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Last Updated: Thursday, 1 December 2005, 13:07 GMT
Skype adds in video to net calls
Video phone call on Skype
Users will need a webcam to make calls in vision
Popular internet phone service Skype is adding video calling to its software.

Skype's software lets computer users talk to each other for free and make cut-price calls to mobiles and landlines.

The new version adds video and a bunch of extra features in what is becoming an increasingly competitive area.

Internet portals such as MSN, Yahoo and AOL have offered video with their instant messaging services for a while, though usage is not widespread.

Internet calling

Skype has 53 million registered users and says more than two million people are using its software at any given moment.

In September it was bought by online auction giant eBay in a $2.6bn (£1.4bn) deal.

Skype uses a technology called Voice over Internet Protocol (VoIP). This allows computer users to talk each other via a headset or microphone and speakers.

Cheap calls to landlines and mobile phones are also possible. Some systems allow users to plug their traditional phones into a desktop box that allows them to make VoIP calls.

"With the release of our new software, it's never been easier for people to talk to one another for free, and now they can see each other with video as well," said Niklas Zennström, CEO of Skype.

Rival services

Version 2.0 of the software is technically a beta, meaning that Skype is still putting the finishing touches. Initially it is only available for Windows XP.

As well as adding video calling, the new version is designed to work with Microsoft Outlook, adding a toolbar to find and dial contacts.

The company has also struck a deal with blogging software service Six Apart to embed Skype links in its blogs.

Skype's upgrade to video calling competes with well established instant messaging services that also offer video phone calling features, including Microsoft's MSN and America Online's AIM service.

And two weeks ago. Sony announced a Skype-like free net phone service with an emphasis on video conferencing.

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