Skype's latest puts focus on watching who you call

By Eric Auchard

FRANKFURT (Reuters) - Web communications leader Skype begins public testing on Wednesday of a new version of its software for making free or low-cost phone calls that aims to make casual video chatting more common.

The Luxembourg-based unit of online auction leader eBay Inc said that public testing of Skype version 4.0 would begin making video a more integral part of the service.

The 4.0 test version invites users to post bigger photos of themselves, instead of just thumbnail images, to encourage callers to see and be seen.

It also incorporates features for non-technical users that detect computer settings, available bandwidth and connected audio or video devices to make getting started easier.

Skype lets users make international computer-to-computer calls to other users in most countries for free, and calls from Skype-equipped computers or phones to landlines or cell phones at low rates. Skype generated $382 million in 2007 revenue and Wall Street analysts expect it to top $500 million in 2008.

The five-year-old service counted 309 million registered users as of the end of March, and plays host to 12 million simultaneous users at busy times of day. Its users can send computer instant-messages and text-messages to phones, share big data files or chat via video phone.

"Skype users are communicating in many different modes -- often at the same time," said Josh Silverman, a veteran eBay executive who took charge of Skype as president this year.

"We thought it was time for software to take that into account," Silverman said in a phone interview. "Now video is really bringing together all those modes of communication."