Learn About Skype

Thanks to Skype, people the world over can now talk to each other — face to face — for free. Using peer-to-peer file sharing and VoIP technology, Skype allows its users to call one another over the Internet, even long-distance or internationally, at no charge. The service’s free features include instant messaging, user-to-user voice calling, screen sharing, and one-on-one video conferencing. Skype also offers a range of paid services, including online phone numbers, call forwarding, calls to landline and mobile telephones, and group video conferencing. Even Skype’s paid features are dirt cheap compared to similar services offered by other providers.

How Skype Works
Skype uses VoIP, or voice-over-Internet-Protocol, technology to relay voice and video calls over a broadband Internet connection, instead of over a phone line. The service converts your voice to a digital signal and sends that signal to other users. Peer-to-peer technology allows Skype to offer basic free services to its 700 million users around the world.

Peer-to-peer technology is the same type of technology that allowed early file-sharing services like Napster and Kazaa to offer large files for download to many users. The system relies on a large network of interconnected users. There’s no main server; instead, they’re all directly linked to each other. The more people who are on the network, the faster and more stable it is. In a file-sharing model like Napster, the more people who have the same file on their computers, the faster others on the network can download it.

Janus Friis and Niklas Zennstrom, the owners of Kazaa, founded Skype in 2003. They offered instant messaging and user-to-user VoIP calling for free, hoping to attract a large user base that would keep the Skype network stable and help it run smoothly. By 2006, they had attracted 100 million users.

Skype’s Acquisition by eBay
In 2005, eBay acquired Skype for $2.6 billion. eBay never did anything with Skype, and sold 70% of their stake in the company four years later, to a private group of investors, who included Index Ventures, the Canadian Pension Plan Investment Board, Silverlake Partners, and Andreessen Horowitz, for $2.75 billion. Over the next few years, various companies, including Google, would make noises about buying Skype, but none of these possibilities would pan out.

Acquisition by Microsoft
In May 2011, Microsoft acquired Skype for a whopping $8.6 billion, in spite of the company’s $686 million debt and reported net loss of $7 million for the previous year. It was the most expensive corporate acquisition in Microsoft’s history to date. The company announced plans to integrate Skype voice calling, video conferencing and other services into its Windows operating system. Microsoft also expressed hopes of integrating Skype applications into the Windows Phone, Microsoft Office, and Xbox 360 platforms.

Since Skype’s acquisition by Microsoft, the company has remained largely autonomous. A Skype application for Sony Playstation Vita has appeared, along with Skype-to-Facebook video calling, and Skype for Xfinity. Microsoft is offering Skype as an optional installation for computers running Windows, but further integration into Microsoft products is not forthcoming. Initial attempts to integrate Skype with Windows phones failed, due to the phones’ limited memory capabilities.

Skype’s Popularity Today
Skype remains the world’s most popular VoIP service, with 65 million active users signing in each day. They spend 700 million minutes talking over Skype daily, and 300 million of those daily minutes involve video conferencing calls. Skype also handles 30 million daily minutes of calls to mobile and landline telephones. It offers a range of features including one-on-one and video conference calling, file sharing, desktop sharing, voice calls, inbound and outbound phone calls, and instant messaging.

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