IT EXPO Keynote: Niklas Zennstrom:

October 25, 2005

Skype CEO Niklas Zennstrom said Tuesday in his keynote presentation at the IT EXPO in Los Angeles that Skype remains committed to revolutionize how people communicate through the Internet.

"What can be more natural than voice?" Zennstrom asked rhetorically. "Talking on the Internet should be simplest and most natural thing in the world."

Skype, he said, is the only major internet company focused 100 percent on voice communications. Nevertheless, he said that the latest launches by several heavy-hitting web portals have kept the Luxembourg-based company on its toes.

"The latest launches of MSN, AOL and Yahoo! make us focus even more," Zennstrom added, noting that voice is its only focus. "[It] is what we think of day and night."

It is this focus that has led to Skype’s growth.

As broadband becomes more ubiquitous most calls will migrate to the Internet using free software on the edge of the Internet that removes barriers to more natural forms of communications.

Indeed, consider the following facts and stats provided by Zennstrom:

•Skype has grown to 61 million registered users. "It’s actually more than that," Zennstrom said.

•That number is growing at 170,000 new registrations per day. "The E-Bay acquisition took us to a whole new level."

•Skype is present in every country in the world.

•Skype’s ecosystem is thriving with more than 200 plus hardware partners, 1,000 developers, 10,000 affiliates, 200 hardware devices that Skype certifies, and 150 Skype enabled applications

"We cannot do everything, [so the company’s sole] focus is on communications," Zennstrom said.

There is also a Digital Goods Marketplace, from which users can purchase ringtones, etc.

Zennstrom also discussed the launch of Skype Groups, noting that 30 percent of Skype users are businesses and 20 percent of its users use Skype for their primary business’ voice communications.

According to Zennstrom, businesses beta testing Skype Groups are drawn to Skype for the following reasons:

•Free Skype calls

•Knowing when colleagues are on line

•Free conference calls

•Mobility of call forwarding

•Setting up water cooler multi-chats.

The payment options for Skype Groups are through PayPal, bank transfers or by credit card.

Interestingly, Zennstrom noted that 50 percent of companies have less than 10 employees; 63 percent of companies are conducting business abroad; 70 percent use a dedicated headset and 30 percent have Skype number on their business cards.

What would a presentation from Zennstrom be without mentioning the Skype-eBay deal? Specifically, Zennstrom reiterated the reasons why the acquisition was sound.

"It goes back to the objective to becoming the world’s largest on-line communications company," he said. "[With eBay, Skype can] integrate with big companies to reach more users, and create ecosystems faster. We had opportunities to speak with several other companies. There are a lot of common philosophies between eBay and Skype.

The end result is that Skype will be a "stronger and faster company."

"I’m committed to stay for many years," Zennstrom said.

Plans on using e-bay reach more users.

The presentation then shifted to a Q&A period, during which Zennstrom said that he sees AOL, MSN and Yahoo!, all of which have bigger user bases, as Skype’s greatest on-line communications competitor.

"None of them are communications companies, they are on-line portals," Zennstrom noted.

Responding to a question regarding how he is dealing with port blocking, Zennstrom responded that, while port blocking is a problem, "what we found out in competitive markets is that companies that block broadband services are telling consumers to go somewhere else."

"Skype is not parasitic," Zennstrom said.