http://www.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=google&guid=%7B05752601-A317-451C-9418-7782176947FD%7D&keyword=&print=true&dist=printTop
Chinese firm may have cracked Skype's code Pirated version could blunt Chinese push by eBay's Internet phone unit By Ben Charny, MarketWatch Last Update: 6:56 PM ET Jul 14, 2006 SAN FRANCISCO (MarketWatch) -- A Chinese software firm may have replicated the popular Internet-phone software developed by eBay Inc.'s Skype unit, a development which, if true, could blunt Skype's growth in a key emerging market. Skype is aware of the claim, but so far company officials "have no evidence to suggest that this is true," Skype spokeswoman Kat James said in an email message. Ebay bought Skype for $2.6 billion in cash and stock in September, betting that its software, which allows users to make PC-to-PC calls for free over the Internet, would become the leading communications platform for Web consumers. Typically, only people who have downloaded Skype's software onto their personal computers can call other Skype users on their PC. Yet on Thursday, the chief executive of Skype rival Vozin Communications, Charles Paglee, posted an Internet screen shot on his blog that suggests a friend of his in China called his Skype account with software developed by the Chinese firm Hanzen Corp. A phone call and email to Hanzen's office were not returned. According to Hanzen's Web site, the company sells a suite of business applications, including products called Hanzen Office, Hanzen Word, Hanzen Excel and Hanzen PowerShow, that "offer users the same functionality and compatibility with Microsoft Office at a fraction of the price" of Microsoft Corp.'s offerings. The Web site, which also states that "overseas software companies come to China and sell their products at the same prices they charge in their home country," and further calls such software "outrageously expensive," says the company has "a number of different software projects in the works." Paglee, whom MarketWatch contacted for this story, wrote on his blog that the call he received was part of a test that an unnamed firm was conducting of their new Internet phone software, which he said is expected to debut in August. Released in late 2004, Skype's software has been downloaded by more than 100 million users in more than 100 countries, according to the company. Those numbers surpass the benchmarks set in the early days of Hotmail (since bought by Microsoft) and the music file-swapping sites Napster and Kazaa, making Skype among the fastest-growing user platform in Internet history. Yet for all of Skype's popularity, analysts have raised questions about how much revenue eBay will generate from Skype, which gives away its basic software and charges only for add-on features such as calling cell phones from a PC. Ebay has forecast that Skype will generate about $200 million in revenue this year, thanks to a series of product upgrades and the addition of new, business-focused Skype products. If Skype's software has been replicated without its permission, Ebay would not be the first U.S. company to fall victim to Chinese software pirates. Cisco Systems Inc. sued Chinese rival Huawei Technologies Co. Ltd. in January 2003, accusing the firm of reverse engineering the copyrighted code that controls Internet routers. Although Huawei admitted no wrongdoing, it agreed to stop selling products using the disputed software. A report by the Business Software Alliance, a group funded in part by Microsoft, estimates that 86% of the software sold in China in 2005 was pirated, which cost global software companies $3.9 billion in lost revenue. Skype is making a push into China through a partnership with the popular Internet site run by Tom Online Inc. If Skype will face a home-grown Chinese competitor, it could siphon off new users and reduce the company's growth there. Still, given that Skype is free, it may not suffer as much from piracy as Microsoft, for example, which charges for its products. Even if there is a knock-off version of Skype, "the software would lack the feature set and reliability of Skype," said James, the spokeswoman. "No amount of reverse engineering would threaten Skype's security and integrity," she added. MarketWatch reporter Michael Paige contributed reporting for this story. Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
