Skype's latest puts focus on watching who you call

FRANKFURT (Reuters) - Web communications leader Skype begins public testing on Wednesday of a new version of its software for making free or low-cost phone calls that aims to make casual video chatting more common.

A man uses a Skype Internet phone next to a laptop in Taipei November 11, 2005. REUTERS/Richard Chung

The Luxembourg-based unit of online auction leader eBay Inc said that public testing of Skype version 4.0 would begin making video a more integral part of the service.

The 4.0 test version invites users to post bigger photos of themselves, instead of just thumbnail images, to encourage callers to see and be seen.

It also incorporates features for non-technical users that detect computer settings, available bandwidth and connected audio or video devices to make getting started easier.

Skype lets users make international computer-to-computer calls to other users in most countries for free, and calls from Skype-equipped computers or phones to landlines or cell phones at low rates. Skype generated $382 million in 2007 revenue and Wall Street analysts expect it to top $500 million in 2008.

The five-year-old service counted 309 million registered users as of the end of March, and plays host to 12 million simultaneous users at busy times of day. Its users can send computer instant-messages and text-messages to phones, share big data files or chat via video phone.

“Skype users are communicating in many different modes -- often at the same time,” said Josh Silverman, a veteran eBay executive who took charge of Skype as president this year.

“We thought it was time for software to take that into account,” Silverman said in a phone interview. “Now video is really bringing together all those modes of communication.”

Skype gives computer-based callers a simple way to hold full-screen video chats instead of constricting conversations to a small window in a corner of the screen, as before.

Full-screen resolution of video in Skype 4.0 is high-enough quality to let users make real eye-contact, Silverman said.

He said Skype was ready to take heat from fans of its classic, small-screen design for the significant revamp in 4.0, which features a more video-friendly, full-screen set-up.

Skype has offered video-calling since late 2005, but due to unfamiliarity with it then -- and a lack of Web-camera-ready computers -- it was an after-thought for many users.

The rise of video-sharing site YouTube has since popularized, especially among younger users, the use of Web cameras connected to home computers. This has fueled a surge in video calling on Skype, and it already constitutes 28 percent of all calls made on the service, Silverman said.

That growing popularity of video-calling has taken place despite the fact that existing versions of Skype software make the video feature hard to find. Users must first start a call to a friend, then find the button to add video to that call.

Skype’s sometimes-controversial software is built on bandwidth-sharing technology that lends computer processing power to users with less bandwidth from users with spare capacity. This has advantages for improving video call-quality that conventional landline or mobile networks lack.

Michael Bartlett, director of Skype product management for Windows, said Skype engineers have designed data-compression technology that enables rich-quality voice conversations with as little as 2 kilobits per second of bandwidth and video calls on connections as slow as 6 kb/s.

Version 4.0 takes advantage of faster average speeds -- now typically 256 kb/s or better, he said. For high-resolution, full-screen Skype video calls, 90 Kb/s is ideal, he added.

Skype will post further details on its blog later on Wednesday at Windows PC users wishing to test Skype 4.0 may then download ithere.

Editing by Braden Reddall