The Engadget Interview: Niklas Zennstr�m

Veteran journalist J.D. Lasica interviews Skype co-founder and CEO Niklas Zennström about the future of voice communication, using Skype through wi-fi handhelds, and the coming death of the telecom dinosaurs: 

Please give me a quick backgrounder on Skype.

We were founded on Aug. 29, 2003, and now have 70 employees, about half in London and half in Tallinn, Estonia, and some in Luxembourg. With our work at Kazaa, we began seeing growing broadband connections and more powerful computers and more streaming multimedia, and we saw that the traditional way of communicating by phone no longer made a lot of sense. If you could utilize the resources of the end users' computers, you could do things much more efficiently.

So what is Skype all about, and what's the difference between Skype to Skype and SkypeOut?

Skype to Skype lets you call anyone else in the world who has downloaded the Skype application on their computer or PDA [personal digital assistant], for free. You just download the free software from our site. With SkypeOut you can call anyone anywhere in the world at cheap local rates, often two or three cents a minute.

How many Skype users are there, and how fast is it growing? 

We have 2 million users in the U.S. and about 13 million worldwide in more than 200 countries. We're getting 80,000 new users each day. And more than half a million people are connected via Skype at any given moment. In fact, we just surpassed our first 1 million simultaneous users online. The average call time is over 6 minutes - longer than traditional phone calls.

What platforms does Skype work on?

Windows, Linux, Mac OS 10 and Pocket PC, and we're now working on some other mobile platforms.

What is SkypeIn and what are the plans for it?

SkypeIn will allow phone calls from the traditional phone network in to Skype. We don't have a specific launch date yet, but hope to offer it sometime this winter.

Who's using Skype? Who's your typical customer?

Skype is for any individual who has a broadband Internet connection. Our early adopters were primarily male, 18 to 38 years old, but we have users now from across every demographic, from young children using it to keep in touch with a parent who may be traveling on business to great grandparents using it to keep in touch with family living all over the world. Skype is easy enough to use so that people don't need to be tech savvy - a lot of users just want to communicate with their friends and family, and they find this is the easiest, cheapest way. If you can use a Web browser, you can use Skype.

Do you still use a land-line phone?

At home, I still have a regular phone line because I sometimes need to send faxes. At the office, we actually don't have a land phone line. We use Skype mostly, and mobile phones to receive calls from people not on Skype.

I hear that Skype has higher penetration in some countries than in the United States. Why is that?

We have a much higher penetration in countries like Brazil and Poland, where phone rates are high and service is hit or miss in some places. In Poland, for example, an awful lot of families have relatives in Chicago and other U.S. cities, and so they place a lot of international calls. A lot of people in China, Taiwan, Japan and Germany are using Skype, too. There are different drivers in different countries.

How does Skype differ from Vonage, 8x8, and VoIP offerings from Verizon or AT&T or the other telecoms?

Vonage is much more similar to Verizon and AT&T than to us. With Vonage, you're using a regular telephone, dialing a number, and its services have rates similar to the telecoms. What we are doing is taking advantage of the broadband Internet to provide basically unlimited free calls to anyone at a higher voice quality than they can with the phone lines.

Another differentiator is that Skype is free and simple to set up, and it costs us virtually nothing for a new user to join the Skype network, which is why we can offer the service for free.

The telephone is a 100-year-old technology. It's time for a change. Charging for phone calls is something you did last century.

I imagine this also appeals to multi-taskers. You can text-message someone at the same time you're talking with them.

Right. They also can combine voice with instant messaging and online file sharing. You can also instant message with others whle you're talking to someone else, which makes the whole communication experience much richer and more efficient for businesses, too. We also have a conference call feature where up to five people can talk on one Skype call.

How do you plan to make money?

We're making money right now by selling value-added services like SkypeOut, which brings in revenue. We don't need to make as much money per user as the traditional phone companies because our marginal costs are so low. We're also working on new paid-for features to offer users. But let me stress that Skype to Skype calls and all the features that you see today - except for SkypeOut - will remain free.

You recently unveiled Skype WiFi. How does that take your company in new directions?

We decided to make Skype available on multiple platforms and independent of the PC. People need to access Skype wirelessly, no matter where they are, and what happens is that we'll be taking advantage of the rollout of Internet everywhere - WiFi and WiMax in particular.

We started with Pocket PC, and now we're looking at other mobile platforms like Windows SmartPhone, Symbian and Palm. We don't have any launch dates yet for any of those platforms. It's going to be wonderful to be able to make a Skype call from cell phones or PDAs. 

So the idea is that anyone in a WiFi cloud can make a free Internet voice call to other Skype users using their Pocket PC.

Right. At no charge, if they both have the software installed. Or by using SkypeOut if they need to call a land line or mobile at low rates.

Several users have told me Skype to Skype typically sounds much better than SkypeOut to a land phone. Why is that?

That's correct. Skype to Skype uses our broadband technology and we're not limited to the phone network. The phone network imposes certain technological limitations on what we're able to do with SkypeOut, unfortunately.

What equipment do you recommend to Skype users? Using a headset improves sound quality markedly, doesn't it?

We do recommend headsets, and Plantronics is our headset partner. It's good for your neck and frees up your hands, and it can improve sound better than some built-in computer microphones.

Have you considered incorporating Skype into other applications? For example, wouldn't it be cool to integrate it with your Outlook contacts?

Exactly. We're talking with third-party developers to integrate their applications with Skype.

And people can use Skype for other things, like sending documents to colleagues or downloading photos.

Yeah. What we want to do is remove the barriers in modern communications. If I have a Word document or digital pictures, it's easy to do and we don't have the limitations you get with e-mail.

What other kinds of gadgets will we be seeing Skype on in the future?

There are several manufacturers that you'll see turning out cordless phones that you can connect to the computer via a USB dongle. We're working with Siemens on that.

Will the wide deployment of WiMax affect the marketplace for Skype?

Sure. The more broadband wireless connections there are, the more you'll see Skype proliferate.

Should the FCC regulate the VoIP market as it does traditional telephony?

The phone market was regulated so that customers get good service and also to enable fair competition in a monopolistic arena. Voice over IP should not be regulated because there is no monopoly. Today, millions of people and teenagers in particular aren't getting land lines, they're getting mobile phones and Internet connections. The phone companies are clinging to old business models rather than transforming themselves into services companies and reducing operational expenses by using the Internet. Soon, most of us will be using the Internet for voice communication, and the idea of charging for that makes as much sense as charging for email or for using a Web browser. 

A lot of people associate peer-to-peer with piracy. Will Skype change people's attitudes toward P2P?

Definitely. First of all, the Internet has been a P2P network from the very beginning. There are plenty of uses of today's P2P networks that have nothing to do with music file sharing or piracy.

Any trouble with your traveling to the States because of your role with Kazaa? We have some fairly onerous copyright laws here.

Well, that's not a problem. We have a number of investors from the United States. The entertainment industry is still spending a lot of money on lawyers, even though they don't have a case anymore. They're still trying to drag me into things. I'm free to travel there whenever I wish.

---

J.D. Lasica is the author of the upcoming book Darknet: Remixing the Future of Entertainment.

[Brady @ Dec 19th 2005 12:05AM]

Skype - seems interesting - Didn't know what the kazaa guys were up to...

As long as it doesnt follow the path of kazaa and become engulfed in adware

[LoneSniper @ Dec 19th 2005 12:05AM]

Great interview. I love Skype and use it each night to talk to my girlfriend who is studying overseas.

[Hooty @ Dec 19th 2005 12:05AM]

I'm just eagerly awaiting SkypeIn... And you guys should really start selling the www.phoneconnector.com on your site. Actually, you should fully integrate it into Skype. Just to let everyone know how good Skype is, my father is hard of hearing and he can only hear me when using Skype (might have something to do with the Plantronics headphones also :-) ).

Here are some features that I'm waiting for:
- webcam capability, once you add that, MSN is gone
- a server based contact list

[Kelly Michelle @ Dec 19th 2005 12:05AM]

Does this mean I wouldnt have to replace a cell phone?

[mnarciso @ Dec 19th 2005 12:05AM]

This rocks

[Kelly Michelle @ Dec 19th 2005 12:05AM]

Does this mean I wouldnt have to replace a cell phone?

[Kelly Michelle @ Dec 19th 2005 12:05AM]

Does this mean I wouldnt have to replace a cell phone?

[Pete Barr-Watson @ Dec 19th 2005 12:05AM]

it doesn't work... and the support is awful...

http://www.petebarrwatson.com/archives/2004/11/skype_again.html

[Chris @ Dec 19th 2005 12:05AM]

I assume we'll be seeing SkypePhones in every home now instead of the traditional Handset?

[TheZodiac @ Dec 19th 2005 12:05AM]

Check it out - via i4u.com


http://www.godmode.org/forum/viewtopic.php?t=4461

[Lame @ Dec 19th 2005 12:05AM]

This guy looks the results of generations of inbreading... either that, or he has downsyndrome... either way, he is one creepy looking bastard.

[MS Mobiles @ Dec 19th 2005 12:05AM]

Thank you for Skype! It rocks.

if somebody with Microsoft powered cellphones needs help then call me over Skype at "msmobiles" ID or click:

callto://msmobiles/

[Milo @ Dec 19th 2005 12:05AM]

Dang! That callto://msmobiles/ link works if you paste it into your web browser and have previously installed Skype!

(Sorry about the hangup call, msmobiles.)

[Robo @ Dec 19th 2005 12:05AM]

#11, this is people with down syndrome:

http://www.down-syndrom.ch/Fotos/Welcom1.jpg

The photo of the guy in the article doesn't look anything like that, he looks like a decent looking guy to me.

[Anders Carlius @ Dec 19th 2005 12:05AM]

The cell phone to use with internet calls is here. We are working to make this a real wireless VoIP possible at TerraNet. Do visit us and give comments on what features you would like to see in the future products.

[Gaurang @ Dec 19th 2005 12:05AM]

I have never used Skype, nor used much voip either... so I am pretty much dumb with respect to this phenomenon.
But the question I had was how is this different from making voice conversations in Yahoo Messenger and MSN Messenger...and how is this different from net2phone and lots of other services that were/are able to call regular phone lines from the internet?
Thanks.

[Ben Dummett @ Dec 19th 2005 12:05AM]

Nothing says heartless like a stock media photo with the subject gazing into the distance, almost prophet like.

[Jan Ciger @ Dec 19th 2005 12:05AM]

If they fixed their credit card handling, it would be great. Right now their SkypeOut is unusable for many people, because:

- they seem to accept cards issued only in the same country where you are at the moment (they seem to check IPs or what) => if you are travelling or working abroad and need credit for SkypeOut, bad luck.

- they refuse credit cards from many countries without reason (e.g. Spain). However there is no list published or anything, so you discover this only after your account gets blocked.

- there is absolutely no way to discover what's wrong with the payment - the support is not helpful, takes ages to get to you (long queues) and they blame the problem alternatively on the CC processor or customer's bank, even though both say that everything is OK and the problem is with Skype. I have got four payments refused or canceled like this, even though the bank authorized it. After several attempts they just block your account and you cannot buy the SkypeOut credit at all for some time. Just great.

Just check out the forums on www.skype.com, there are literaly hundreds of similar complaints and nothing is done for long time. They should get their act together, because if they do not want my money, if though I willing to part with it, it is pretty strange business model. Heck, it is just stupid 25 Euro max, it is not like I wanted to defraud you of several thousands of Euro ...

On the other hand, the free PC-to-PC service is great.

Jan

[Sebastian Wain @ Dec 19th 2005 12:05AM]

Skype is great, just one think: I prefer to have a specific encoders & decoder on hardware to minimize CPU usage. Skype is very CPU intensive.

[C Waite, M Sc @ Dec 19th 2005 12:05AM]

Licensed [Ham or] Amateur Radio operators can now operate remotely located transceivers (eg, Kenwood's TS-2000 HF / VHF / UHF), via browser & - in at least one case - Skype.

Such a system is known as "Remote Base."

One system seems to be a spin-off from another innovative Swedish system - albeit receive-only - originally known as JavaRadio.

The last "Remote Base" I used (VK3UR's, in Victoria, I think) conveys the audio between radio & remote user via a Skype voice connection.

Where is the Skype Developer's kit, apparently used to integrate Skype into this innovative application?

[Gavin Terrill @ Dec 19th 2005 12:05AM]

Love the concept/service, but for Skype to survive they need to get their act together billing wise - there are simply too many problems trying to purchase Skypeout credits. Here's a clue: if your revenue is based on being able to sell something then make it easy for people to pay you.

[Boris Blue @ Dec 19th 2005 12:05AM]

SkypeOut, the prepaid service to acess any phone does not work!
I spent hours trying to make a payment, but all creditcards are refused, without explanation.
Just see the thousands complaining for months in the Skypeforum
http://forum.skype.com/bb/viewforum.php?f=19&sid=ef7ed62d9c858597d2921a8f4ac4b627

The support is useless and waist of time, they seem to be cheap robots.

And Mr. Niklas Zennstr?Nothing, no comments.

For sure, there are no millions custommers, just some thousands of annoyed and disgusted people who tried it and are running away by now.
Well deserved punishment for iresponsible "enterpreneurs" like Mr. Niklas Zennstr?

[Sinjun.act @ Dec 19th 2005 12:05AM]

Just joined and made a test call. Really impressive so I've passed the info on to friends and family everywhere: Japan to Switzerland. Other contributors please note that I give spelling lessons.

[mhj @ Dec 19th 2005 12:05AM]

The support is poor.
Why dont you outsource it to India?

[John Vassiliou @ Dec 19th 2005 12:05AM]

I tried repeatedly to buy Skypeout and had a hell of a time doing so. Sky support was not helpful. I finally figured out the problem myself. When you type in your Credit card number , you MUST allow the spaces between the number groups. In other words, type the numbers excactly as they appear on the credit card including spaces. It worked !

[Juan Jesus @ Dec 19th 2005 12:05AM]

Yo he conseguido comprar skypeout a trav�s de moneybooker. Es un sistema de pago por internet y que s� acepta el skype. Funciona muy bien y las tarifas son realmente bajas. Un saludo.

[Don Faber @ Dec 19th 2005 12:05AM]

Skype works very well, and SkypeOut as well, except I find it almost impossible to call the Bahamas from the U.S. I get an audio message stating that the call cannot be completed. Skype Support has been no help, so maybe this forum will help get the problem solved! Am waiting for videoconferencing on Skype...hopefully it will be available soon.

[Don Faber @ Dec 19th 2005 12:05AM]

Skype works very well, and SkypeOut as well, except I find it almost impossible to call the Bahamas from the U.S. I get an audio message stating that the call cannot be completed. Skype Support has been no help, so maybe this forum will help get the problem solved! Am waiting for videoconferencing on Skype...hopefully it will be available soon.

[arshia @ Dec 19th 2005 12:05AM]

i am a novice who got skype downloaded, i therefore request for point by point empirical instructions starting with 1. log on 2.click on skype icon on yr desktop.3 write registered name on skype box.4......so on till iam able to talk to another skype member

[arshia @ Dec 19th 2005 12:05AM]

pl give point-wise empirical instructions to novice so that he should be able to operate the downloaded spyke

[faruk @ Dec 19th 2005 12:05AM]

spontanie4skype
do u know actually
how it works with the videocamera
the videoresources
how can i invite somebody to the videoconference
thanks

[Hatar skype @ Dec 19th 2005 12:05AM]

HOW MANY TIMES SHOULD I WRITE TO YOU ABOUT THE PROBLEM WHICH I CAN NOT USE ANY SERVICES FROM SKYPE?!
I WANT MY MONEY BACK!
FUCK YOU skype2!
FUCK YOU GLOBAL IP SOUND AB!
FUCK YOU MR. NIKLAS ZENNSTR?!
2005-06-21
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2005-06-21_Det h?kommer inte ta slut tills jag f?uppr?else, f?an ! --------- VB: SKYPE TURTURE_NIKLAS-ZENNSTR? _ SATAN - ?LAR !!!
�����������������������������������������������
2005-06-17
Hej,
Nu ?det ett tag som jag ?j?igt f?nnad p?r usla service och tj?ter och ?u v?e p?tt jag inte f?vare sig n?t svar eller ??at problem. jag vill ha mina pengar tillbaka. H?nedan har jag kopierat del av material som jag har skrivit till SKYPEs kundtj?t flera g?er. Jag har skrivit till
tidningar och journalister om det j?a usla tj?ter som ni skryter om. Jag har d? om vad Aftonbladet kallade SKYPE UNDRET till SKYPE
TURTURE ! jag vill ah mina pengar tillbaka. FY FAN ! SATAN !
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