Skype Struggling To Recover From Outage

Skype struggled Thursday to restore service from a global outage that has left millions of users unable to place voice or video calls for almost 24 hours.

The Luxembourg-based voice over IP (VoIP) company estimated 10 million people were able to make calls, which is less than half of the more than 20 million calls regularly made during peak periods each day. Those that did log in found that some features were unreliable, such as people's online status and instant messaging. Group video calling was not expected to return to normal until after person-to-person calling was restored.

The current outage is the second major disruption in service this year and leaves open the question whether the company is ready to serve the communication needs of businesses, as it claims. The company's service troubles also come as it prepares for an initial public offering (IPO) next year.

Details on the cause of the outage that started early Wednesday afternoon Eastern Time have been sketchy. Skype has blamed its troubles on computers it calls "supernodes," which act like phone directories on the Skype network. Peter Parkes, social media communications lead at Skype, says in the company's blog that the supernodes "were taken offline by a problem affecting some versions of Skype." The company runs on a peer-to-peer network that ties people's computers together through Skype's proprietary software.

To restore service, engineers have been creating what Parkes calls "mega-supernodes" to replace the ones that were down. Parkes has acknowledged that the process would likely take some time.

In the meantime, Wall Street is watching Skype as it prepares for its IPO. Skype announced its plans over the summer, but has yet to say when the stock launch would take place. In the meantime, the company has been working to beef up its paid services, particularly in the business market. The vast majority of Skype users use their PCs to call each other free-of-charge. People who call landlines or mobile phones pay only pennies a minute.

In January, Skype was down for 3.5 hours, and in August 2007, it was down for 36 hours. The company has said it is working to improve the reliability of its network so it can provide 100% uptime. In October, Skype named Tony Bates, former Cisco senior VP, chief executive. He replaced John Silverman, who had served as CEO since March 2008.

EBay bought Skype in 2005 for $3.1 billion. It sold the Internet telephony provider in November to an investor group, which included Silver Lake, Canada Pension Plan Investment Board, and Andreessen Horowitz, for $1.9 billion in cash and a $125 million note. EBay retains 30% ownership.