I received email from a reader today suggesting a take a look at Skype, whose peer-to-peer text and audio IM solution is in beta and can be freely downloaded. The company was founded by Niklaus Zennstom and Janus Friis, two of the founders of KaZaA, and they are continuing their efforts to apply peer-to-peer technology to provide mass market breakthrough technologies.

I fiddled with the client, and was really happy with the speed and performance both in text and voice chat. The voice chat (unlike Yahoo and MSN solutions) did not involve using a wizard to test the various settings of my microphone and so on -- which is a good thing if your microphone and speakers are already configured correctly, but may be bad if they are not. I thought the quality was slightly better that sample audio chats that I had later on with MSN and Yahoo, but still reminded me of talking to someone's cell from your cell -- even with full duplex there seemed to be some cutout. On the other hand, the guy I was chatting with did not have a headset and was simply using his laptop's embedded microphone. Note that this was with full end-to-end encryption of the audio content.

I presume that Skype plans to roll-out video at some time in the future, a capability already supported by MSN and Yahoo. (I intend to test these existing services in the next few weeks when my new laptop arrives.)

In principle, Skype audio can burrow through firewalls, NAT, and routers without configuration changes, unlike some of the stories I have heard about MSN and Yahoo audio. However, the company hedges: "In short, Skype works behind the majority of firewalls and gateways with no special configuration."

Skype does not have a central network like MSN, Yahoo, or AIM, aside from providing a centralized connection to the network for creating initial user information and to connect when coming on-line. A distributed and dynamic mechanism to manage the status and IP address of those participation is maintained in a "Global Decentralized User Directory" that they call Global Index. As they state, "The Global Index technology is a multi-tiered network where supernodes communicate in such a way that every node in the network has full knowledge of all available users and resources with minimal latency."

I guess I would be willing -- as a private individual -- to tap into the Skype network to save money on audio conferencing when compared to telphone. The challenge for Skype is to get those already happy with Yahoo and MSN (and soon, AIM) audio solutions to switch over. And of course, to roll out video. However, corporate users may be less happy about the peer-to-peer approach, even though the traffic is encrypted, since it will tap into computer resources of those PCs on the network.

The success of Skype seems to hinge on the degree to which the other services are blocked by firewalls, NAT, and routers. Over the next few weeks, I will continue to compare the service side by side with contacts working behind firewalls, etc., and see if there is a real competitive advantage there.