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What Apple's FaceTime app means for Skype

The iPhone 4 will sport a built-in video chat app that requires no special setup. Is Skype for iPhone doomed?

FaceTime for iOS 4
FaceTime will be limited to Wi-Fi calls from one iPhone 4 to another, at least at first.
James Martin/CNET

As time ticked on in Steve Jobs' keynote at Monday's WWDC conference, we kept waiting for the Apple chief to showcase the iPhone 4's front-facing camera. When he finally did, it wasn't a Skype video conferencing app that many expected, but Apple's own software, called FaceTime.

FaceTime is built into the version 4 operating system that Apple is now calling iOS 4, since it powers the iPhone, iPod Touch, and iPad. Using the front-facing camera, two callers will be able to see and hear each other in a high-definition video call.

The good news is that FaceTime will require no setup, so firing up video chats should be intuitive even for VoIP novices. Here's the setback: at launch, FaceTime will run only over Wi-Fi, and only on the iPhone 4.

We understand that hardware and software requirements like a front-facing camera and HD video recorder would cause Apple to limit FaceTime calls to between iPhone 4 phones, but we are surprised that Apple isn't taking advantage of 3G calling, particularly since it's been six months since the company allowed third-party developers to add 3G calls to VoIP apps.

The bigger question on our minds, however, is just how big a blow FaceTime will deliver to Skype and other competing VoIP services.

Right now, it looks like nothing too bruising. Wi-Fi and hardware limitations on the iPhone 4 (like that front-facing camera) will keep FaceTime's audience modest until iPhone 4 sales take off, though not having to register for a new service is sure to attract new users. In the meantime, Skype has a chance to add video calls and other unique features to its iPhone lineup before FaceTime takes off.

More aggressive competitors, like Fring, may even see iPhone's FaceTime as an opportunity to grab curious new iPhone 4 users. That's especially if Fring or others manage to one-up the native iOS 4 app with additional features before Apple's team can add them--such as, perhaps, multiparty calling. (Fring currently supports two-way video calls on iPhone.)

Both Skype and Fring have the added benefit of making calls over 3G (though Skype will soon charge for the privilege) and placing said calls to folks on any mobile platform that their service supports, not just iOS 4. Skype and Fring (which plugs into Skype and SIP) can also conveniently reach people on their computers, mobile phones, and home phones, not just iPhone 4. Are you sensing a theme?

Third-party developers are known for improving on built-in apps and FaceTime shouldn't be any different. As far as we're concerned, Skype's most looming threat is its own stalled innovation in a field it helped pioneer. Despite being in all probability the most recognized brand around for VoIP communication (it's even carved out a sponsored spot on,) Skype in months behind in desktop and mobile development.

That leaves plenty of room for others to step in. For the platform-specific FaceTime, total trespass isn't likely.