SKYPE KICKING BUTT... PATH TO GREATNESS

Skype recently hit 1 million users of their premium service, SkypeOut, and over 86 million downloads of their software. They spread virally to an astounding degree and now they have the negotiating power to strike deals with the wireless handset makers. What an ideal path of growth and positioning. I'm not sure if that is the strategy they planned for, but in hindsight it looks great.

Niklas Zennström made a name for himself as cofounder of the Kazaa peer-to-peer file sharing service. Now the entrepreneurial Swede hopes to make his latest venture, the Skype p-to-p voice service, a household brand. In recent weeks, the CEO of Luxembourg-based Skype Technologies has signed a string of deals with wireless handset manufacturers. Carrier Devices, for instance, has agreed to install proprietary Skype VoIP (Voice over Internet Protocol) software in its i-mate branded Pocket PC phones with Wi-Fi capability. Motorola is also on board to integrate Skype software into a number of its new wireless devices. Another big-name manufacturer on the list is Siemens.

In a crowded booth at Cebit with music blaring in the background, soft-spoken Zennström fielded a number of questions from IDG News Service. Contrary to reported customer complaints about call latency, failed connections, and voice quality with Skype, Zennström said the VoIP offering is much better than traditional phone service. Don't expect this shrewd businessman to knock his own service in free editorial space. Zennström takes pride in boasting that his company is adding millions of customers without paying a cent on large advertising campaigns.

IDGNS: Your service appears to be growing strongly. What are your numbers?

Zennström: Skype is growing extremely rapidly: We have 29 million users and are adding 155,000 users each day. Most of them run the software on their computers, but we also have around 1.3 million Pocket PC users.

IDGNS: Last year, you entered into an agreement with RTX Telecom A/S to develop a line of cordless phones. How do these work?

Zennström: You can connect the cordless phone to a normal socket and use it as a normal phone. But it also has a USB connection to your computer, which runs the Skype software. When you push a designated button on the handset, you can use Skype to make a VoIP call. (full interview)