Learn more about Skype’s unique network model and how the company started and has grown to be the video chatting king it is today.

Skype has become the Google of video chatting. Just like when Internet users say they’re googling no matter which search engine they’re actually using, most people refer to video chatting as skyping. How did Skype rise to this kind of prominence? Our brand new case study answers that question and more as it examines the company in-depth. To get your feet wet before you head over to the case study, here’s a synopsis.

Niklas Zennstrom and Janus Friis founded Skype in 2003. Both had worked together previously on Kazaa, a peer-to-peer file sharing service. At the time of the Skype beta release, there were versions for Linux, Mac, and Windows operating systems. Since then, Skype has also been released for Sony PSP, Xbox 360, Comcast cable services, and on multiple cell phone platforms.

eBay bought Skype in 2005 but the two companies disagreed about the direction of the video chatting software. Shortly thereafter, in 2009, eBay announced its intention to make the company independent by 2010. Skype announced that it would have an IPO in 2010, but when a new VP was put in charge the IPO was postponed until 2011. In the end, the public offering never actually took place. Microsoft bought Skype in May 2011 and the company is still private.

Some impressive Skype stats from the case study: Skype has 700 million registered users and handles 300 million minutes of video calls daily. 1.8 billion video chats happen every year. 58% of all Skype calls are audio.

But what’s the bread-and-butter of Skype; how does it work? The service uses Voice over Internet Protocol (VoIP) to relay audio, video, and chat messages across the Internet. Since its inception, the company has continued to improve its product regularly. Features that have been added since its 2003 release include: video conferencing, instant messaging, file transferring, mobile apps, HD video quality, and more.

Calling other Skype users is a free service on the software, but calling other people’s landlines or cell phones costs users per minute of talk time. Skype also offers competitive long distance per minute pricing.

The network Skype operates with is referred to as a hybrid peer-to-peer network. What this means is that when nodes (i.e. users with the Skype software installed on their computer) call each other, they have to interact with a supernode (i.e. users that have the Skype client installed that don’t have to work behind firewalls from ISPs or network address translation like standard nodes do) to connect to each other.

The network of supernodes internationally is the Skype cloud network, where each supernode performs as an operator for individual node connections (i.e. regular, audio/video chats between Skype users). Skype does have its own servers as well that keep track of user information, financials, authentication, and new customer enrollment.

Skype’s server stats themselves are interesting to examine because of its unique network model. The servers that the company manages actually don’t use many resources because the traffic and computing power are essentially being outsourced to users’ personal computers.

The company did have large-scale outages in 2007 and 2010, but since then have had relatively smooth sailing. To prevent any further catastrophic outages, Skype has invested in making the servers they do have incredibly scalable. That way, if one server goes down, it takes very little time to put another one in its place.

So again, go check out the Skype case study for more information about how Skype works and how the company got to where it is today. If you’re interested in reading how streaming video has changed how our brains conceptualize the world around us, check out our blog post “How Online Streaming Is Revolutionizing the Way We Entertain Our Brains.”