Skype Reaches Beyond the PC
Skype Technologies, a company that offers free software for making phone calls over the Internet, is introducing a new version of its application this week that includes a prepay service for making calls to any fixed line or mobile phone around the world at local rates.
Skype for Windows Version 1.0 is an updated version of the Luxembourg-based company's flagship offering, which lets broadband Internet users make free phone calls and chat with other Skype users over a peer-to-peer application. The new software adds a service called SkypeOut, that lets users call mobile and fixed-line phones worldwide at discounted rates because the calls travel through the Internet and only connect with the public phone system at the last mile.
"We have a very different offering--a software application that uses the Internet as a carrier for the voice," says Skype Chief Executive Officer and co-founder Niklas Zennstr
Skype announced that it had sealed routing and termination agreements with four carriers on last week, allowing it to offer the service.
The company is touting global calls at local rates and users who sign up for the service are automatically on the SkypeOut Global Rate plan, which allows them to call 25 countries for 14 cents a minute.
"We aim to make everything very simple and my experience is that phone companies try to make their pricing very complicated so you never really know how much you are paying ... our plan is simple and transparent. We are trying to make the world very small," Zennstr
Global Rate plan countries include Russia, China, Hong Kong, the U.S., New Zealand and Norway. Calls to other destinations cost varied prices: Users can call the island nation of Vanuatu for about 50 cents a minute, for example, or a mobile phone in Argentina for about 11 cents a minute.
Users can visit Skype's Web site to credit their account, or log in and view their phone record. Zennstr
"The majority of our users just want to make free phone calls to their Skype friends and family. Their core contacts use the service and SkypeOut is just a value-added offering for calling other people [outside the Skype network]," Zennstr
Skype's P-to-P application not only offers instant messaging between users, it also looks a lot like a traditional IM service, with a contact list, call list, and customization tools that let users add image display, ring tones, and call alerts.
"That's a huge difference," Zennstr
Skype's offering represents a fundamental shift in how telecom services are offered, says Jon Arnold, voice over Internet Protocol program leader for Frost & Sullivan.
"In the big picture this is very threatening [to traditional telecom providers] because it works. They've demonstrated that they can make end-to-end phone calls and cut the phone companies out of the equation" Arnold says.
The analyst notes that VOIP is only one part of a new communication model that incorporates data, video, and voice.
"Voice is just the beginning. Once you are in the IP environment and you bring in video and data, it's all about who can create the best application ... it's about interactive multimedia," Arnold says.
Skype's Version 1.0 for Windows also offers free features such as conference calling, a global directory of Skype contacts, call and message tracking, and file transfers. Beta versions of Skype for Linux and for Pocket PC, which allows for mobile Skype calls, are also being released Tuesday.
The Internet calling application has been getting quick pick-up in countries with high broadband penetration rates, Zennstr??m says, and is currently seeing strong growth in Europe and Asia, with Poland, China, Taiwan, and Japan leading the pack. The company claims over 7.5 million users so far, and has recorded over 17 million downloads.
"By having telephony as a Net application, we can develop new features faster ... it takes a long time for traditional telephone companies to develop new switches," he says.
The company plans to continue to roll out new value-added services, such as voicemail, which is slated for later this year, and to expand its offering to allow incoming calls from non-Skype users.
Arnold believes that this two-way functionality of being able to make and receive non-Skype calls will increase the company's base of application users because people will realize that they can make the calls for free via Skype.
"And once they grow their user base for the free software, there's no end to the services and applications. They can pioneer a whole new business model. There are no rules," Arnold says.