Skype’s Vision

The Economist profiles Niklas Zennstrom, who co-created Kaaza and Skype:

So far, Skype users have only been able to call other Skype users from their PCs. But the latest version of the software, which is now being tested, allows Skype users to call ordinary telephones too. While Skype-to-Skype calls remain free, users must pay to call ordinary phones: but rates are low, with most calls costing around 1 cent a minute. This puts Skype in direct competition with traditional phone companies, alongside a growing band of other small firms that offer low-cost telephony by routing calls partly over the internet. By bypassing the traditional phone network as much as possible, they can avoid the fees charged by traditional operators for carrying calls over their wires.

But Mr Zennstrom thinks that merely linking traditional and internet-based phone systems is an inelegant halfway house. He is more radical, believing that all calls will migrate to the internet and be provided via software alone, with no need for any dedicated infrastructure. Telephony will be another free internet service, like e-mail and web browsing are today. (Skype plans to make money by charging for extras such as voice-mail, call waiting, multiple lines and calls to the few die-hards who stick with pre-internet phones.) If he is right, the traditional fixed-line voice business will shrivel and die, and telecoms incumbents will be reduced to selling broadband access, and little else.

Mr Zennstrom has competed with telecoms giants before, having worked at Tele2, then a small Swedish operator, during the 1990s. He came to the conclusion that only a radically new approach to telephony would ever be able to challenge the incumbents, whose ownership of national telephone networks gives them a huge advantage over their competitors. Skype is the result. So how can the incumbents respond? Some are rushing to launch their own internet-telephony services, but most are trapped in the monopolist mindset. Mr Zennstrom recalls their attempts in the early 1990s to establish fee-based proprietary e-mail services, in effect clinging to the old idea of the telegram. Such services were wiped out by internet-based e-mail, which was free. The same, he believes, will now happen to telephony.

Digital Home

The Economist writes how “companies are fighting to turn your home into an entertainment multiplex”:

Intel, with a virtual monopoly in the chips that power PCs, naturally hopes that PCs will dominate and morph into media hubs. So does Microsoft, with its near-monopoly on PC operating systems. HP, Gateway, Dell and Apple also want the PC to win, although HP is also big in printers, digital cameras and other consumer gizmos, and Apple has the iPod to fall back on.

On the other side are the giants of consumer electronics. Sony wants future versions of its game consoles, rather than PCs, to play the role of digital hub. TiVo, a leading maker of digital personal video recorders (PVRs), has hopes for its machines. So do makers of TV set-top boxes.

Extrapolating from history, the PC industry would be the favourite to win, since it has the powerful and rich Microsoft on its side. Microsoft is certainly trying. In the past year, it has launched and re-launched its Windows Media Center, a version of its operating system that looks more like a TV menu and can work via a remote control. Microsoft is also pushing its own next-generation DVD technology, that competes with rival technologies from Japan’s Matsushita, NEC, Toshiba and others.

The one thing that all companies seem to agree on is that households will be connected to the internet via a broadband link that is always on, and that content will be shared wirelessly between rooms within the home. The upshot is that there need not be any single device inside the home that becomes a central media hub. A baby picture could be stored on a PC, on a console, or on a mobile-phone handset. Or it might alternatively be kept on a remote and powerful server computer somewhere on the internet. The latter model is how subscribers to Rhapsody, a service provided by RealNetworks, an internet media firm, already listen to music.

The gadget makers therefore have much to ponder. Art Peck, an analyst at Boston Consulting Group, says that the real money in the digital home will be made by those providing a service or selling advertising. The hardware makers, he thinks, are therefore fooling themselves by thinking that any device can become a Trojan horse to enable them to capture the bounty. It is much more likely that they will all end up as makers of interchangeable commodities for the digital home, that the consumer cares little about unless the stuff breaks down.

Grid Tools

ACM Queue writes: “A set of surprisingly mainstream software tools has come out of an unlikely sourcea scientifically focused collective called the Gelato Federation. Formally launched in March 2002, the group seeks to apply open source Linux software running on Intel’s advanced Itanium processor as an enabling technology toward the goal of putting together large, highly scalable clusters of 64-bit systems. The Gelato group believes such scalability is the most significant trend in high-performance computing in the last 10 to 15 years. It marks a potentand much cheaperalternative to the Cray supercomputers that populated university labs in the 1980s and early 1990s. Indeed, clusters (also called grids among jargon-slingers, though the simple descriptor networks is often equally apt) are seen as the quickest way, with current technologies, to push overall performance up into the teraflops region.”