Instant messaging

Skype is a software application that allows users to make voice calls over the Internet. Calls to other users within the Skype service are free, while calls to both traditional landline telephones and mobile phones can be made for a fee using a debit-based user account system. Skype has also become popular for its additional features which include instant messaging, file transfer, and video conferencing or talking to any out of town relatives. The network is operated by a company called Skype Limited, which has its headquarters in Luxembourg and is partly owned by eBay.

Unlike other VoIP services, the Skype company does not run servers, but makes use of background processing on computers running Skype software—the original name proposed, Sky peer-to-peer reflects this.

Registered users of Skype are identified by a unique Skype Name, and may be listed in the Skype directory. Skype allows these registered users to communicate through both instant messaging and voice chat. Voice chat allows calls between pairs of users and conference calling, and uses a proprietary audio codec. Skype's text chat client allows group chats, emoticons, storing chat history, offline messaging and editing of previous messages. The usual features familiar to instant messaging users—user profiles, online status indicators, and so on—are also included.

The Online Number service allows Skype users to receive calls on their computers dialed by regular phone subscribers to a local Skype phone number; local numbers are available for Australia, Belgium, Brazil, Chile, Colombia, Denmark, the Dominican Republic, Estonia, Finland, France, Germany, Hong Kong, Hungary, Ireland, Italy, Japan, Mexico, New Zealand, Poland, Romania, South Africa, South Korea, Sweden, Switzerland, the Netherlands, the United Kingdom, and the United States.A Skype user can have local numbers in any of these countries, with calls to the number charged at the same rate as calls to fixed lines in the country.

Video conferencing between two users was introduced in January 2006 for the Windows and Mac OS X platform clients. Skype 2.0 for Linux, released on March 13, 2008, also features support for video conferencing.Version 5 beta 1 for Windows, released May 13, 2010, offers free video conferencing with up to 5 people.

Skype for Windows, starting with version 3.6.0.216, supports "High Quality Video" with quality and features, e.g., full-screen and screen-in-screen modes, similar to those of mid-range videoconferencing systems. Skype audio conferences currently support up to 25 people at a time, including the host.

Skype does not provide the ability to call emergency numbers such as 911 in the United States and Canada, 111 in New Zealand, 000 in Australia, 112 in Europe, or 999in the UK. The U.S. Federal Communications Commission (FCC) has ruled that, for the purposes of section 255 of the Telecommunications Act, Skype is not an "interconnected VoIP provider". As a result, the U.S. National Emergency Number Association recommends that all VoIP users have an analog line available as a backup.

Skype was founded in 2003 by the Swedish entrepreneur Niklas Zennström and the Dane Janus Friis. The Skype software was developed by Estonian developers Ahti Heinla, Priit Kasesalu and Jaan Tallinn, the same individuals who together with Niklas and Janus were also originally behind the peer-to-peer file sharing software Kazaa.In April 2003, Skype.com and Skype.net domain names were registered. In August 2003, the first public beta version was released.

One of the initial names for the project was "Sky peer-to-peer", which was then abbreviated to "Skyper". However, some of the domain names associated with "Skyper" were already taken.[27] Dropping the final "r" left the current title "Skype", for which domain names were available.

In September 2005, SkypeOut was banned in South China. In October of the same year, eBay purchased Skype and in fall of 2009 sold a majority stake to an investor group. In December, videotelephony was introduced.

In April 2006, the number of registered users reached 100 million. In October, Skype 2.0 for Mac was released, the first full release of Skype with video for Macintosh, and in December, Skype announced a new pricing structure, with connection fees for all SkypeOut calls. Skype 3.0 for Windows was released.

In 2006, a now-discontinued feature called "Skypecasting" was introduced. It allowed recordings of Skype voice over IP voice calls and teleconferences to be used as podcasts. Skypecasts remained in beta until its end. Skypecasts hosted public conference calls, up to 100 people at a time. Unlike ordinary Skype p2p conference calls, Skypecasts supported moderation features suitable for panel discussions, lectures, and town hall forums. Skype operated a directory of public Skypecasts. Skypecasts was discontinued as of September 1, 2008.

Throughout 2007 updates (3.1, 3.2 and 3.5) added new features including Skype Find, Skype Prime, Send Money (which allowed users to send money via PayPal from one Skype user to another), video in mood, inclusion of video content in chat, call transfer to another person or a group, and auto-redial. Skype 2.7.0.49 (beta) for Mac OS X released adding availability of contacts in the Mac Address Book to the Skype contact list, auto redial, contact groups, public chat creation, and an in-window volume slider in the call window. In August, Skype users unable to connect to full Skype network in many countries because of a Skype system-wide crash which was the result of exceptional number of logins after a Windows patch reboot ("Patch Tuesday"). And in November, there was controversy when it was announced that users having London (020) 7 numbers would lose them.

In 2008, Skype released various updates including versions for the Sony PSP hand-held gaming system, version 2.0 for Linux with support for video-conferencing, version 4 for Windows (with both a full screen and a compact mode), but also discontinued its SkypeCast service, without explanation and added internal monthly and daily usage caps on their SkypeOut subscriptions advertised as "Unlimited". Many users and observers had commented on the high rate of dropped calls, and the difficulty of reconnecting dropped calls. Skype was also used in the seventh season of the U.S. syndicated game show Who Wants To Be a Millionaire, for a new Ask the Expert lifeline for video chat. In October, analysis revealed TOM-skype in China sends content of text messages and encryption keys to monitoring servers.

In 2009, Skype 4 was released, their Linux client was updated, and also launched Skype for SIP, a service aimed at business users. At the time of launch around 35% of Skype's users were business users. In April 2009, eBay announced plans to spin off Skype through an initial public offering in 2010. In August, Joltid filed a motion with the U.S. Securities and Exchange Commission, seeking to terminate a licensing agreement with eBay which allows eBay (and therefore Skype) to use the peer-to-peer communications technology on which Skype is based. If successful, this may have caused a shutdown of Skype in its current form. In September, eBay announced the sale of 65% of Skype to a consortium of Index Ventures and Silver Lake Partners. Early in September, Skype had shut down the Extras developer program. In November, eBay completed the sale of 70% of Skype to a consortium comprising Silver Lake Partners, CPPIB, Andreessen Horowitz, and the original founders valuing the business at USD2.75 billion.

In 2010, a report by TeleGeography Research stated that Skype-to-Skype calls accounted for 13% of all international call minutes in 2009. Out of the 406 billion international call minutes a total of 54 billion were used by Skype calls. In May, Skype 5.0 beta was released, with support of group video calls with up to four participants. Also in May, Skype released an updated client for the Apple iPhone which allowed Skype calls to be made over a 3G network. Originally, a 3G call subscription plan was to be instituted in 2011, but the plan was eventually dropped by Skype.

On August 9, 2010, Skype filed with the SEC to raise up to $100 million in an initial public offering. In October 2010, Skype announced it had named Tony Bates as their CEO; Bates has been a senior VP at Cisco and responsible for its multi-billion-dollar enterprise, commercial and small business division.

On October 14, 2010, Skype 5.0 for Windows was released with a slew of improvements and feature additions, most significant of which is the inclusion of a Facebook tab that allows users to SMS, chat or call their Facebook friends via Skype right from the News Feed plus offline messages which are kept encrypted on Skype's servers for 30 days and will also be copied automatically to a computer that one never signed in on.