Why All the Hype About Skype?

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Hardly anybody took notice of voice over Internet protocol (VoIP) when the first experiments were conducted back in 1974. Now it is growing in popularity, with more and more people experiencing the savings they can rack up while making phone calls using a broadband Internet connection. Skype, in particular, seems to be making the most of this disruptive technology.

Those who study history and the effects of technology on society know about disruptive technologies.  Wikipedia gives an excellent definition, describing a disruptive technology as “ a new technological innovation, product, or service that eventually overturns the existing dominant technology in the market, despite the fact that the disruptive technology is both radically different than the leading technology and that it often initially performs worse than the leading technology according to existing measures of performance.” In particular, a disruptive technology can often handle tasks that the older technology could not. The automobile is a classic example of a disruptive technology.

The Internet, of course, is another classic example of a disruptive technology. One of the interesting aspects of this is that, not only is the Internet itself a disruptive technology, but it is helping to enable other disruptive technologies. As often happens, a number of the companies representing older, entrenched technologies don’t yet see the threat for what it is -- though at least one has (more about that later).

In this case, I’m talking about Voice over Internet Protocol. This technology allows users to place phone calls over the Internet almost as easily as sending an email message. While VoIP has been around for a while, it is only within the past couple of years or so that its quality and ease of use have begun to rival landline and cell phone offerings from the major telecommunications firms.

What most VoIP companies, such as Vonage, offer users is the ability to make unlimited local and long distance calls for a monthly fee that is often lower than the rate available for a cell phone plan with relatively limited minutes. Users simply download the software onto their computers, get some accessories (such as a microphone or headset for their computers), and can quickly begin saving money. To eliminate the need to be tied to your computer, some companies offer a phone adapter that works with corded or cordless phones. The system can also work with laptops, offering an even greater degree of portability.

All of this is disruptive enough, but one VoIP company takes it one step further. What would you say to completely free phone calls? Niklas Zennstrom, CEO of Skype, is hoping you will say yes.

Next: Who is Zennstrom? >>
 

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