Each Skype user must have the Skype software running on his computer. This software is available for free and can be downloaded from the company website. The Skype code and protocol remain closed and proprietary. The main difference between Skype and other VoIP clients is that it operates on a peer-to-peer model rather than the more traditional server-client model.
The Skype user directory is entirely decentralized and distributed among the nodes in the network, which means the network can scale very easily to large sizes (currently just over ten million users) without a complex and costly centralized infrastructure.