Skype hopes to bring P2P magic to video calling

Skype has unveiled the latest version of its popular voice over IP (VoIP) application, with free video calling topping the list of new features.

Placing video calls over the internet with the help of a webcam is nothing revolutionary and is already available in competing products from the likes of AOL, MSN and Yahoo! but Skype is hoping to bring the same P2P magic it brought to voice calls. Though Skype was not a pioneer in offering free VoIP calls, it's become one of the biggest brands in the arena, with more than 58 million registered users.

The move to video was largely in response to Skype users' demands, according to James Bilefield, VP of global business development at Skype. He told silicon.com: "We sensed a frustration with users - 'You did a great job with voice, can you help us out with video too?'."

Analysts see the importance of Skype 2.0 as less about the individual feature adds and more about what they say about Skype's greater strategy.

John Delaney, principal analyst at Ovum, said the new video calling feature is "very much catch-up". More important, he said, is Skype expanding the reach of its brand. "Now you have Skype essentially trying to elbow its way into the group of the five big portal brands", along with AOL, Google, MSN and Yahoo!.

He added: "It could also be a tool to help [Skype's owner] eBay establish itself as multi-purpose brand."

Slow frame rates, which cause choppy, pixelated pictures, is one of the main downsides to video calling on the internet, especially for business users, and so far Skype's offering looks like it'll be no different.

This should relegate it to the realm of the consumer, with perhaps the occasional ad hoc business call, said Quocirca analyst Clive Longbottom.

He told silicon.com: "In the business arena, Skype has some footing in the low end but does not have good enough guaranteed quality for business use - the bringing in of video will make no difference to this."

Also today Skype announced blogging software maker Six Apart will integrate Skype into its Typepad blogs early next year and eventually into the popular Live Journal blogs. The new service will allow blog readers to click on a link and start talking to the person who publishes the blog via Skype.

This is part of the VoIP company's goal to expand Skype's reach beyond the client application, according to Bilefield. "We want to power other companies, we want other people to leverage what Skype is doing," he said.

Other new features in Skype 2.0 include the ability to personalise the application with avatars and ringtones, improved searching and grouping of contacts, and a toolbar which allows Microsoft Outlook to make Skype calls to contacts with one click.