Skype readies business telephone offering

Skype readies business telephone offering | CNET News.com

In fact, as much as Skype presents a budding competitive challenge to the old-line companies, it's also looking for ways to cooperate with them. The start-up voices lofty goals of expanding the way people communicate, but it still faces the down-to-earth demands of broadening its own sources of revenue.

Because of its peer-to-peer architecture, Skype requires absolutely no infrastructure and only minimal capital investment compared with phone companies that own their own lines and switches. Rather, Skype's 750,000 daily users create the network on the fly, sharing computer resources to manage traffic flow and ensure call quality. Skype claims its network can grow organically without the need to add new equipment to support increased traffic demands.

This "network free" concept is unprecedented, even for Net phone providers that are already turning the century-old telephone industry on its ear. With Skype, one no longer needs a few hundred thousand dollars in start-up costs typically associated with Net phone service, let alone the billions of dollars in investments to become a traditional phone company.

Skype has turned heads for its unique blend of technology and rapid grassroots adoption. The company claims more than 22 million downloads since the software was first made available in August 2003. It is currently signing up about 60,000 new registered users every day--numbers that draw comparisons to free software downloads that swept the Internet during the late 1990s, such as the ICQ instant messaging service.

"Its growth rate is sky high," said Tim Draper, managing director at Draper Fisher Jurvetson, which has invested $9 million into the company. "I don't think there's been this speed of adoption since Hotmail. We are thrilled with what Skype's been able to do. We think it's a global phenomenon that will change communication for the better."

Like Kazaa, Skype uses peer-to-peer technology that connects PCs and turns them into a powerful, collaborative network without the need for central servers to direct traffic or otherwise administer the system.

With Skype, people can place phone calls without touching the traditional phone network. That means callers can avoid long-distance charges, regardless of the destination, provided both caller and receiver have the Skype software.