To start off with a formal definition…
Skype is a software application that allows users to make voice and video calls and chat over the Internet.
Most 21st century interwebbers are familiar with Skype. People use Skype to voice or video chat with friends and family. Instead of using the traditional form of telephoning a friend or a family member, people can video call anyone they want with Skype. Distance doesn’t matter either. Anyone with Internet connection and Skype installed on their computer can chat and make calls. Any Skype user can make video calls and phone calls to other Skype users for free. Calls to landline telephones and mobile telephones can be made for a fee using a debit-based user account system. Following the trend of growing smartphone users, Skype also introduced mobile versions of the software to allow more users to use their program on their personal mobile devices. Even job interviews are carried out through Skype now.
Since its birth, Skype has grown to become the largest international voice carrier, garnering over 663 million registered users as of September 2011. As of 2010, Skype was available in 27 languages and had an average of over 100 million active users each month.
This video describes how Skype works
History
So let’s go back in time and take a look at how Skype started. Skype was founded in 2003 by Janus Friis from Denmark and Niklas Zennstrom from Sweden. The creators of Skype first met each other at Tele2, a Swedish telecom company where they were both employed. In 1999, they put in their resignations and decided to form a development team. Before Skype was released in 2003, both Zennstrom and Friis had already earned a name for themselves in 2001 for creating a popular file sharing software called Kazaa, which is one of the world's most downloaded programs. Kazaa is a peer-to-peer file sharing software. The Skype software was developed by the brains behind Kazaa, Estonians Ahti Heinla, Priit Kasesalu, and Jaan Tallinn. The creators of Skype developed the program to offer a way of making local and international telephone calls in the IM environment.
When Skype was first launched as beta in August 2003, it was only available on the Windows platform. Its initial features included voice calls (VoIP) and chat features, and video call functionality was later added in December 2005. In April 2006, the number of registered Skype users reached 100 million. In October 2006, Skype for Mac was first released to the public. Skype for Linux was launched in March 2008, which also supported video conferencing features. Throughout 2007, updated added many new features such as: Skype Find, Skype Prime, Send Money, video in mood, inclusion of video content in chat, call transfer to another person or a group, and auto-redial.
China banned Skype in September 2005. In October 2008, however, analysis revealed TOM-skype – the Chinese version of Skype run by TOM online – sends content of text messages and encryption keys to monitoring servers. Since September 2007, users in China trying to download the Skype software client have been redirected to the site of TOM online, a joint venture between a Chinese wireless operator and Skype, from which a modified Chinese version can be downloaded.
Growth
Skype has experienced rapid growth in both popular usage and software development since launch, both of its free and its paid services. The Skype communications system is notable for its broad range of features, including free voice and video conferencing, and its ability to use peer to peer (decentralized) technology to overcome common firewall and NAT problems.
Skype Usage and Traffic Chart
* Skype users may have more than one account; it is not possible to count users, only accounts.
| Date | Total user accounts | Active users, daily use | Skype to Skype minutes | SkypeOut minutes | Revenue USD |
| Q4 2005 | 74.7 | 10.8 | N/A | N/A | N/A |
| Q1 2006 | 94.6 | 15.2 | 6.9 | 0.7 | 35 |
| Q2 2006 | 113.1 | 16.6 | 7.1 | 0.8 | 44 |
| Q3 2006 | 135.9 | 18.7 | 6.6 | 1.1 | 50 |
| Q4 2006 | 171.2 | 21.2 | 7.6 | 1.5 | 66 |
| Q1 2007 | 195.5 | 23.2 | 7.7 | 1.3 | 79 |
| Q2 2007 | 219.6 | 23.9 | 7.1 | 1.3 | 90 |
| Q3 2007 | 245.7 | 24.2 | 6.1 | 1.4 | 98 |
| Q4 2007 | 276.3 | 27.0 | 11.9 | 1.6 | 115 |
| Q1 2008 | 309.3 | 31.3 | 14.2 | 1.7 | 126 |
| Q2 2008 | 338.2 | 32.0 | 14.8 | 1.9 | 136 |
| Q3 2008 | 370 | 33.7 | 16.0 | 2.2 | 143 |
| Q4 2008 | 405 | 36.5 | 20.5 | 2.6 | 145 |
| Q1 2009 | 443 | 42.2 | 23.6 | 2.9 | 153 |
| Q2 2009 | 483 | ? | 25.5 | 3.0 | 170 |
| Q3 2009 | 521 | ? | 27.7 | 3.1 | 185 |
| Q4 2009 | ? | ? | 36.1 | ? | ? |
| 2010 (full year) | ? | ? | 190 | 12.8 | 860 |
Acquisitions
eBay acquired Skype Limited in September 2005 and in April 2009, eBay announced plans to spin it off in a 2010 initial public offering. It was acquired by Silver Lake Partners in 2009. On May 2011, Microsoft agreed to purchase Skype for US$8.5 billion, and the company is to be incorporated as a division of Microsoft called Microsoft Skype Division. Microsoft acquired all of the company's technologies with the purchase. This was completed on 13 October 2011.
Competition
Many chat platforms and other competitive chat applications have introduced video call features over time.
Apple introduced FaceTime, a video calling software that launched with the iPhone 4. Since its launch, FaceTime is now available for the Mac operating system as well, allowing Apple devices with front-facing camera to FaceTime with other Mac OS users. FaceTime has the potential to quickly gain users through its Mac OS and iOS users.
Google Talk (also known as Google Chat), a free VoIP application developed by Google, also added video call functionalities to its application. Google Talk has a significant advantage over Skype since any Google account user can use Google Talk without having to sign up for a new account. As more and more Google account users start using Google Talk, more people will be exposed to Google Talk’s video chat functionality. These users will likely use Google Talk over Skype, since they don’t have to open up and login to a separate program for chatting.
Facebook Chat also added video chat capabilities in August 2011. As one of the leaders in social networking service, Facebook’s video chat capabilities can easily threaten Skype with its millions of active users. Similar to Google Talk, Facebook already has many active users who will choose to use Facebook Chat’s chat functionalities, as opposed to opening up program.
ooVoo, which is a instant messaging client, is known for getting the notion of video conferencing popular in the earlier days. Founded in 2007, ooVoo rivaled Skype in the earlier days. Skype, however, had more competitive advantage than ooVoo. Skype was introduced earlier, and had many other functionalities and ooVoo had to catch up to.
Other popular instant messaging (IM) services have added video chat capabilities to allow their users to connect with others in a more interactive way. Popular messengers such as Yahoo! Messenger, Windows Live Messenger, AIM have all incorporated video calling features to their platform. Meebo, a browser based IM program which supports multiple IM services as well its own, has allowed users to video chat with the IM service of their choice. This functionality allows users to access any of the IM services that Meebo offers, and enjoy similar features as Skype.
Future of Skype
Skype has been constantly introducing new features to maintain its competitive edge. It has increased the number of platforms it is available on, and has been making mobile versions of the program to expand the usage of the program. It has added SMS features, which allows users to send text messages. In October 2011, Skype introduced Facebook integration, which will allow users to connect their account to their Facebook account. Skype users can make free voice and video calls to their Facebook friends, as well as sending instant messages without having to leave the Skype program. This flexibility will help users to keep using Skype as their primary IM service.
Video on Sending SMS through Skype
Video on Skype and Facebook Integration
Conclusion
The methods of communication have changed over time, and the Internet has pushed our generation into new ways of communication and interaction. VoIP applications, such as Skype, have certainly changed how we communicate. Just as how the ways of communication evolved over time, Skype is evolving to tailor their services to the users’ needs. With updates and new versions that add more features, Skype tries to empower their users with more options and hopes to gain new users in the process as well. Even with many rising competitors in the IM and VoIP industries, Skype is performing very well to stand as the largest international voice carrier. What Skype will bring in the future is a mystery, but I personally hope for Skype to generate creative and innovative ideas to stay on top of its competition.
Sources
2. http://en.wikipedia.org/wiki/Skype
3. http://en.wikipedia.org/wiki/Skype_Limited#History
4. http://www.youtube.com/user/skype?blend=7&ob=5
5. http://en.wikipedia.org/wiki/Facetime
6. http://en.wikipedia.org/wiki/Google_talk
7. http://en.wikipedia.org/wiki/Facebook_chat#Chat
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