With more than 13 million users worldwide, Skype has quickly become the Internets favorite free peer-to-peer voice-over-IP application.
"Skype has become very successful because its [an] easy-to-use, great-sounding person-to-person communications medium with some other bells and whistles like audio conferencing," said Andy Abramson, editor of the blog VOIP Watch and co-host of KenRadio Broadcastings "World Technology Roundup".
Like most grass-roots Internet technologies, Skype (developed by Skype Technologies S.A., in Luxembourg), started as a hobbyist tool that soon began to take root in the business market. The company says that almost half of its customers are now using Skype for business communications.
"People start using it just because it makes their communications workflow easier and more efficient," said Janus Friis, co-founder of Skype.
Jeff Craig, vice president of sales for BridgePort Networks Inc. in Chicago, was one of the first Skype users. His company develops technology for mobile phones and other devices to roam from a cellular network to a WLAN (wireless LAN) and onto the Internet.
With a constant eye on VOIP technology, Craig said he tested Skype and instantly fell in love with its interface, simplicity and quick-to-talk capability. As a result, he said he persuaded everyone in his 80-person office to install it.
"We did it as a way to reduce our costs that we incurred for conference calls," Craig said. "We also found it very reliable for international calls. So when I travel to Europe, which is every other week, I can pay Vodafone [Group] $3 a minute, or I can fire up my Skype client in a hot spot. When Im on an hour- or 2-hour-long conference call, those are big savings."
The high cost of communication at a far-off physical location can often be an impediment to participation. And as Craigs constant business travel illustrates, "Weve moved into an environment of a distributed work force," Abramson said.
Its this new dynamic that has allowed innovative business models—Internet-based, not telephone company-based—to rise in prominence. "Their cost per customer acquisition is almost nil," Craig said. "Their biggest problem is what to do with all the subscribers that they have."
Skype hopes to answer that challenge by creating a small-business-group application that addresses the needs of workgroups. The business-centric Skype, released this year, includes integrated billing for all workgroup users, user management and group messaging.
Currently, PC-to-PC calls, aka Skype-to-Skype calls, are free. Skype calls that cross the PSTN (Public Switched Telephone Network) to reach a land-line or mobile phone must use the SkypeOut service. The company charges for SkypeOut: a few cents per minute in addition to the cost of terminating the call—a cost that can increase dramatically if the receiving party is international, on a mobile phone or both.
That may seem like an odd coincidence to some. Skype is Internet-based and very different from a traditional phone company, according to Skypes Friis. But Skype is trying to make money just like a phone company, argues competitor Dmitry Goroshevsky, co-founder, chairman and CEO of Popular Telephony Inc. of Sophia Antipolis, France. Like a telco, Skype provides interconnect services whenever you make calls out to the PSTN.
Unlike Skype, Popular Telephony offers a serverless peer-to-peer technology known as Peerio. The company sells IP phones and software that allow for direct one-to-one calls without the need of a central managing PBX or network cloud. Goroshevsky argues that Skypes use of unknown supernodes to route traffic and act as a directory server make the product inherently less secure.
Skype officials said they are aware there are security concerns with their product, but they contend thats based on perception.