Microsoft dials up Tango, not Skype for video calling on Mango

Microsoft (Nasdaq: MSFT) spent $8.5 billion to buy VoIP provider Skype, but it'll be Tango's video calling service that users turn to when they connect with phones that run on the refreshed Windows Phone OS, set to be released in early November.

Microsoft will use Tango's video calling service on Mango.

While Microsoft has said it plans to aggressively integrate Skype into its products, the timing of the deal--European regulators just gave their blessing to the acquisition earlier this month--meant that the company had to turn instead to Tango for a quick fix.

But Tango, which also operates on iOS and Android devices, may be in for quite a ride. The company hopes to use the break as a springboard to dominance in the video-calling market. It currently operates on 450 devices, including 30 tablets, and it works cross platforms.

"I think Microsoft sees video-calling as a killer app for holiday season sales [of Windows Phone devices]," said Tango founder and chief technology officer Eric Setton in an interview with Forbes. "And no other video-calling company besides us will be out on Windows Phone [before the holidays]."

Forbes said Tango has 25 million registered users in 190 countries and is adding about 500,000 users every week, meaning it's growing about twice as fast as Skype did when it first launched.

"We are growing at an unprecedented rate," said Uri Raz, co-founder and CEO of Tango, in July. "There are 1.5 billion PCs in use worldwide and 95 percent of the world's computers run Windows. With this launch, we are well positioned to reach our goal of 100 million customers by this time next year."

The service hasn't had a difficult time finding funding, announcing in July that it was closing a $42 million Series B funding round. The company said it plans to use the money to speed up its product delivery cycle.

"We've been extremely lucky with timing," admitted Setton. "We came out as handset manufacturers were adopting front-facing cameras. and people were comfortable with video-calling because of the iPhone 4 and [Apple's video-calling app] Facetime."

Skype reported more than 170 million "monthly connected users" in its most recently-recorded quarterly period.

For more:
- see this Forbes article

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Mobile video calling firm Tango nabs $42M in VC, expands features to PCs