable and Vonage Holdings.