Google Hangouts is an interesting application and service that was originally called Google Talk, but through a long period of evolution, has gradually been refined and improved. Google gave Hangouts the ability to handle SMS and MMS messaging in additional to Hangout messages some time ago, although we have seen some signs that Google may be about to remove SMS support as the latest version of the application has been encouraging users to try Google's other text messaging application. One of the reasons why Google might remove the SMS functionality is that it frees up the application developers to work on the instant messaging and related features of Hangouts, which include video and voice calling. The ability to include SMS messaging functionality in Hangouts has polarised opinions of Hangouts users over the world: for some, the services should be different but for others, integrating the two services into one makes perfect sense.
On the subject of voice calling, in common with many other instant messaging applications, Google Hangouts offers free voice and video calling. Some Hangouts users are reporting a new message has appeared in their application letting them know that in order to improve voice quality, Google are changing how the Hangout application and service works. Currently, at least for most voice calls, these are routed via one of Google's servers but it appears that in order to improve matters, Google is switching to a peer-to-peer connection. In other words, rather than a voice call being handled through the Google cloud server, one device will connect directly to another. This will increase the efficiency of the connection but at a small cost: Google's support web page advises customers that a direct connection between devices will reveal the IP address to each party. The site goes on to explain that these IP addresses may be used to approximate the location of the device in question. However, currently Hangouts does not have the ability to look up an IP address so presumably Google are covering their bases here.
Currently, we do not know the full extent of the underlying changes to the Hangouts service that Google have and are making. We know that the Chief Technical Officer of Voxer, a voice-enabled instant messaging application, recently joined Google. Google have also been supporting WebRTC (Web Real-Time Communication), an API designed around browser-to-browser voice and video calling that removes the need to install additional third party software. WebRTC carries the benefit of being secure through encryption technologies, both during the call and when setting up and establishing the connection.