Although Skype, which provides Voice over Internet Protocol (VoIP) telephony services and PC-to-PC calling, turns two years old on August 29, it remains unclear what kind of business this relative newcomer will turn out to be. Skype could remain a mere fad for techies, become a next-generation communications platform or evolve into the next eBay or Google, say Wharton experts.
What's certain, however, is that Skype, which has offices in Estonia, London, San Francisco, Korea and Japan, is worth watching. The company touches on a handful of key trends -- peer-to-peer technology (using the computing power of a distributed network of PCs), the commoditization of telephone service and the viral nature of Internet marketing.
Here's how Skype works. It's a software application that allows people to talk and instant message for free using PC-to-PC connections. Users -- identified through names instead of numbers -- talk through a headset and microphone attached to their computers (although the connections require someone else to have Skype). But, unlike most other most other VoIP services, Skype uses peer-to-peer technology to combine the computing resources of all of its users -- not surprising considering that Skype CEO Niklas Zennström also created the Kazaa software that enables people to swap music files easily. Zennström says Skype is more than just a cheap way to have a conversation and notes that the company will be offering video and a host of other yet-to-be-created communication services in the future.
Meanwhile, it's hard to argue with Skype's numbers. Skype's software had been downloaded nearly 145 million times as of Aug. 4, and the company claims to have 47 million people using its services. More than 1.8 million people use SkypeOut, a pay service that allows users to call traditional phones from their PCs for low minute rates. Skype also charges for voice mail. "It's funny the way things grow," says [continue]
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