Skype is a Voice over IP (VoIP) application that allows users to use their computer to call other computers or traditional phones. Skype leverages individual users’ processing power to support its Internet phone system.
Description of user contribution system
For computer-to-computer calls, Skype’s uses Peer to Peer technology to route calls, eliminating cost to host communication service elements (directories, packet routing etc). The technology is similar to the Peer-to-Peer technology Skype’s founders developed and deployed for their earlier startup, Kazaa.
Traditionally, phone companies have added value by taking on the significant capital expenses of building out a phone network (e.g. lines, switches, etc) and, on an ongoing basis, providing the infrastructure to support that network. Instead of investing heavily in supporting infrastructure, Skype leverages existing Internet infrastructure and individual PCs to route traffic and perform other duties traditionally performed by telcos.
Benefits for the users
Reduced cost:
- Skype users making computer-to-computer calls pay nothing to do so (beyond the computer and Internet service they’ve already bought)
Solutions that meet individual needs:
- For those who require high-quality audio for phone calls, Skype offers higher quality audio than traditional land / mobile lines
Benefits for the creators of the system
Reduced time & cost:
- Skype’s VoIP application was developed much more quickly, at a drastically reduced cost, compared to building out a new network
- This, in turn, reduced risk involved in establishing the product
Fast growth due to the price, coupled with easy scalability (as users join, the capacity increases)
- Q1 2006 - $35 million revenue
- Q1 2007 - $79 million revenue
- Q1 2008 - $126 million revenue
History of the idea
Skype, the company, was founded in 2003 and launched v1 application July 27, 2004. The company was purchased by eBay October 14, 2005 for $1.3B in cash and $1.3B in stock.
Scale
It is uncertain exactly how many people use skype. As of Q1, 2008, there were over 300M registered users, although this includes lost and inactive accounts. For more statistics and information on skype usage, see Wikipedia
For traffic statistics, see http://www.quantcast.com/skype.com
More resources
See also, on this wiki
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