11 June 2005

What is Skype?

Recently I've been hearing references to an intimate computing device called "Skype." This is a software that allows one to use an internet connection to make telephone calls. People who are "Skype-enabled" can therefore call each other long distance for very little. The software is downloadable for free, and I paid a visit to the "Skype Journal" expecting to encounter a field of astroturf.

Apparently, there is some other social network involved, comparable to Ryze, Ecademy, Linkedin, Tribe. Ryse seems to be like a directed version of Friendster, in which people give you permission to join the community, and you then link up with others who presumably trust you a little more because you're a friend of a friendster. Ecademy involves a networking arrangement of business people. Skype has a downloadable software that allows telephony among members. Skype likewise has a "community," which is visible mainly as a group of forums.

Technically, Skype—a company based in Luxembourg—implements a proprietary version of "voice over internet protocol" (VoIP) which it developed as a commercial monopoly. Competing with this are other versions of VoIP, such as the freeware, "open" standards SIP, IAX2, and so on, that could potentially lead to format wars. Skype's strategy for winning this war includes allowing members of the Skype community to talk to each other for free (one can still use Skype to get very low rates talking to non-Skype members).

Who are these people and how do they make ends meet? It seems Skype is a company with a business plan similar to Adobe's (with Acrobat): get PDA users to use the internet to mak telephone calls, then offer a premium service to users who need to reach non-Skype phones (Science Daily).
A free download of Skype allows users with Internet connections to make free VoIP calls to other users of the program. In its first 18 months of existence, the company, based in Luxembourg, claims to have enrolled 41 million users, with an average 150,000 new users joining each day and a total of 118 million downloads of its software.

SkypeOut — as the company's current premium service offering is known — has 1.5 million registered users and allows access to traditional telephone lines at an average rate of 2 cents per minute.

Now, SkypeIn will give users a telephone number to receive calls as well. It costs $39 per year and shifts the company from its roots as a peer-to-peer service to a commercial service.

Despite Skype's rapid growth, it may not become a company to rival Vonage, the broadband telephone carrier, or traditional long-distance competitors, according to some industry analysts and even the company itself. Skype only recently created an option for billing its customers through PayPal. It also does not currently offer any live customer support or emergency services.

Anyway, more information is available on this Reuters story:
Skype's business plan has been to offer its basic service for free and then charge for additional services. But Zennstrom said the company has intentionally given developers free reign, even if their offerings compete with Skype's own offerings.

The privately-held company made a crucial decision early on to open its API — a set of protocols and routines that coders use to build new software applications — which allowed developers to write their own applications that fit neatly together with Skype.

The move involved surrendering a certain amount of control over how Skype is used. Indeed, some of the add-ons, such as "answering machine" software and a video conferencing application called Video4Skype (http://www.video4skype.com/), bump up against some of the products that Skype itself plans to offer.

I'll address terms of art like "podcast," and who is Vonage, in a subsequent entry.

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