Six months ago Skype, the self-described global Internet telephony company, hit a milestone: For the first time ever, the Skype system was used to support 1 million simultaneous calls.
That was remarkable given the company was just more than a year old. But Skype was just warming up. Its growth has since gone through the roof. At one point last week the company had 2.6 million callers online.
In that six-month period the number of people who have downloaded the company’s software – which lets users talk to other Skype users over the Internet for free – mushroomed from 13 million to 102 million, and the number of minutes served jumped from 2 billion to 7.6 billion. (If the download counter on the company’s Web site is to be believed, more than 21,000 people download the software every hour.)
This is the instant messaging phenomenon all over again, but unlike IM, the rise of this free Internet tool takes money directly out of the pockets of legacy players – big old telephone companies. At an average of, say, five cents per minute, that’s $380 million in revenue Skype just sucked into the ether.
And the number is probably even larger given that calling in Europe, where the bulk of the Skype traffic is today, is more expensive.
While Skype is likely to make fewer waves in the U.S. because calling rates here are relatively low, Internet telephone innovators such as Vonage still charge a fee ($25 per month for premium residential), as do the traditional carriers that are trying to keep up: AT&T charges $30 per month for its CallVantage service and Verizon charges the same for VoiceWing.
Skype, on the other hand, gives the basics away, choosing instead to make money on premium add-ons. SkypeOut, for example, lets callers dial off-net to regular phones for around 2 cents per minute. And the company just announced it is beta testing a voice mail service that will cost $19 per year, and a service called SkypeIn that, for $39 per year, will let customers pick a country and area code and get a regular telephone number that callers can use to reach Skype customers, no matter where they happen to be.
That feature alone might sway domestic users who don’t care much about costs, or they might be motivated by the IM-like dashboard that shows what buddies are taking calls.
If nothing else, the success of Skype indicates Internet telephony may be more disruptive than many now believe. The peer-to-peer technology from the founders of Kazaa could be a sign of things to come.
