Wednesday, February 23, 2005

Do you...Skype?

Skype is a small piece of free software that anybody can download and install on their computer. It lets you make free phone calls over the Internet to anyone else who has Skype. Unlike all the previous attempts to do the same thing, Skype actually works — in fact, it works amazingly well, in some ways better and more convenient than a telephone. To use it there are only a few requirements: you must have a computer with audio (sound) capability, you must have a microphone (or better yet, a headset), and you must have an Internet connection (even a dial-up connection will do).

Seventy four million people have already downloaded Skype. You can download it yourself. It's poised to have a big impact (i.e., wipe out) ordinary telephones, as a column in today's Wall Street Journal (subscription required) relates. They make this observation:

Despite all the skepticism that surrounds the notion of giving away (as Skype does) a service that the telecom operators charge for, this is serious stuff. Sure, the "free" price tag alone is for many an unbeatable proposition. (And don't be fooled: There is a lot of money in "free," as many companies have demonstrated in recent years.) It is serious because of what happened during my conversation with Susan. Using Skype's file-transfer feature, we exchanged documents and pictures related to the project we were discussing in real-time. We Googled information and shared it immediately by sending links to one another through Skype's instant-messaging tool. And at a certain point we needed to ask our colleague Alberto for an update. My Skype "buddy list" showed that he was online, probably in his office in Lugano, Switzerland. We suspended the discussion for five seconds, the time it took me to set up a Skype conference call with six clicks, and there we were, the three of us, talking freely and for free across the ocean.

That's what really makes VOIP so potentially disruptive (Skype is just its most aggressive incarnation; I expect it to ignite a VOIP-boom this year). When a phone call becomes a mere application on the network, then it can interact and converge with many other applications and with online presence (the information provided by the "buddy list") to create a rich, dynamic and amazingly flexible communication environment.

As a Skype user myself, I couldn't agree more. Something that article didn't point out is that Skype has a very direct plan to make money: they've set up "gateways" through which Skype users can call ordinary telephone users, and vice versa — and these will not be free. While in the end Skype may cause conventional telephones to disappear, the need for mobile phones (and the gateways) will remain. Sounds like a good business model to me...

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