Facebook Launches Video Chat with Skype

Facebook has teamed up with Skype to launch video chat on the social network, which now has 750 million users.

Facebook CEO Mark Zuckerberg speaks during a news conference at Facebook headquarters July 6, 2011 in Palo Alto, California, USA. He announced new features that are coming to Facebook including video chat and a group chat feature. Photo: Siarhei Karotki/TheBlogIsMine

Facebook co-founder and chief executive Mark Zuckerberg made waves last week when he said his company would be announcing “something awesome” this week. Following Zuckerberg’s comments about “something awesome,” there was speculation that the company might finally unveil its long-awaited native iPad application.

Last month, The New York Times reported that the application was in its final stages and would be offered in the coming weeks. Facebook video chat rolls out to its 750 million users on the 6 July but will not be available on mobile yet.

There were also rumors swirling that Facebook would launch a new iPhone photo-sharing application that TechCrunch discovered last month. That app reportedly allows users to share photos with others, but would not be integrated into Facebook’s existing iPhone application.

This Wedneday everything cleared up. Zuckerberg made the announcement and revealed the new user figure during a press conference at the company’s Palo Alto headquarters. The two companies have teamed up to launch the new feature which will allow its users to talk to each other via video.

Facebook has introduced a new ‘call’ button on the site, which people can click on so as to activate the service. The new video call experience is very similar to Skype’s original offering.

“We think this is awesome because we’re using the best technology that’s out there for doing video chat with the best social infrastructure that’s out there to create some really cool new scenarios,” said Zuckerberg.

The chief executive of Skype, Tony Bates, revealed that the two companies have been working together for the last six months. There are only one-to-one video calls at the moment, but Zuckerberg said that group video calls could happen in the future.

Tony Bates said Wednesday’s deal with Facebook is only the start of a potentially lucrative partnership. “For us, this makes a lot of business sense,” said Bates at the Palo Alto event. “We get huge reach. In the future we’re talking about potentially also having Skype paid products available within the web format we saw here today.”

At the press conference Zuckerberg announced that the site has involved 750 million members, which equates to one in nine of the world’s population. However, he said that was no longer the important metric for the site. Instead Zuckerberg said that it was important  much information each user is sharing every day, which has doubled since a year ago.

Zuckerberg also said about a new group chat feature. More than half of Facebook’s 750 million users have created ‘groups’ of friends. With the new release people can use instant messenger to talk to multiple friends at the same time.

Additionally the company has redesigned its chat tool – making a bigger sidebar for people to see who is online with more ease. Facebook’s move comes a week after Google turned up the competitive heat by introducing a social networking service Google+.

Ars Technica editor Paul Ryan pointed to the Facebook-Skype web-only interface as a stumbling block, saying, “[I] can’t imagine ever using the new video chat service. A chat system that is tied entirely to a single website in a browser isn’t particularly useful to me.”

And AllThingsD reporter Liz Gannes said that although Zuckerberg’s presentation repeatedly emphasized third-party apps and mobile traffic as key drivers of Facebook’s growth, the products announced Wednesday launched “without any support for apps and mobile.”

Facebook’s new video offering could benefit Microsoft, which owns 1.6 percent of Facebook and announced its $8.5 billion purchase of Skype in May. The world’s largest software company is investing heavily to muscle in on Google’s turf with its Bing search engine, and is hoping Skype – which it is buying for about 10 times its annual sales – will help it broaden its portfolio of Web-based properties.

“Clearly you will see more usage (of Skype),” said Sid Parakh, analyst, at McAdams Wright Ragen. “It makes Skype stickier in the consumer mind. That will help Microsoft as it starts to integrate Skype into its products.”

Skype, which was founded in 2003, allows people to make Internet phone calls and video calls at no charge and has also developed premium services. Microsoft shares rose 0.9 percent to $26.26 on Nasdaq, while Google’s rose 0.87 percent to $536.64. [via Mashable, The Telegraph and CNET News]

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