Skype dreams for developers

Like the iPod, free phone service Skype is creating a coattail economy as hungry developers rush to cash in on its popularity.

In just 18 months, Luxembourg-based Skype has signed up some 31 million registered users, promising free phone calls over a broadband connection between two members anywhere in the world. Now Skype is hoping to take the service even further by recruiting third-party developers to build add-on programs that might attract even more customers and possibly take its technology in new and unexpected directions.

Since the company began licensing or giving away its proprietary source code late last year, an estimated 1,000 programmers have jumped on the bandwagon, creating dozens of free and commercial products for the service. Developers get the source code by promising to either give their products away for free or provide Skype a share of the profits.

News.context

What's new:
Developers, developers, developers! Skype knows outside help can make its Net calling software a major technology--that's why it made source code available to enterprising programmers.

Bottom line:
Source code licensing is hard. Developers complain that they're undersupported, and the confusion could stifle Skype's attempts to build a profitable business around its phone call giveaway.

More stories on VoIP

"Skype prioritized freely offering the (source code) to expand the potential of Skype and inspire great developers worldwide," Skype spokeswoman Kelly Larabee said. "We will extend and formalize our software developer programs with time."

Building a viable developer community is considered a key step in the evolution of software dynasties. A few years ago, Microsoft CEO Steve Ballmer drilled the concept into the heads of Microsoft employees, bounding up and down onstage at a company event bellowing, "Developers! Developers! Developers! Developers! Developers!" The now-famous scene became the butt of jokes when the tirade made the rounds in an online video, but the truth behind the message has never been disputed.

Skype's developer program has seen some limited success so far. In the vanguard are relative unknown companies such as Connectotel and Meinskype, offering free Skype voice mail, SMS and ring tones, respectively.

Also in the works are Skype-based advice lines selling legal and medical information, astrology forecasts and other services. Paypal-style payment services for Skype have already been developed to handle micropayments involved in such transactions, potentially turning Skype into a sort of eBay for advice and dating services, if Skype developer Jyve has its way. The company is developing tools to let Web site operators cash in on just such a trend.

"Where I see money being made is for professionals to charge for their time over a Skype line," said Jyve CEO Charles Carleton.

Third-party applications are an important competitive bulwark for Skype, which is pushing to make its proprietary software an industry platform. Most of its competitors have turned to open standards-based technology known as Session Initiation Protocol, or SIP, that's used in instant messaging and Internet telephony and can be freely licensed by anyone.

Some backers of SIP have criticized Skype for potentially splitting the Net phone industry, undermining standards and interoperability--a threat that would become all the more acute should Skype's developer community take off.

Cannibalism--a gray market?
Although crucial for Skype's long-term prospects, courting developers is not without its risks.

Skype is beginning to roll out its own premium services, and it might face competition from similar products seeded by its developer program. For example, Skype is testing a voice mail system that it wants to sell in the future. Yet there are already at least a half-dozen free Skype voice mail add-ons available for download on the Net.

Skype has two other paid services up and running or in tests that might similarly come under attack. SkypeOut, launched last