The latest version of Skype's app lets users of the iPhone, iPad, and iPod Touch make video calls, which will expand mobile videoconferencing globally—and strain network capacities
(Bloomberg) — Skype Technology SA, the biggest provider of international calls, introduced video calling for Apple Inc.'s wireless devices, a move that may broaden the appeal of mobile videoconferencing.
The newest version of Skype's application lets users of the iPhone, iPad and iPod Touch make or receive video calls via 3G or Wi-Fi connections, the company said today in a statement.
The company had previously offered its free mobile video-call app only for Nokia Oyj's N900 smartphone. Luxembourg-based Skype is seeking to increase the number of subscribers who may eventually buy its premium services. The new app will compete with existing iPhone and iPod calling services offered by Apple, Fringland Ltd. and Tango.
"Skype has significant scale," said wireless consultant Chetan Sharma, founder of Chetan Sharma Consulting in Issaquah, Washington. "Whatever they introduce has the opportunity to make significant impact."
In June, Skype had 560 million global users of its mobile and desktop software, according to an August regulatory filing. In the first half of 2010, video calls accounted for 40 percent of all Skype-to-Skype call minutes, the company said.
The app may help bolster Skype's brand as the company prepares for an initial public offering. Skype, which filed for an IPO in August, hasn't set a date for the share sale.
"They become incrementally more valuable, Sharma said.
In two years, as many as 20 percent of wireless subscribers may use video calling, if carriers don't jack up prices, Sharma said. The increase would come as more phones are equipped with front-facing cameras, a feature needed to run the app.
Apple, HTC Corp., Nokia and Dell Inc. have released mobile devices with front-facing cameras.
Internet-connected devices are proliferating, from tablet computers to TVs. Skype wants subscribers to be able to access its full set of services regardless of the platform they're using, especially as consumers increasingly rely on personal phones for business, Chief Executive Officer Tony Bates said.
"You should have the same experience," Bates, 43, said in an interview. "It shouldn't be different. We should have the same quality and same expectations across devices."
Apple hasn't released usage statistics for FaceTime, its iPhone 4 and iPod touch video-calling service that's also being tested for the Macintosh computer. Fringland's Fring service has already connected 100 million video calls, about 40 percent of them among U.S. users, said Jake Levant, vice president of marketing at Fring.
'Next Growth Curve'
Until now, most mobile video calls have happened via Wi-Fi connections at homes and coffee shops. Some carriers don't offer video calling over 3G networks. That could change as companies like Skype release apps that run on the networks.
The growing popularity of video calling may lead carriers to charge consumers more for data access. Heavy users of mobile video calls may need to switch to more expensive data plans. An average video call consumes five to 10 times more bandwidth than a voice call, according to Sharma.
"We are giving the operators the next growth curve," Fring's Levant said. "There's certainly a lot more money there."
Carriers will need the extra cash to expand the capacity of their networks, which are becoming increasingly stretched by streaming of movies, YouTube clips and other video.
"Video calls will add further strain to the network," said David Sharpley, senior vice president of marketing and product management for Bridgewater Systems Corp., a supplier of network software. "We've seen operators' networks get congested already, without a huge amount of video pickup."
In the past few years, AT&T Inc. has moved to increase its network capacity in urban areas such as New York and San Francisco after complaints about dropped calls and slow connections.
Last week, Skype's own network crashed and resulted in interrupted service for more than 24 hours after the company's servers became overloaded.