VIDEO CALLING SERVICE GROWING EXTREMELY FAST

The free video calling service

is growing faster than Skype did.

Eric Setton looks at his phone and sees $60 billion in revenue via low-cost video calling. “Smartphones, advanced cell networks, Skype, app stores–this is the best time to have built a new communications platform,” he says. “We’ll be on PCs, tablets, you name it.”

With the aforementioned Skype soon to be bought by Microsoft for $8.5 billion, or ten times 2010 revenue, we’ll forgive Setton for his enthusiasm. In September he and cofounder Uri Raz released an app called Tango, which allows you to make video calls for free. It already has 13 million users in 190 countries and is adding another 1 million every two weeks. Skype, which began offering desktop peer-to-peer video in August 2003, achieved 9.5 million in its first year. Go, mobile world.

Tango calls are good, not great, and can be done with or without looking at yourself as you talk. You can switch from a front to a back camera to show things as you talk. By this summer Tango will likely start charging for enhanced features. Setton won’t say what, but think video voicemail or add-ons like the hearts subscribers could put inside their videos last Valentine’s Day. Those items would show up on a cellphone bill, saving Tango a lot of hassle.

Video calls are hard to do well on a cellular network. The inevitable dropped data packets and congestion show more immediately in video than in voice calls. Developers also have to juggle the requirements of different phone models and the two very different dominant operating systems, Apple iOS and Google Android.

One secret of Tango’s success is clever software. Skype’s so-called peer-to-peer technique involves the trick of distributing data packets to relatively precise ports on the network. Tango has to figure out, during the couple of seconds that a call is dialed and set up, which of several million ports inside a mobile router is the right one. Setton says they have 80% to 85% success and are getting better. During a call the service monitors how fast data are going through the air and adjusts call quality so the video doesn’t cut off when a network’s load changes or someone roams to a new cellular tower.

Tango’s other strength is ubiquity. While Apple’s Facetime video service works only on iPhones, Tango works on iPhones and Android and will be on Microsoft Windows Phone 7 when it is released. Tango arrived functional on 25 phones and now works on some 70 models, including tablets. “We’re getting support requests from the Congo, Botswana,” says Setton, a Ph.D. who serves as chief technical officer. About 55% of Tango users are in the U.S. Korea is the second-largest market, with 2 million users. Not bad for a company funded with only $15 million, most of it from five private investors.

There are lots of applications, but the founders think the biggest market is spontaneous consumer calls. “Shopping, when the kids are doing something cute–the best-use case is close family, the people you talk to when you don’t care what you look like,” Setton says. He figures this group is between 10% and 20% of the worldwide communications market, valued at $600 billion to $700 billion. Hence, $60 billion for Tango–nothing like a startup that thinks big.

Rivals abound, including other startups such as Fring and Jajah. Skype bought a video-sharing service called Qik, which has taken lumps over call quality; Microsoft may do something about that. Android’s video ser vice hasn’t caught on in a big way. Apple’s Facetime, if it hopes to gain share, needs to operate on other phones. “It’s a race right now,” says Setton, “but anybody who tries to start now has to be on the 70 phones we’re doing, plus whatever comes next.”

Sourced & published by Henry Sapiecha

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