Skype

Skype. It is a telecommunications application software product that specializes in providing video chat and voice call services between computers, tablets, mobile devices, the Xbox One console, and smartwatches via the Internet. The service also offers instant messaging and file transfer capabilities, and users may transmit both text and video messages. Initially developed by Skype Technologies, a Luxembourg-based company founded by Niklas Zennström and Janus Friis, it is now a division of Microsoft Corporation.

History

The application was conceived by Ahti Heinla, Priit Kasesalu, and Jaan Tallinn, the Estonian developers behind the peer-to-peer file-sharing software Kazaa. Officially launched in August 2003, it quickly gained popularity for its ability to provide free voice calls over the Internet. In 2005, the company was acquired by eBay for $2.6 billion, a move aimed at integrating voice communication into the online auction experience. This partnership proved challenging, and in 2009, eBay sold a majority stake to an investor group including Silver Lake Partners and Andreessen Horowitz. The service's most significant corporate shift came in May 2011, when Microsoft announced its acquisition for $8.5 billion, one of its largest purchases at the time. Under Microsoft, it was initially positioned to compete with Google Hangouts and Apple FaceTime, and was later integrated into the Windows operating system and the Microsoft Office suite. A major redesign in 2017 introduced a new interface and deeper integration with other Microsoft services like Outlook.com and OneDrive.

Features

The platform's core functionality revolves around free voice and video calls between users, supporting conference calls with multiple participants. Its instant messaging system supports emojis, file sharing, and screen sharing. A distinctive feature is Skype Number, which allows users to purchase a local phone number in another country, enabling them to receive calls from traditional landline and mobile phone networks. The service also offers Skype to Go numbers for making discounted international calls and Skype Credit for calling non-users. For businesses, Skype for Business provided enhanced features like Active Directory integration and webinar hosting, though this enterprise offering was later merged into Microsoft Teams. Other notable features include call recording, real-time translation for voice and text, and integration with digital assistants like Cortana.

Technology

Originally, the system was built on a proprietary peer-to-peer architecture, where user computers helped relay calls and data, reducing the need for central server infrastructure. This protocol was based on the work done for Kazaa and was developed using C++. Following the acquisition by Microsoft, the underlying technology underwent significant changes, migrating from the P2P model to a cloud-based infrastructure hosted on Microsoft Azure. This shift improved reliability and scalability, especially for mobile users. The application uses a variety of codecs, including Opus for audio and VP8 and H.264 for video, to compress and transmit media efficiently over the Internet. Security features have evolved to include end-to-end encryption for certain modes of communication, though its implementation has been a subject of discussion among security researchers.

Business model

The primary revenue streams for the service are derived from its paid offerings that connect users to the traditional Public Switched Telephone Network. Users can buy Skype Credit for prepaid calling to mobile and landline numbers globally, or subscribe to Skype Number and Skype To Go services. The company also previously offered subscription plans, like Skype Premium, which included group video calling. While peer-to-peer calls between users remain free, monetization focuses on these out-of-network communications and value-added services. As a part of Microsoft, its business model also supports the broader ecosystem, driving adoption of Microsoft accounts and integrating with paid Microsoft 365 subscriptions. Advertising was tested within the application but was largely discontinued in later versions.

Reception and impact

Upon its release, the software was widely praised for its high-quality voice service and disruptive effect on the international telecommunications industry, particularly affecting incumbent operators like British Telecom and Verizon Communications. It received awards such as the Webby Award and recognition from the World Economic Forum as a Technology Pioneer. The application played a notable role in global communication, being used by journalists during the Arab Spring and by families to maintain international connections. However, it has faced criticism over the years, including concerns over its privacy policy, the complexity of its interface after major updates, and security vulnerabilities. Competitors like Zoom Video Communications, WhatsApp, and Discord have captured significant market share in both consumer and enterprise spaces. Despite this, it remains a widely recognized brand in Voice over IP communication.

Category:Microsoft software Category:Voice over IP Category:Instant messaging clients Category:Videotelephony