We recently got a chance to briefly sit down with Sun CEO Jonathan Schwartz, who definitely ranks among the geekier and more sincere CEOs we’ve had the privilege to meet. We discussed the long-missing JavaFX Mobile platform Sun promised a while back, as well as Java on the iPhone, and doing battle with Microsoft as an open source software vendor. Check it out over on Engadget Mobile!

• On Urge and integrating with Rhapsody, “The Urge brand will be retired… but we wanted to be welcoming and loving to existing Urge subscribers” who are now making the migration to Rhapsody.
• On Rhapsody and MTV’s strange bedfellows partnership: “Philosophically we have very similar views…”, Real intends to leverage “MTV’s expertise in genres and content curation”, but technologically Real’s Rhapsody platform will continue to be what the venture builds off.
• For example, one unannounced iteration of that integration would be with “MTV’s Top 20 video countdown — you’ll be able to see the countdown and get music directly in Rhapsody.”
• On PlaysForSure: “PFS is a legacy system that Microsoft abandoned when they went to Zune.” With the Clix2 Rhapsody, Real and iRiver “picked up the mantle of innovation that MS chose to abandon.”
• Will real continue to support PFS? “Yes, as long as there is a high volume of devices and we can extend them, we see no reason to stop supporting the legacy architecture.”
• On DRM-free music sales: “We think in the long term DRM-free music delivers the best consumer experience, solves the interoperability problem, and better connects with consumers psychologically.” Damn skippy.

Today’s interview is a first for Engadget in a couple ways: we’ve never talked with an executive whose company doesn’t actually make or sell something, nor have we talked with anyone whose technology is theoretically infeasible. Still, we’ve all had our chance to criticize Steorn for its scientifically heretical claim to the invention of a perpetual motion machine, its failed live demonstration of that machine, and so on. So now it’s time to turn the mic over to Steorn’s CEO Sean McCarthy, where he discusses his belief in the potential of Steorn’s Orbo technology, his feelings about the scientific community and skeptics at large, and what happens next for the supposed free energy company.

Thank you for taking the time to speak with us today. I’m sure that you’re very busy, especially after the last couple of weeks–

I’ve had better weeks.

Yeah, I would imagine. But before we actually get started talking about the technology [Orbo] or anything like that I think that a lot of people would probably like to know a little bit more about the company. So what can you tell us about Steorn that we don’t already know? I mean we know that it was a company that was founded not to break the laws of thermodynamics but rather technological means.

The company was founded by myself and three other guys back in 2000 and it was basically three of us had come from a company that I had been working with for a year and the Irish economy was doing well so we decided we’d set up a tech company with no real objective. We started working in the early days just helping people manage some of their big e-commerce spend. So it would primarily be contract management, so for example where corporate would be spending vast amounts of money on e-commerce projects.

But that day was over so we came in to restructure the contracts and try to manage them into a more realistic burn rate. So we did that with probably some of Ireland’s biggest corporate e-commerce sites including people like Banks of Ireland and so on. In 2001 we were asked to get involved in the development of some anti-counterfeit technology for credit cards and basically that became the mainstay of our business both in terms of developing anti-counterfeit systems for optical disks and for plastic cards and also doing an awful lot of forensics and expert witnessing for law enforcements across Europe.

I see. So then you stumbled upon this technology by–

An awful lot of the work we would have done would have been done in ATM fraud, which is a very widespread fraud in the UK and in Ireland and across Europe, and from working with the police they have quite a different view on the crime than for example a bank, and the police’s prime objective is to catch the bad guys. So we started looking at covert surveillance equipment to monitor high risk ATMs, because clearly what the law enforcement wanted to do was to get evidence of a person physically committing a crime and it was during the development of some covert CCTV cameras that we were looking at basically very mobile devices — so we wanted wireless image transmission and also not to have to worry about wiring them up to anything. So we initially looked at solar cells and we looked at augmenting solar cells to extend the battery life of the system with winter at the top of these were lamp post sized devices. So it was during that we started really playing around with magnetic systems and that’s where we began to notice some strange anomalies and got caught in this weird and wonderful world OU. [Over unity, aka free energy.] Sometimes we wish we hadn’t but we have.

So we know you stumbled upon this supposed technology. How long did it take you guys to realize what you thought was going on here?

It took us an awful long time to be honest, because the first thing when you get an anomalous reading on a system in a lab, the first thing that you do is obviously question your test equipment. We obviously went out and we looked out and looked at the way we are testing it and systems we were using to make analysis and so on. And after a fairly extended period of testing in different ways — I should make the point that when we discovered this we weren’t generating, the systems didn’t run away with themselves. What we noticed was at certain speeds the speed range for magnetic systems that we were getting substantially different energy results — which is unexpected.

So we spent a good six months ourselves just looking at the systems and not full-time six months. We wouldn’t jump on it and say, you know, this is the solution to the world’s energy crisis. We did it in a fairly calm, rational manner and over a course of the six months we began to realize that hey this, these readings are not due to some measurement anomaly and that these readings are real. There are these energy anomalies at certain speed ranges with certain magnetic configurations and that’s pretty much how we managed to convince ourselves that it was worth pursuing.

You just mentioned, to quote, that this is the solution to the world’s energy crisis. Do you think that is actually the case? Do you think that this will end the world’s energy crisis?

I don’t… I mean… My own background just to explain to you is providing technology into the UK Royal and gas industries. So I know the energy industry pretty well. I don’t think there is a single solution to the energy crisis. I think that certain energy demands have certain needs. We have no doubts that what we have can play a very significant role. However, there is one thing sitting in Dublin here with a claim on a technology that nobody believes. Making that a commercial reality is a long and difficult road. So we are not naive enough to say that we will have a massive impact in the short frame of time, but we can see that it’s possible and that’s what we’re dedicated to.

It’s interesting that you mention that it’s a technology that no one believes and I’ve seen some of the videos where I think it was you or one of your colleagues refers to the technology as being “absolutely impossible.”

That would be me. [laughs]

Why do you think that this is so difficult to pitch to people?

From the simple point, we’re all believers up to the notch of pretty well qualified engineers. You know, we have very classical university training and we’ve worked months of our lives in a classical engineering and technology environment. And so, the only way I can describe how I would feel about this technology is that if I’d be looking at this technology from the outside I’d be going, “Hocum! This is complete and utter rubbish! This is the most incontrovertible law of physics and if this was untrue then the universe wouldn’t work.” So I understand the skepticism, I would be very much and like everybody else. I’ve seen these kind of claims come and go over the years. So I understand it and an awful lot of what we’re about is to try and at least erode people’s disbelief. Because we can’t make this a viable commercial technology without obviously people accepting that it’s real.

Right, and in the US the USPTO, our patent office, actually requires people to send in physical working samples of supposed perpetual motion machines because they have historically received so many claims for patents to this system.

[laughs] We work with a pretty large U.S. patent firm. We took the decision that because of the company, we have so many battles to fight, and the last thing we wanted to do was to fight a battle with a patent office. So from the patent perspective we don’t make claims that would violate classic Newtonian dynamics. However we have constructed a portfolio of patents that do protect us. So we’re making claims that protect the technology… So we’re not concerned about our patent position or having to fight because even that statement about the patent office is not necessarily true according true according to our patent agents. But again, we haven’t felt the necessity to make claims in our patents of you know overunity or anything that could be deemed scientifically controversial. That doesn’t mean that we don’t believe in the claim, it simply means that we can protect the technology without having to go through that step.

How many people do you have working on this Orbo technology right now?

Head-count in the company is 21 full time staff and we would have anywhere between probably 5 and 15 people working on the contract at any one time and they would be in partner organizations or direct contracts to the company. It’s very substantial for a very little company’s operations.

You guys are operating strictly on VC right now? Or what are your other means of income?

Since we went public last August we stopped all works with the forensic and expert witnessing simply because we would not be credible, we’d be too easily — we’re presenting obviously to the prosecution. It would be too easy to be discredited with a claim like this publicly in the eyes of the court. So it’s currently no revenues at all and we will attempt to make no revenues until the technology is validated.

How are you paying your employees for the time being? Is this from cash reserves?

We’re operating via private investment, which we took through this all last year.

So that’s the company, let’s talk a little bit more about the technology that you guys have supposedly developed here. Laws of thermodynamics basically state that you can’t achieve 100% efficiency in any apparatus and that there are always transfers of heat and energy in any system. But obviously you guys are claiming 100% efficiency. Do you have a statistic or number of what you estimate the energy efficiency level of your machine is? Is it 110% or 150%?

It varies from configuration to configuration. I think the largest efficiency that we would have physically measured would be about 485%. These numbers can be misleading. For example we might be getting 485% per joule, which means were getting 4.85 J out, but there could be a configuration that’s could be delivering 130% efficiency yet delivering 10 joules. So, the technology itself is pretty well researched in terms of punch line efficiency it’s 485%, but that wouldn’t be the optimum output of the system. Obviously we’re more focused on direct power output of a device than the punchline numbers. 485 to 1 is 4.85, but we could easily say, 10 to 12 joules off of a system is going to have a lower punch line efficiency. And power output is obviously the key factor, energy output is obviously the key factor.

So you guys have been trying to bring the scientific community into the fold. Obviously kicked off by the full page ad in The Economist and there’s the open invitation…

[laughs] It was a brave decision.

Well, it definitively opened you guys to a lot of criticism. My publication is definitely not excepted from that. I think it’s one of those claims to where you’re just going to have to put up with the lumps.

We knew it. Again, the only way I can describe this is that we didn’t set out to do this. We stumbled upon it. I wouldn’t believe a word of it if I wasn’t working here and so in deciding the best route for the company was to go and do this, what they call a slap in the face of science. We had no illusions at all of how it looked or how it would be conceived, what we would be called and so on. But at the end of the day we have to face that, but it’s a relatively easy thing to face when you know what you have is real because, you realize there is an end to it and we can get on with the business of business.

I think part of the reason why people didn’t and don’t take it seriously is partly because there is no [credible] university affiliated with the research. The fact that you guys were not out to actually invent this new science and that there was no big name physicist behind it at the time is, I think, what is most damaging to your credibility.

To be fair, I don’t think of there’s an awful lot of what we could have done with respect to credibility. But the other thing to recognize in terms of the August thing [running the ad in The Economist] is that we achieved our objective, and our objective was to get qualified scientists engaged. As much as we get an awful lot of criticism, and obviously the event the last couple of weeks haven’t helped, the bottom line for us is that process has started and that process will end with very qualified people doing the analysis. So were quite happy to sit here — happy is the wrong word — but we’re quite willing to sit here and take the smirks or the laughs or the cries of fraud and so on because August was a big victory for us because our biggest concern in doing all of this, is, well, what if no scientist responds? That would have been a disaster for us. The fact that we got ridiculed, that was going to happen anyway.

Since this open invitation to invite scientists to review the technology under their own means and their own circumstances, that they see fit–

We’re obviously covering all of their direct costs and paying them a nominal fee to do it. But they’re deciding the details of the process. It is and will be seen to be at the end of it, a fair process. We’re not paying them massive consulting fees, which is one of the concerns that we had. We tried to structure it in such a way that when the results arrive, and obviously we are very confident in what the results are going to be, that people could look at the process and say, it was a fair process. Although we’re obviously keeping it pretty non-disclosed, but in the end of it when these guys report, people will be able to see how much they were paid, the level of testing, and where they’ve gone through. And so they can see that the report, whatever it says, was fair.

I understand that some 5,000 scientists applied to be a part of this.

No, we had 5,000 total applicants. It was an online thing. So when you rule out the Bart Simpsons who had applied we had 1,000 qualified people, of which about 500 who would be qualified scientists, and 500 qualified engineers.

And so how many people have actually accepted this challenge and are currently working on this?

We’ve signed contracts with 22 of them. There is a copy of the contract on the website, and 22 of them are involved in an analysis of the technology.

Do you know when they are expecting to publish their results? Because I know that was one of the requirements as well, that they publish once they’ve made their conclusions about it.

The straight answer to it is no. We’re not in control of the process. All we can do is facilitate it. So, while I think a lot of people will say, well this should easy, it actually isn’t a simple process and also it’s not a simple process on the technical level. There are a lot of energies that need to be looked at. It’s also such a big claim that these guys need to be 100% sure about what they do, whether they prove us right or wrong. It’s a thorough of process, it’s a slow process, and we haven’t set a time limit on it, and neither do we know how long it’s going to take.

So, I’d like to talk about the demo.

I wouldn’t. [laughs]

Yeah. Well you knew this was coming. [laughs]

[laughs]. I’ve done nothing but talk about it, but go on…

I’d like to know why you think it failed — and not the reasons that you’ve already given. We’ve definitively heard that it was ball bearings, or it was mechanical failure, it was the heat from the lights. We heard all that. We know. I want to know why you think it failed, in the sense that why did the other two backups that you guys brought not work? Or why were you not able to relocate the demo to another location that didn’t have these issues? Or why was it not thoroughly tested enough, and so on…

I’m not going to tell you anything that if you have read some of this stuff that you haven’t heard. The simple fact of the matter, just to state, is that this is not production technology and so you know anybody who works in the prototype world will understand that there are always issues. But with respects to what happened, we brought three systems to us from Dublin, three component systems, we don’t move them in their operational way, we stripped them down. They are very, very simple and there is not huge configuration to them, but they are very sensitive configurations because there are lots of magnetic loads and so on. We got one of the systems working on the Tuesday night which was the Tuesday before we were going live on Wednesday evening. We started to install that in the demo case and began to notice problems. It wasn’t working. That being the prime problem.

We then took the classic engineering process of stripping it down and testing, testing, testing, and what we found was that in that prototype was that the bearings, while not visibly damaged but the friction had more than quadrupled in them, which would have been a killer in a this type of system that we were planning to show. And under pressure we just kept plugging in all the spare bearings we had. Now, these are not standard bearings you might buy from your local hardware store. These are very, very low friction bearings used in the watch industry. Our analysis of what happened is that the heat allowed play in the system that damaged the bearings to the point where the extra friction in the bearings didn’t allow the technology to happen. Whether people believe that or don’t believe it, there isn’t a lot that I can say other then that’s what happened.

As this is supposedly scientific phenomena that — by your terms — redefines the laws of physics, shouldn’t this be demonstrable consistently? Of the machines that you brought, which by all appearances looked like a very simple closed system, why did only one machine work?

First of all, we only planned to get one machine working just in the time frame. The spare bearings that we had we took from the other systems, so at the end of the day we ended up on Thursday morning with six bearings of which we had damaged five for whatever reason. We were pretty sure we know the reasons whether people believe them or not. I then had to make the decision to defer because the reason that actually happened has nothing to do with the bearings, the reason it happened was just the ridiculous time frame that we were doing it in. So we will be doing a demo, again. Obviously people will believe it when they see it and I can understand the skepticism about that. It is a deferral, our guys are currently in the process of rebuilding some more robust systems and changing some parts to prevent the engineering thing from happening again and we’ll be back out in the near future with it.

So do you have a time-frame that you’re looking at for the next demo?

What we’ve decided to do this time, is rather then beating ourselves with a stick, we’re going to get it running in a location and then we are going to announce that people can watch it online. So we are actually physically getting it operating, it will be the same. The principle behind London, which was clearly a failed demo, was that it wasn’t for for a sequence of webcams to people to watch, but it was equally physical, so that people could go there. We put in some PCs so they could chat about it and so on. So the principle will be identical, that it’s both a physical location where people can go view it. Obviously not everybody can do that, so people can watch it online and chat directly with people there and discuss theories of where batteries might be hidden and so and so on. It’s a deferral, we have decided that we will only announce it when it’s actually live and in place this time which is a mistake that we made last time. We should have done that but didn’t.

I think another thing that might have raised some eyebrows about the London demo was that it was taking place in an art gallery of sorts. And, again, as I mentioned earlier, this kind of level of scientific community credibility that I think maybe some people had expected this demo to show up in the university setting with a far more controlled environment then what you would think of as your normal London art gallery.

I mean the thing about Kinetica is that it’s a kinetic gallery. So that the stuff they do is kinetic art, and obviously our technology is kinetic in nature. The other thing about it is that is very open plan. It’s glass on three sides, the demo case was suspended five feet in the ceiling, and we had invited some skeptics to come along and test it because if you’ve seen the device there is virtually nowhere to hide a battery, and there are obviously ways to transmit energy, but they are relatively easy to resolve. So the intention was to be open, and that intention will remain. The other thing that people need to understand is, to be honest, if it had gone as planned I would be expecting to have the conversation with you now and you going, “How did you trick us? How did you hide the batteries?” So, no demo is ever going to be deemed as conclusive proof of this kind of requirement and neither should it be because it doesn’t answer all the questions.

But for us it’s only a process of erosion where we’re saying, look we will demonstrate the technology. Obviously we didn’t last time, but we will be doing it. We don’t expect that to be a slam dunk for anybody. We do expect it to at least erode some people’s views of why we’re doing this, and how we couldn’t possibly have what we claim to have. But at the end of the day, our general analysis was that at the heart of the Steorn general watching community, the people who think that we’re a fraud would use it as a definitive proof we’re a fraud, and the people who believed us would use it as definite proof that they believed us. The audience was intended to be wider then that. But there is no demo that is going (and neither is it designed by us) to be perceived as conclusive evidence. Conclusive evidence is the views of the scientific community and that’s an issue that’s in hand with us and that’s ongoing.

You mentioned inviting skeptics to come to the demo and I’ve actually read one of the reports of one of the skeptics that you invited, someone who identifies himself as Doctor Mike.

Doctor Mike, yes.

His quote about the technology was: “My conclusion…”

I believe that it was all spinning my head. [laughs]

Right… what he said was that, “My conclusion after going through all this is that Steorn is neither hoax nor scam. It is delusion. The reason it seems surreal is because it is surreal — we are the real part of someone else’s imagination.”

How can I criticize. We invited the guy to come from Canada to see something. He didn’t see it. It’s his opinion. He has no other basis, he has nothing else to work on, other than sitting and having a chat with us. I can’t possibly criticize, Doctor Mike for what he said. It’s exactly what I would have said, I probably would have been harsher if I had been in his shoes.

I don’t necessarily want to talk specifically about Doctor Mike, but I feel that is probably what a lot of people feel at this point. You’ve been very open about your process, which is more than what you can say about a lot of snake oil salesmen who might try to peddle a perpetual motion machine. But at the same time that I think that a lot of people just seem to think that what it really comes down to is that you guys have convinced yourselves that these are true phenomena, and that you actually believe it, whereas it’s not necessarily the case.

Again, obviously if I’m delusional, whatever answer I give is going to be based on my own delusions. The only thing that I can say — I can say a couple of things about it. First thing is that the answer that anybody looking at us and wants to know will ultimately be delivered contractually. It’s going to happen whenever it happens from a bunch of scientists. So unless they’re delusional as well, if they agree with us then we deal with that at the time. If you stand back from the failed demo and say ok, I don’t think anybody should believe this — I wouldn’t believe this in the circumstances, demo or no demo — there is a process that’s in place that’s a real process where real scientists are going to draw a conclusion and that conclusion will be made public.

The other side of it which I think is why people have taken the delusional route is because an awful lot of people had expected us to rig the demo. They expected us to have a hidden battery or whatever it is. If we were in that business, believe me, there would have been a spinning wheel. But we’re just not in that business, the business of scamming people or rigging demos. It failed, it’s prototype technology. Huge disappointment to us. We’ll redo it. But the answers to the question — the demo doesn’t answer the question, it provides some thoughts from supporting evidence when it happens. But the answer to the question will be done by professionals and then were either be found to be delusional or not.

So what happens–

I mean, I was expecting a lot more criticism [from everyone] to be honest.

So what happens if you can’t prove this supposed technology? If you can’t figure out a way to convince people.

But we have. We have. There are lots of tactical things that we’ll be doing, such as demos — and obviously we’ll have to respond to the failure of that demo and probably do more than we’ve intended to. We’re a small company and maybe we’re slightly overstretched in doing it, but we have to do it. But the jury process is happening, they will have to report — they will either have to say yay or nay. Ok, so you can say how long will it take? I don’t know. But the point of the matter is that there will be an end to the process and an answer will be provided. Now that answer, if it’s what we think it will be, will obviously raise more criticism and so and so on. But we’ve got lots of other things that we are doing to address that. There is going to be no defining moment in my opinion where people go, “It’s true!” Even if these 22 scientists — who are really top scientists — turn around and say, “By Jove they’ve done it!”. We as a company will still have to drive that message home in other ways.

The purpose of the London demo — which has clearly backfired on us — was part of that process. We’re going to have to do more things like that in a more creative way and a more convincing way. But none of these things and themselves are going to convince anybody. People are still going to think we’re delusional or scam artists, or whatever the latest theory on it is. But, again, the answers will come. I know an awful lot of people have said to us, that’s an excuse to raise more money and drag this out. We haven’t raised a dime since last August and we’ve said quite simply we will commercialize this is no way, we are not going to sell film rights or book rights whatever the latest scam theory on it is. We’re sitting here like everybody else waiting for the results of the jury and we will do other things to try and support the premise that we’ve made — understanding completely how ridiculous it sounds.

So then assuming that your technology does then proves itself to be true. What happens then?

What happens then is that’s in many ways is the smallest hurdle for us because obviously we believe it’s true — whether we are delusional or not will be found out ultimately. What we have to do then is actually make money from it and get it into the market. We’ve chosen a kind of open-source model. We do have a developer forum for people, were putting in learning modules about how you go about doing this. The concept is very simple, but once it’s validated this released in an open-source way with a very comprehensive database of e-learning, designs and so on.

So people can go off and do this for themselves from a hobbyist level through to a commercial entity level. And the purpose of that is just to understand is to ensure widespread adoption. Typically if you believe this kind of stuff is possible you expect people to run off to the biggest company in the world and to do big fat licensing deal and retire off to the Maldives. We believe that there is a far more effective way to get it into market which is to release it to everybody in exactly the same way. Whether you are the biggest or the smallest company in the world you get access to it, and if you can go off and you can develop products to market fast, then you’ll win, we’ll win.

So then I guess the only other thing I’d like to know is what you have to say to everyone in the technology community who feels as if they have been toyed with or led astray.

I don’t think that anybody in the technology community ever believed it. So I don’t think we’ve been toying with them. I think it would be an unfair assessment, I think people in the technology community would probably scoff at how naive we were trying to do the demo in such a short time frame and we failed the thing. But we haven’t toyed with anybody. If we were toying with people we would have rigged the demo and we were never going to do that. We’re genuine about this. We fundamentally believed in what we have and we fundamentally believe in it’s impact and what it can do. We just move on, it’s as simple as that. I don’t think that anybody in the technology community will believe this until it is validated and until they can build one themselves or buy one in stores.

Well whether or not they believe it — and I do agree that almost everyone does not believe it and that everyone has been extremely skeptical about it. But the fact between the ad, the demo, and the PR campaign that has gone on inbetween those two bookends, Steorn has raised a lot of awareness and attention–

I don’t think we have done any PR in between. To be fair, I have no problem marketing what we believe in. I’m not going to be apologetic for August because it was hugely successful for us. We went out to attract the attention of a critical world of science — a rightly critical world — we got it and now they are off doing their job and they’ll deliver an answer. With respect to the demo, yeah we can’t complain. When you shoot yourself in the foot, you don’t ask yourself was the gun loaded, you just ask what were you aiming at. We can have no complaints.

But I don’t accept that we were toying with people. We have a technology, we’re putting more than our money behind this. We’re putting everything behind this, our reputation and everything behind it, because we believe. That doesn’t mean that other people believe, but we do believe, and we do believe in the medium term that this technology will make it to market and that is what we are interested in. The rest is noise.

So what are you guys planning to do going forward that will improve this process for the general public who is paying close attention to what you’re up to?

Obviously we are going to have to redo the demo. There is no question that we are not going to do the demo. We will, as I said before, not pre-announce it this time. We will get it set up properly, but the ground rules will be identical. The ground rules will be physical public access to the device, online webcams so it will be as open as possible. If anybody has seen the intended device and then realizes that it’s, well, not impossible obviously to hide a certain energy source, it becomes quite a convoluted process. So we are going to try and demonstrate the technology in it’s simplest, simplest format in a place with public access where people can watch online and talk to people there.

That will be one thing we have — and to invite skeptics along. We have to do that. We have to embrace the skepticism. But equally to understand, these are not intended to be slam dunk results, because they won’t be. There will always be issues and rightfully so a simple demo, no matter how long it lasts, isn’t proof of the claim. Proof of the claim is scientific analysis. But we are going to have to do other things as well. I won’t go into details, but the biggest mistake that we’ve made and obviously we have to learn from our mistakes was to pre-announce the London demo. We’ve paid the price for that, we won’t do it again. But we will be doing probably an awful lot more than we had intended. Basically when it happens we’ll be letting people know. It will not be that far away.

Sean, I really appreciate taking some time to talk to us. And I appreciate you being very candid in speaking about this stuff.

No problem Ryan, I know how crazy all this stuff sounds. [laughs] I don’t know what to say to people other than… I guess all that I can really say is that at the end of the day the key issue outside the demo and marketing and all that stuff, the answer is coming and we’ll know. And it is never our intention to toy with people, and that’s the first time I’ve heard that said. It just doesn’t make an awful lot of sense.

I don’t want to accuse you of toying with people. But I think that people feel as though they have been toyed with, and I’m asking on account of that.

Which is a fair point, I guess. I’ve met an awful lot of disappointed people. People who came, who believed, who wanted to see history made. Disappointed skeptics, people like Doctor Mike who we dragged half way around the world — and all I can do is apologize to them and say look it didn’t work, but we are going to do it again. It’s not the end of the Steorn story. Unfortunately, I’m sure that many people wish they’ve never heard of us again but we’ll be back and we’ll be back in the not to distant future.

Well, we’ll be waiting.

Alright. Cheers Ryan.

Thanks.

We got a rare chance to sit down and talk shop with recently-named Sony Computer Entertainment, Inc. President Kaz Hirai, and his US successor, Jack Tretton. These two had a lot to say, and we were more than happy to let them talk about where the PS3’s going in terms of hardware, software, and services, why Sony’s E3 presence this year is so radically different than last year, even a little bit about how things have been at PlayStation HQ post-Kutaragi — check it out!

So out of all the three press conferences we’ve been writing up, we’re giving each one a grade based on a new highly scientific Mega Man ranking system. Sony is our last one, but chronologically so we haven’t gotten there yet. But this press conference had a much different tone then let’s say last year’s E3 press conference. How much did you guys look at last year’s, how should we say, performance, and decide that you needed to do something different? What kind of decision making process was that?

Jack: Well obviously I was not as intimately involved in planning last year’s press conference as I was in this one, but it’s funny now that you look at that perspective and you see some of the other press conferences and how people are conducting themselves. I think companies are very proud of their success and they want to tell everybody how successful you are. But what you realize is that everybody already knows that and no one really cares. They want to know how you are going to be successful going forward. And so we’ve certainly taken our fair share of heat about, you know, the performance of PlayStation 3 in the first six to eight months, and I guess we wanted to focus our message on really telling you why PlayStation 3 is going to be successful going forward.

And its all about content, its about games, and I think going through that experience, you know, the light bulb goes off, and you go oh, wait a minute, its really all about the content and what we’re going to do going forward to keep our platforms relevant. Its not about what we did 10 years ago, its not about how many units we’ve sold here or there. So clearly I think for points of reference and perspective we wanted to point some things out that we really wanted that press conference geared towards why people are going to want to buy games and buy our platforms and that was kind of the theme and the central message. I give Dave [Karraker, Senior Director, Corporate Communications, SCEA] a lot of credit for building off of that theme and coordinating tremendous amounts of presentations and content through the whole thing. But hopefully we’ve stayed on message and we’ve gotten the point across.

So why no word about rumble?

Jack: Well, I guess at this point the SIXAXIS controller is something that we’re comfortable with and we’ve certainly settled our differences with Immersion. Is it something that can happen down the road? Absolutely. But the bottom line is we haven’t made that decision and we didn’t have anything to announce or introduce. Will we down the road? Possibly, but it’s unbeknownst to me if we have a rumble controller coming out.

Oh I think you’d know before anyone!

[laughter] Well, you’d be surprised! It’s a big company…

There is some discussion, I think by [redacted], about something to the effect that the timed exclusive for Unreal Tournament wasn’t an arranged thing, but just a matter of fact that they hadn’t got the chance to get the 360 version done in time. You know, your exclusive strategy seems to be one almost similar to Nintendo’s, where you are focusing on first party exclusives…

[Kaz Hirai, President, Sony Computer Entertainment, Inc., enters the room.]

Jack: Yeah, you guys know Kaz I hope.

Kaz: I heard you guys were here and Jack was sending me an SOS email… [laughter]. Sorry to interrupt.

Jack: If I heard your question correctly, I think and would tend to agree with you that we felt and that you can never control or anticipate what another company is going to do. That’s their business and they run it as they see fit. So the best way to ensure that you have content that differentiates your platform from the next and showcases the technology is to create it yourself. That’s why we’ve invested so heavily in our internal development over the years. I think we kinda look at exclusive opportunities a little more organically. Most of the time the publishers approached us and said, this is what we have to offer and this is what we’re looking for — whether its some development help or some co-marketing — but you know we would look at that the same way we would look at our strategy behind developing a first party game.

Is this something that is going to showcase the technology and is this something that is gonna differentiate our platform from the next? Because an exclusive, just because it’s not on any other platforms does nothing for you. If its exclusive and its actually a game people want to buy and want to play you know that helps you. So, you know we get a lot more exclusive offers and / or games that have come out on our platform than I think we would — you know, I don’t think you can assume that every time there is an exclusive, “Oh, they must have paid for that or they must have co-marketed.” Its the ones that we say yeah, we’re going to help drive the message on that game because that’s going to help us drive the message on our hardware.

So I hope that answered your question and wasn’t too windy, but yes I think first party development is what we saw as the key. I didn’t hear Mark’s comment to that effect, but you know whether that’s true or not I’d be disappointed to hear that. But again I guess this is a perfect example of you can’t control what other people say and they run their business as they see fit. I guess that the net-net of the whole thing is that it will only be available on our platform this year and hopefully that is a good thing for PlayStation 3 consumers.

So to what would you attribute the sales figure that we’re hearing now that the Wii is outselling the PS3 6 to 1 — at least in some markets. But all markets that the Wii is out, the Wii is vastly outselling the PS3.

David Karraker: I think that at least you are referring to Japan, the 6 to 1 margin so that I might actually be a better question for Kaz.

Well, in the US the Wii is still outselling the PS3 as well.

Jack: You know, all credit to the Wii for the success they’ve had. I think we’re talking about 8 months into a product life-cycle and we don’t want to be outsold for a day, but if we’re outsold in the first 8 months, its much less of a concern than to be outsold for the first 8 years. The other thing that we have going for us is the perspective that we’re looking at a 10 year product life-cycle. I’m not saying that our competitors aren’t, but the thing our competitors don’t have is two viable product platforms in the market. So we get to add up the revenue and the sales that we’ve sold on the PlayStation 2 with the revenue and the sales that we’ve sold on the PlayStation 3, and while I’d like think that [users] buy a PlayStation 2 today and they buy a PlayStation 3 tomorrow — we know that people we’re selling PlayStation 2s to are probably not going to buy a PlayStation 3 this year — they are probably going to migrate somewhere down the road.

But we really believe in bringing interest in the category is good for everybody and while I’d like them to buy a PS3 today, if they buy a Wii and they buy a PS2 and they buy an Xbox 360, I think in time we’ll be able to convert everybody and anybody who hasn’t bought a PS3 to the PS3 if we deliver on the promise of the technology and the gaming content. I don’t think its a matter of when you get them, but its a question of if you get them. If we’re sitting in this competitive position 10 years from now I’ll be very disappointed, but quite frankly as far as the company is concerned, if we are well accepted by consumers and we deliver profit contributions, how you sold relative to the competition is somewhat irrelevant. Because what they sell and don’t sell doesn’t pay any bills for Sony.

Its about how your platform is doing in terms of consumer acceptance. And I think if you look at the PS3 right now is is a little bit softer than we would have ideally liked? Yes. Is that a tremendous surprise? Not really, we knew that it was a tall order to get millions consumers to pony up $599 in the first 6 to 8 months. That’s a lot of money and its a lot more money then they’ve been used to paying for hardware. And I think in time they’ll understand the technology, and if we deliver the promise on the software that we’ll get where we want to be.

Do you think any of that has to do with the phenomenal success of the PS2 as a platform? Because you guys didn’t go scorched-earth with Microsoft and with the Xbox, so there is less incentive for people to upgrade in some respects. And you also have the massive price difference between the two systems.

Jack: I don’t think there is any question about that. We had the same question on the PlayStation 1 and the PlayStation 2. I mean, again, we’re dealing from a position of strength, we’re not talking about the first 6 months. I mean, if you’re starting from a zero base and, you know, you said it yourself, scorched-earth, those platforms are abandoned. So now you’re trying to decide your first unit with your new platform and you’re in a position where the last generation you didn’t fare too well competitively, so its all about year one. Maybe, we’re a bit overconfident, but the PlayStation 2 remains incredibly viable — great contributions to the bottom line and great software for the consumer — so I think we felt like we could have a little more patience in terms of getting to where we needed to get to.

I guess that the question that I’ve said a bunch of times — maybe it’s a good question for Kaz — is the decision that Sony could have made a couple of years ago is to say, you know, we’ve really got this PlayStation 2 thing nailed, and we’ve sold 118 million units. What do you think about doing a PlayStation 2.5? We’ll add some bells and whistles to it, we can put it out at $199 or $249. I bet we could sell a bunch of them in the next couple of years — and I think we clearly could. Could we sell a bunch for the next 10 years? No. So I think we’d have been looking at introducing a newer platform that didn’t have the staying power that the PlayStation 3 does. We elected to do the quantum leap. The 10 year life-cycle because that’s what did so well for us in PlayStation 1 and PlayStation 2, and if you have a strategy that’s worked, you tend to stick with it. I don’t know how you feel about…

Kaz: Just to add to what Jack said, or to add some more color. We’re obviously a part of Sony and we do take a very long-term perspective on the business as a whole, and I’d always say, well instead of focusing on the first 6 months, I think the better perspective and great example to really see where things stand is really with the PS2. Where you look back, you know 7 or 8 years into the life-cycle and to say, ok, how much have we accomplished in terms of business volume for Sony for publishers and for the retailers on this platform that is 7 or 8 years old (depending on which territory you’re talking about), and after 118 million units worldwide, then you look back and say how does that compare with the business volume of, say, Sega, which was able to generate the Dreamcast (because were talking about the same generation), and how much business and volume Microsoft was able to deliver with the Xbox, and how much business volume were we able to deliver on the PS2.

I don’t think the same kind of comparison is really viable had we had this same conversation back in the Spring of 2000 or even in 2001, because again we were only a year in a half or two years into the life-cycle of that product. The hand really hasn’t really played itself out to the extent that we have the perspective now of looking back where we are with the PlayStation 2. So I know we all get focused on the here and now, and I have a tendency of doing that as does everybody else, but I think we need to make sure that we look at here and now, but also understand that there is a wider business implication that we need to look at from the Sony perspective over the 10 year life-cycle that Jack was talking about as well.

So Kaz, specifically for you, how do you feel that the business has changed within Sony within the games division with the departure of Kurtagi-san?

Kaz: I think that you know, many subtle changes have already come about, in that I kind of bring a different perspective in that I was in Jack’s position for 11 to 12 years on the regional headquarters side, where you know, we got a lot of different strategic input from Japan on a lot of issues that would pertain to the North American market. So I was on the receiving end and Japan was on the transmission end. There were times where I said, you know what, perhaps that’s a great idea for the Japanese market or the European market, doesn’t know if that really works here in the US. Snd other times I think the Europeans felt great about strategies for North America, but it doesn’t really work in Europe, et cetera.

So one of the things that I’ve tried to start changing is giving more autonomy, more decision-making power and therefore more responsibility, if you will — as well as more credit, if everything works out — to the RHQs (regional headquarters). We’re starting out with small things, like, for example, this time around Jack was talking about the PSP. We’ve got the black obviously, we’ve got the silver and the white, and as opposed to Tokyo saying you do this color or that color, or here are the five colors we can choose from — none of them really work for the US but which one would you like? The process was more like, Jack, tell me which colors you need and I’ll make it happen. Small things like that I’m really starting to implement, but bigger issues down the road as well. Again more autonomy for regional headquarters.

When it comes to basic fundamental strategies where the hardware needs to go or worldwide implications such as where a phone needs to go, those kinds of things — that’s obviously something that needs to be decided at the Tokyo level, but in conjunction or in concert with a lot of discussions we would have with the RHQ heads to make sure their issues and their points of view are taken into consideration when we come to decisions at the Tokyo level (that have these global implications). Having said all that, its not like it was a one-way street before, but perhaps it was 6 lanes coming this way [from Japan to US] and 2 lanes [from US] going to Tokyo, we’re making sure that the freeway now has 3 ways either side in terms of information flow and exchange of opinion, and also making sure that those kinds of opinions actually get reflected in decisions that I need to make in Tokyo.

I thought that one of the most interesting parts of the keynote was when Phil pulled out a Sony Ericsson phone that had some integration with PlayStation Home. Historically Sony has had a lot of trouble integrating, they’ve been a very vertically integrated company and I know that one of the things that Howard was brought in to do was to try and make the company more horizontal. I’m just wondering going forward what things are we going to see in terms of the company being more horizontally integrated and being more cross platform in respects to things like mobile devices. We’ve been hearing hints of a Sony Ericsson mobile phone with PSP capabilities and things like that…

Kaz: Sure, you know this is one of these things where there’s always room for improvement and quite honestly it’s something Sony can do a lot better job at doing just as a group, but having said that I’ll try to respond to your specific point before I do that I do want to point out to basically the PS3 where if we were completely siloed and only vertically integrated we probably wouldn’t have a PS3 because we wouldn’t be able to design it we wouldn’t be able to source key parts for it like the CELL chip, because that’s coming from Sony; we wouldn’t be able to manufacture it because it’s being manufactured, portions anyway at Sony EMS, and so, Howard talks about Sony, and I was actually at a management conference where I did a presentation on business at Sony united, and I said if you want Sony united look at the PS3. where necessary and especially at the real operation level of the organization, there’s a lot of back and forth that happens, with or without Howard saying Sony united or not.

Now, as I said before there’s always room for improvement and I think the smaller territories where there are smaller numbers of people within SCE and within Sony there’s a lot more integration that happens, and a prime example of that is the relationship that Sony Computer Entertainment Canada has with Sony Electronics Canada because they’re actually very close and they work together on a variety of different promotional activities and what have you. When it comes to Japan it’s the hardest because there are so many people and so many different businesses involved. But I think just overall, with Howard making a call for Sony united just at every level of the organization, you know for example I engage with Howard literally on a weekly basis, you know he’ll call me, I’ll call him… I spend some time with Dr. Chubachi who is the President and Electronics CEO over at Sony. I also speak to Mr. Nakagawa and Ihara, who are right below Dr. Chubachi, and we just talk about technology trends, we talk about marketing issues, we talk about the possibility of what can we do … for example, what can Sony Ericsson and Sony Computer Entertainment do, what can we do in conjunction with Sony Pictures in Japan or in the US, so there’s a lot more, again, talking about the two lane versus six lane highway, there’s a lot more information flow that happens at the management level as well, and I think that going forward, whether it’s in products or in marketing activities, or in sales activities in certain instances, you’re going to see a lot more collaboration between the Sony organizations.

But I think the most important thing though is – we’ll do that, if it makes sense, not for the sake of doing it, and that’s a trap that we don’t want to fall into, we meaning not just us, but everybody in the Sony group. I think some of the things that made sense, that manifested itself would be, for example the Talladega Nights pack-in, and you know, people look at it and say, well that’s just a pack-in of product. Yes, but you also need to realize we got it, what was it, a week or ten days before the launch. And you know, Sony Pictures pulled some strings, and they made it happen for us. You know, that kind of stuff you can only do when you have a video game company as well as a motion picture company within the same group, and that’s a prime example of the kind of things that you can expect to see going forward and even more, given the kind of dialogue, improved dialogue that we are having with the Sony companies at the senior management level.

Can you talk just a bit about the integration with Sony Ericsson going forward, and the stuff on the…

Kaz: I can definitely tell you we are having some conversations.

Are you thinking more on the device level or just on the software integration level?

Kaz: I can tell you that we’re having some conversations. [laughter]

Let me ask this then, why was the Home integration announced on the Sony Ericsson mobile devices, and not within the PSP? The Home demo was on a Sony Ericsson phone, but not on a PSP.

Kaz: I think you know was just a, I don’t want to belittle the Sony Ericsson guys, because it’s not meant to be that way, but you know, basically Phil wanted to demonstrate a technology where you could take a picture on your cellphone and then, you know, have it come back on Home, and it just happened to be that, obviously if we’re going to demonstrate something on a cell phone, that we would much rather use a Sony Ericsson phone, than a Motorola phone, so it was a technology demonstration, and you know I don’t think that we want to read too much into that at this point in time.

David: Yeah and that was actually, he sent it via a phone network.

Via MMS?

David: Yeah.

Okay, I was just surprised that it was on a Sony Ericsson phone and it wasn’t also shown on a PSP in addition to the phone. So speaking about working horizontally and the Talladega Nights example, I think a lot of people were disappointed that we didn’t find out more about any kind of video on demand service, or an IPTV service, for the PlayStation 3. That seems to be one of the areas where there was a lot of opportunity for corporate synergy, to use a corporate term, and we still haven’t seen it. There had been promises of things like that on PlayStation 2, and here we have the PlayStation 3 — which seems kind of ideally suited to provide that service — and we still haven’t heard much about it.

Kaz: A couple perspectives. One, is, and we’ve said this before and it still holds true, is that we are looking at a variety of ways of bringing a video download service and a music download service to the PlayStation 3, as well as the PSP (obviously), and it’s something that we’re actively looking at doing and actively working on as well. Having said that, whether we like it or not there are some other companies that have that as their core competency in that music download space. One of the things that we have to look at this point in time is, okay, if for example, I think had we done something like a straightforward music download service for the PlayStation Network Store, your quesion would have been, “What differentiates your store from downloading music from the iTunes store?” And I want to make sure that we are able to put a unique, PlayStation-esque way of presenting the music content, for example, to the PlayStation 3 users .Otherwise, we’re just one of them.

We have the assets obviously, but it’s not like Sony Pictures or Sony BMG for music download doesn’t license the music to anybody else — obviously they license to everybody, which is the way they should be doing their business, so they have access to the content as well as we would so what differentiates their service? So one of the things as an example of what im trying to get at is Phil demoed Singstar and obviously there’s a music download component there’s also a video download component there primarily for promotional videos, obviously because its a music application, but you can see that the music download is an integral part of and is in addition to just downloading music listening to it — and okay you’re happy.

But its a part of the overall Singstar experience that you’re downloading the music that so that is a kind of different experience than you would have for downloading music that’s specific to the PS3 experience that you can’t get anywhere else. That’s the kind of thing i’m talking about, and therefore, in conjunction with Singstar, there is going to be music download obviously because we find something that’s very PlayStation-esque. So I want to try to come up with something that has the same kind of different PlayStation experience for music downloads, if we’re going to expand it to the PlayStation Network Store≤ and also for video downloads as well — so that you won’t be asking me, “What separates your service from everybody else’s?”

Well I think there’s still a general demand for digitally distributed things like TV shows or movies regardless of how unique the experience is. I think people like the experience of being able to rent a movie at home directly. Right now you have the Xbox 360 maybe at some point in the future Apple will enable it in the Apple TV, but Sony seems peculiarly able to do this, not only because you guys own movies, but also in terms of the hardware you have available…

Kaz: Not only that, we also have the infrastructure in place as well. So the technology [road]blocks if you will, and the client side — its all there, but you know again, we may ultimately decide a straight solo store is the best way to go, because, you know, we may have a lot of internal discussions on this between your recording — maybe there is still a lot of demand for just a straightforward download service and we may end up doing that ultimately. So again, it’s not something that we decide we’re just not gonna do, it’s something we want to do, but we want to do it right, and if the right answer means we just do a straightforward download [service] that may be the solution, so that’s kind of where we’re at. Are we planning something? Absolutely. When I say, “I’m planning something” and you say, “When’s that gonna launch?”, well it’s up for discussion.

It seems pretty obvious that this should have happened a very long time ago. Now thinking a few steps ahead it just seems like there’s just too much of a reliance on physical media — what’s the point of having downloadable 1080p movies for PS3 if you have Blu-ray discs, what’s the point of having downloadable movies for PSP if there’s UMD? So it seems like you keep on saying, “It’s happening, it’s happening,” but to me it just seems like, “No, get it on one of our physical medias.”

Kaz: As I said before, exactly your point, that’s exactly the kind of discussions we’re having internally, we may ultimately decide that that’s the right answer and in which case the ingredients are in place, but you need to come to the determination that we’re embarking on the right strategy, so that as I said before jokingly, that Jack is not asked next year, “What is so unique [about your service]? Everybody can download to 1080p.”

Thanks for your time!

From the big-picture perspective, Bluetooth is a short-range wireless technology with its mission in life to replace cables and to allow devices to communicate with each other without having to plug them together.

Work on this began in the mid- to late ’90s. Since then, work has been done on enhancing the specification, creating a good test program that devices go through before they enter the market to ensure interoperability between devices, and getting Bluetooth into many devices so that it really becomes valuable to the consumer.

The initial use cases we’re seeing lots of take-up now is in the mobile phone to a wireless headset for you to take and receive calls on. Similar to that is its use in the car, where you can take calls from your mobile phone hands free, so you use your speakers in your car stereo and a microphone that’s typically placed above your visor to take and receive calls.

Beginning this summer, we’ll see a wide number of stereo headsets available, and then your mobile phone and portable media devices will be able to play on those headsets without having to plug them into the unit.

Stereo headsets for music?

Exactly right. The scenario there is either your portable music player like an iPod or your smart phone with music

capabilities would be able to play to that Bluetooth headset.

Probably next year you’ll be able to stream music to your car stereo so that you’d be able to access music from a

single digital music store in your car as well as your home.

We recently profiled Motorola’s iRadio initiative here. What other companies are working with

There are many companies working on the stereo music capability. Today you can buy an adapter for the iPod that

enables that with Bluetooth to stream to a stereo headset. Most, if not all, of the mobile phone manufacturers are

looking at this to see how the mobile phone can be your No. 1 digital music store device.

Let’s start with cars. Bluetooth car kits are available from Nokia, Motorola, Parrot and other companies. How does

One of the things that was exciting for us in 2004 was the number of factory-installed options had increased from

fewer than 10 to more than 30 models where you can get Bluetooth factory installed.

I want my Bluetooth Jaguar!

Sure. There are also add-on kits where Bluetooth is integrated with your car’s entertainment system. So if you’re

driving down the road listening to the radio or a CD and a phone call comes in, you hit a button on the dashboard or on

the add-in unit, or use voice control to accept the call, and your music will turn off while you’re taking the call, or

the CD would pause. When you’re done with the call, the music resumes.

In some of the newer models, you can see the number of who’s calling on your stereo or on your rear-view mirror or on

the windshield at the bottom. The most popular use of Bluetooth today would be in mobile phones, is that right?

That’s correct. The most devices sold with Bluetooth are the mobile phones. Initially they were the high-end phones

but we’ve seen the trend where Bluetooth is in more and more models. We envision that within a couple of years it will

be difficult to buy a mobile phone that doesn’t have Bluetooth in it.

Any numbers on Bluetooth deployment in cell phones?

Research from IDC found that 13 percent of mobile phones in the U.S. had Bluetooth, and they expect that number to go

up to 65 percent or more by 2008. Globally, IDC is forecasting 63 percent of all mobile phones to have Bluetooth by

2008.

What’s the advantage of having Bluetooth in your cellphone?

There are a couple of key advantages. One is the wireless headset — to be able to take your calls via that, or the

hands-free operation that we discussed earlier. Other advantages include synchronizing your phone with your personal

computer to keep your contacts and schedule and task list current on your mobile phone.

Another usage for Bluetooth in the phone that’s much more popular in Europe and Asia than it has been in the States so

far is where you use your mobile phone as a modem for either your personal computer or PDA. The reason it’s been more

popular in Asia and Europe to date is they have faster wide area networks. But now that we’re starting to see 3G

networks being deployed in the U.S., I think we’re going to see that become more popular here as well.

Why is Europe ahead of the U.S. in Bluetooth technology overall? Is it simply a technology issue or docorporate gamesmanship come into play too?

I think it’s also the personal mentality that Europe seems to be more mobile phone-centric while the U.S. is more

personal computer-centric.

I understand that Verizon Motorola V710 freezes out photo transfers to computers with Bluetooth, insteadrequiring customers to use its proprietary photo-transfer service for an additional fee. Are you running into those

We have seen that a couple of times in the U.S. That has been disappointing because it’s confusing to the consumer.

Bluetooth has gotten to the point where people now have a pretty good understanding of what a good Bluetooth phone

implementation is, and when they take a picture, they expect to be able to either beam it to one of their friends or to

a printer. When they haven’t been able to do that, it’s caused disappointment and confusion. ‘Why can my friends

phone-beam the picture but yet mine can’t?’ We’re trying to work through that.

Do you consider Bluetooth an open platform? Members have to join and pony up some dough,right?

We consider ourselves an open standards group. You need to be a member of the Bluetooth SIG to implement the standard.

There’s a free and a paying membership level. And there is a one-time fee associated with creating a Bluetooth product

because of the requirements for certification and testing.

Bluetooth still hasn’t come into its own in the personal computer field. Is Apple leading the waythere?

I think your assessment is fair. We think Bluetooth has a lot to offer to the personal computer world, and it hasn’t

been as widely adopted there.

You’ve seen Apple and the Mac be more aggressive in this space. Last November, the latest version of the Bluetooth

specification was published, and in February Apple released a Powerbook containing an implementation of that spec that

was exceptionally fast. I wasn’t expecting to see that until this summer. Apple is showing great innovation and

leadership in that space.

What does the Bluetooth Powerbook do?

It’s able to interface and synchronize with your phone. You’re able to exchange files with other personal computers or

your PDA. You can use wireless mice, keyboards, printers with the personal computer. The main advantage for the new

version of the spec is that it has a higher bit rate. If you’re exchanging a presentation or pictures between two

devices, it lets you do that faster.

I’m looking beneath my desk right now and I’ve got more cables and coils than a used car lot. The vision isthat a lot of that is going to go away some day?

We’ll definitely be able to remove the wires behind your desk. Already you can remove the wires from your mouse, your

keyboard, your printer. The biggest challenge Bluetooth can’t solve today would be the cable to your monitor, which

requires a higher bit rate.

Let’s talk about some other gadgets. What does Bluetooth add to a cameraphone?

The largest camera manufacturers are shifting to cell phones because they’re putting cameras in so many phones.

Clearly, the optimum usage model is where you take a nice picture on your camera phone and send it directly to a

printer or to a person standing across from you using Bluetooth. As people get used to using the camera on their phone

to get that kind of instant gratification, that will drive even greater use of those camera phones.

The other trend we’re seeing is higher pixel density on the phones. It won’t be long before 2- and 3-megapixel phones

will be common here.

What if you wanted to publish your picture to the Web? Bluetooth is only for short rangecommunication.

You could take one of two options. You could use Bluetooth to transfer the picture to your personal computer that’s

connected to the Web and publish from there. Or you could use the wide area connection already in your phone to publish

to the Web that way.

What about the social dimension? Howard Rheingold wrote Smart Mobs, about how people are using portabledevices to communicate and interact in surprising ways. Will Bluetooth be a part of this?

The owner of a Bluetooth device can decide whether they want their device to be seen by other devices, that’s a term

called discoverability. You can search for all nearby devices and it will tell you all devices found. If you’re in an

open area, the range can be 20 or 30 meters. You could find a long list in a place like a train station. Then, you’d

have a business card, where instead of your name, you have a nickname or handle and watch and see who looks at their

phone to narrow it down who you’re communicating with.

Why would anyone want to be discovered, other than to hit on someone?

People have different motivations. I always keep my phone discoverable, because when someone wants to send me a

legitimate business card, it’s just easier to have the person send you it. It’s a classic ease-of-use vs. privacy

situation.

What about the privacy issues? Bluetooth devices have been hacked or commandeered.

We definitely continue to work with our memberships to make sure that the devices out there can’t be hacked into. Not

every issue has been solved, but the problem has been minimized. Most known devices with a problem are either not sold

anymore or a patch has come out.

We keep hearing about smart refrigerators what will order a half-gallon of milk when we’re running low. Willthere really be Bluetooth fridges, microwaves and toaster ovens?

There is some work in the appliance industry, but that’s not a major driver today. Toshiba is working on some of those

implementations.

Home automation or home security systems offer tremendous value. If you install a security system, you’ll be able to

install sensors on your windows and doors and have those transmit wirelessly back to the security panel. That’s a very

nice setup. Bluetooth could communicate with your mobile phone so you can arm and disarm your system as you enter and

leave the house.

How might business travelers take advantage of Bluetooth?

The one nice scenario for business travelers using Bluetooth is dialup, where you use your mobile phone as a modem and

connect your PC to the network that way. You could connect wherever you’re at using a wide area network — you don’t

have to go searching for a hotspot. And you can run email applications, browse the Web, connect back to your corporate

intranet to run applications, and so on.

When you look at the gadgets we highlight on Engadget, do you see most of them becomingBluetooth-enabled?

I think a lot of them will be. It will depend a little bit on how successful Bluetooth is in various markets. In the

home entertainment cluster, those devices can potentially be very good to have Bluetooth in for remote control. What’s

nice about Bluetooth is that it’s not directional and you can transmit data in both directions.

You can create a smart remote control that displays information about the movie being played, or the tracks on the CD,

or about the TV show being displayed. You could transmit the guide to the remote rather than having to show it on

screen.

In the portable devices space, that’s where Bluetooth’s strength is today, because it’s such a low-power and efficient

technology, and can be added to those devices without causing their batteries to drain significantly. So the portable

gaming consoles you see are prime type devices for Bluetooth to enable multiple-player gaming.

Why haven’t we seen more in the way of interactive television? Will Bluetooth let us communicate with our TVsthrough our laptops?

Yes, your laptop or a tablet-like device. You can come up with all sorts of interesting form factors. To be able to

out-of-band information from the TV and display it on the device in your lap, the possibilities there are

tremendous.

Most interactive TV systems today take up a part of the real estate on your screen, and typically people don’t want to

give that up. Some of the TV manufacturers are looking into it. So far I haven’t heard of any interest by Hollywood or

the content creators.

Does Bluetooth need to become better known by the average person in the street, or do you just need to beknown by the device manufacturers?

The consumer really cares about the function, or what’s enabled. They want to be able to do hands-free talking in

their car. The reality is that people are coming to understand you need Bluetooth for that. In the UK, there’s 77

percent brand awareness for Bluetooth.

What about in the U.S.?

In the U.S., awareness almost doubled from 22 percent to 41 percent of those polled being aware of Bluetooth from 2003

to 2004. In Japan, that figure increased from 43 percent to 61 percent.

Where do you see Bluetooth going in the next few years?

This year we’ll continue to see more Bluetooth-equipped cars, letting more people using the hands-free operation. I

also think we’ll see Bluetooth extend into portable media players for use in the car, so you can take your digital

music store with you.

We’re also looking at being able to address the video market in addition to what we’re doing with audio.

Beyond that, we’re looking at technology that enables its use in more vertical segments like industrial automation. A

conveyer belt on a factory floor, with sensors all over it, could use Bluetooth to report the status of the widget

being created.

Bluetooth is an established technology found in more and more devices, but we’re still enhancing the technology and

making changes for new industries to come on board, like in the medical devices field. So we’re really just on the tip

of the iceberg.

J.D. Lasica’s new book about the digital media revolution has just been released:

Special thanks to John Hamilton.

So, thanks for the interview, Steve.

You’re most welcome. Namaste.

So, what’s the hardest thing about being Steve Jobs?

The constant pressure and sh*tstorm of a million distractions. Eurotards, Microtards, longhairs. Not to mention the SEC and US Attorney’s office. Oh and Greenpeace. I hate Greenpeace. Really — a lot.

What about people that ask you for tech support? Do you get that very often? Because my shuffle has been acting up…Yes all the time. Luckily, however, I actually know almost nothing about computers. And people who know me know that. So they don’t ask. But yes, strangers come up to me all the time.

Do they ever confuse you for the character actors that portray you on SNL and now Mad TV?

Yes and it drives me nuts. Or people will go, You know, you look a lot like Steve Jobs. But honestly, usually people do know who I am, and they get all weird and nervous around me, which i have to admit, never gets old. I love it.

I was really into NeXT, whatever happened with that?

Well, we had some issues around pricing. Like, we figured out what the product should cost, and then we multiplied that by four and set our prices that way. Turns out we were over-overpricing. When I returned to Apple we figured out how to overprice correctly. About 50% more than the reasonable price is about what people are wiling to pay to get a product that makes them cooler than everyone else. So now instedad of over-overpricing, we’re just overpricing. And as our results indicate, it’s working.

Speaking of overpriced, so were you really carrying the iPhone at the soccer game, or what?

Sure. Why? I’ve been using one since last summer.

Well, um, can I have a look at it?Sure. Do you know where my office is?

I’ve been to the Apple campus, sure.

Great. Well just come on over, go to the front desk and tell them I’m expecting you.

I hear they’re all locked in a vault. So will HyperCard work on this thing, or what?

I have no idea what HyperCard is. But, um, yes. it will.

Seriously?

Absolutely. What is HyperCard?

I guess that was after you left, it was in the 80s — lived up through OS 9. They taught it in school.

Yeah, well, see, I am a dropout. And I have very strong feelings about that. And about education in general.

On the topic of strong feelings, what do you have to say to all the European countries criticizing Apple right now?

You know, I tend to get kind of hostile and upset about this topic… but lately I’ve been trying to just calm down and approach it rationally. Really what I’d say is, look, nobody is forcing you to use iTunes and iPods. You don’t have to buy them. So vote with your dollars. It’s as simple as that. We put a product out into the market that we think is insanely great. But if you don’t like it, don’t use it. Go buy a Zune, you’ll love it. Or better yet, make your own music player… friggin Norwegians.

So if you had it to do all over again, would you still invent the friggin iPod?

Absolutely. But this time around I would make sure I got all the credit for it. I’m kind of bummed at the way all these other people have rushed forward trying to claim it was partly their idea too. Did you see that Wired story last fall? Made me sick.

Yeah. But, well, PortalPlayer did the software right? And it was a very engineer-driven effort…

No, I wrote all the software.

Really! I did not know that.

Of course you didn’t. Because the anti-Steve propaganda machine has been kicking in in full force. I wrote OS X, too, but you never heard that either did you?

You know, I didn’t!

Because Apple PR invents these frigged up stories.

So I actually wanted to know — on the topic of journalism and outreach. Obviously you are pretty tight lipped about forthcoming products. What do you do when learning of a leak in the good ship Apple?

Basically, our ex-Mossad security team swings into action. I ran a photo recently of a leaker, and what we did to him. [Pulls out photo]

Ah. Ouch. And what about Scully? Did you ever pull a knife on that guy?

Wanted to. But so far just prank phone calls. Which, by the way, he always falls for, the dope. He so wanted to be like me it was just sad. He used to even talk like me, try to imitate me. I pitied him. Then he got me tossed, bastard.

Speaking of which, I know you and Gates are pals, we’ve all seen the pictures of you at D, and you’re appearing together this year. Why do you have to go making fun of him on TV?

Look, Gates has spent the past thirty years stealing every one of my ideas and then making Special Olympics versions of what I make. It’s insulting. If he’s going to copy me, he could at least do a good job of it. Have you seen Vista? It’s embarrassing. And even then they couldn’t get it out on time. All they had to do was copy us and they still couldn’t do it.

I dunno, it’s got its pros and cons.

Really? What are the pros?

Well, it certainly handles business networking environments pretty well. And Media Center is pretty good — and it predates Front Row…

Ouch. Okay, I’m outta here. Bye. [Stands up]

Ok, hang on, we can talk about something else…

Nope! This interview is OVER!

But –

But what? You apologize?! For your lies?

…

Well?!

Well, why don’t you tell me who would win in a fight? Do you think Gates would have some secret implants or something you just didn’t know about?

I would totally win in a fight with Gates. He does have implants but I don’t think he’s gonna hit me with his [redacted], honestly. And I’m a 10th degree Tai Chi master. I could tear out his heart and eat it in front of him. I know what you’re going to say: Tai Chi is not a violent martial art right? Well, I do the violent form of it.

I think I’ll pass on my question about how many of your fingers you think I’ll break if you keep blogging about my girlfriend…

I only blogged about her once or twice didn’t I?

Well, that’s once or twice more than most tech execs. [Links here and here]

Yeah well she deserves more. Let me say this, all kidding aside. Veronica is a rock star. Seriously. Go look at all the other internet TV talking heads. They’re awful. She’s like an order of magnitude better than the others. And on top of that she’s extremely beautiful. Let me ask you something. Is she as gorgeous in person as she is on TV?

Absolutely.

I wish she didn’t rate the Gigabeat above the iPod, but what the hay, she’s entitled to her opinions. I really do think she’s going to end up on network TV, or cable. Has she ever talked to anyone at Fox?

I hope not, TV is so old-media. Speaking of which, what’s with the love affair with Time, WSJ, Newsweek, and those stodgy publications?

By the way, what was the question about breaking fingers? You want to break my fingers? Or you’re going to break your own? You wouldn’t pick on an old guy would you? –So you think I’m obsessed with Time, Newsweek, and the like?

Well, you do seem to give them the exclusives. You’ve been on the front page of Time more than a few times. Our pal Mossberg gets a lot attention from you.

I think maybe it’s a generational thing. How old are you, may I ask?

I’m still in my 20s.

Yeah. See, when I was your age, Time and Newsweek and the Journal all really mattered. So I guess it’s hard to undo that kind of thinking and try to imagine that, um, like Om Malik is really important or something.

Om is a pal of mine, I think he’s doing some really important stuff…

No disrespect to Om, he’s a pal of mine too…

So any chance of you debuting the next iPod on Engadget then?

I am pretty sure we’re already making those arrangements. Can I turn the table and ask you a couple of questions?

We don’t normally do that, but ok. Who am I to refuse Steve Jobs?

Hey this is new media, citizen journalist. Why should you stick to the old way of doing things? So, how many times have you taken LSD?

Hm, to date? None.

None. Okay, question 2. At what age did you lose your virginity?

Er…

See, these are two very important questions that I always ask everyone before I hire them. Did you know that?

What are the correct answers?

Zero acid trips means you don’t get to work at Apple. Have you done mushrooms at least? Peyote? Mescaline? PCP? Anything?

Sorry, I don’t do drugs! (Stay in school, kids.)

Damn. What is wrong with your generation, Ryan? It makes me sick. You all fell for that Reagan “Just Say No” stuff. Drugs are amazing and very important and will totally unlock your creativity. You should try acid. Forget ecstasy, it’s for girls.

Well, we do our best to be sober when interviewing people.

You know this one time when I was at Reed and really experimenting with acid, we did some 4-way acid but we didn’t realize it was 4-way so we each took a whole hit — which turned out to be a quadruple dose. And I swear during that trip I imagined the iPod for the first time. This was the early 70s. Actually I imagined a little teeny tiny record player that you could carry with you. But that’s basically what a hard disk is. I think.

How close did you come to realizing that vision?

Oh, the iPod turns out to be almost exactly what I saw back in the 70s. Acid is amazing stuff. Really.

Well, your wrangler is motioning that you’ve got to go — anything you’d like to leave us with? Parting words for Engadget’s readers?

We’ve got some amazing products coming very soon that are going to restore a sense of childlike wonder to your lives. I hope you enjoy using them as much as we enjoyed making them for you. And I’m not just talking about the iPhone. Also, go buy the Apple TV. It’s insanely great. Peace out. Namaste. I honor the place where you and I are one.

Thanks, Steve.

You’re welcome.

We interviewed David E. Weekly, founder of Coceve and creator of the super-handy IMSmarter.com. What is IMSmarter? David describes it as a “secretary that helps you out by sitting between you and the rest of the world, letting you know about things that are interesting and taking notes of your meetings so you can recall what was said later.” Works on all computers, no software to install, very neat idea. We predict this will be a standard part of IM soon.

Name, rank, a little about yourself.

Private David E. Weekly, Serial #55429…hey wait! I’m not in the military. I’ve been a computer geek since I started programming at five – less impressive than it sounds when you realize I was just copying in BASIC programs from a kids’ magazine into an Apple II/c to see what happened. I’ve been tooling around with computers since then – I actually got pretty involved in the whole MP3 movement while I was getting my CS degree at Stanford. I believe I was the first person to have a web page that actually explained what MP3 was in layman’s terms.

I signed up with ICQ fairly early on (way pre-AOL) and have been following the IM space with great interest since

then. I worked for a year and a half at the virtual world startup There.com, which was a neat experience and definitely

got me thinking about ways to enhance communication between people. If you ever do sign onto There.com and see (and

hear) jukeboxes in the world, that’s my code – I’m pretty sure that was the first 3D implementation of a Shoutcast MP3

player.

My personal website is at http://david.weekly.org/.

What is IMsmarter?

It’s a new kind of IM enhancement. Go to www.IMSmarter.com to check it out. Geeky people would call it a “proxy”, but

the easiest way to think about it is as a secretary that helps you out by sitting between you and the rest of the

world, letting you know about things that are interesting and taking notes of your meetings so you can recall what was

said later. In the same way that you don’t need to change your phone or mail systems when you get a secretary, IM

Smarter doesn’t require you to change anything about your current IM habits – after a thirty-second configuration (not

requiring you to install any software), you’re good to go. You just keep on using your favorite client on your favorite

OS: AIM, Yahoo Messenger, ICQ, MSN Messenger, iChat, Trillian, whatever! It works on Windows, OS/X, and Linux!

Give us some example of IM Smarter in action.

It’s 4pm; you’re at work and you remember you were going to meet your buddy for dinner tonight, but you’ve forgotten

where. He’s not online, but you had IMmed with him last night from home to discuss where you’d meet up. Without IM

Smarter, you’d be screwed – with IM Smarter you just log in to the web site, click on your buddy’s name, and see the

chat you had last night.

or…

You’ve got a lot going on and are feeling a bit scatterbrained; you’ve just put the clothes in the wash and need to

remember to move them over to the dryer in 40 minutes, plus the casserole needs to come out of the oven in 30 minutes.

You’re doing a million other things and you know you’ll forget when you need to do what. A “calendar” is the wrong tool

here. With IM Smarter, you just send two IMs:

   bug me in 40 minutes about the clothes in the wash

   bug me in 30 minutes about the casserole

And presto! Even if you log off and log back in, you’ll get an IMmed reminder – even if you log on from a different

location and with a different screen handle! And even if you sign on with a different protocol!

Isn’t this just like (Google Desktop / DeadAIM / Trillian)?

Google Desktop can be pretty handy, but can only search chats on the same computer from which you IMmed, can only

search them provided you IM using the official AIM client on Windows, and can only search them if you’re running Google

Desktop application…and want to give everyone else who might ever sit down at your computer access to your full chat

logs without a password. It can’t do any kind of IM notifications, and even search-wise it can’t let you search “all

chats last week about sailing” or just search chats with a particular user. Google Desktop even makes it awkward to

simply say “I just want to search my instant messages!” IM Smarter lets you securely search instant messages and

richer-yet search functionality is planned for the near future. And you don’t even have to install any software.

DeadAIM requires you to download software that modifies AIM. And it obviously only works with AIM. While you can log,

you can only search logs of chats you had on that computer, and even then only chats on AIM.

Trillian is pretty sweet; it’s one of only a select few pieces of shareware that I’ve found valuable enough to pay

for. But it does require you to download a piece of software and change your IM habits. This hasn’t proved popular with

most IM users. A number of the features that work smoothly in the official clients don’t work very well in Trillian

(voice and video in particular). Trillian 0.74 and Trillian Pro 2 can both log chats but provide no real search

capability. Trillan 3.0, currently in beta, can only search chats that you had while chatting on that computer using

Trillian. All this said, you can use IM Smarter with Trillian; many of our users do!

What IM Smarter is doing – providing a zero-download consumer IM logging and notification service – is really a

completely new kind of thing.

What are the future features planned for IMsmarter?

Providing logging is interesting – and hopefully useful – to a lot of people, but it’s really only the tip of the

iceberg. The really exciting and hugely novel stuff concerns notifications – the next major release (internally:

Release Seven) we’ll be deploying a rich notification architecture to let you know not only when your buddies update

their websites, but when news likely to be of interest to you is happening; or when your package status changes with

UPS or FedEx. Really, any time when you get a short email or are obsessively rechecking a web page is an opportunity

for IM to make someone’s lives easier.

One of the venues we’d like to explore is how we can help make IM more interesting and more secure; not just in terms

of the logging, but also in terms of connectivity. For instance, we’d like to help filter out IM virii for people and

let folks easily and safely share file attachments with whole sets of buddies. We take our users’ privacy *extremely*

seriously; we have a very strict privacy policy and even a rather unique Privacy Pledge that I and my co-operator David

Ulevitch have signed. We’re going to be continuing to look for ways to guarantee the sacred right of privacy for our

users with Hushmail-like mechanisms. If folks don’t want to bother with the legalese of the privacy policy, we’re

making a new “welcome” walkthrough that will hopefully make it clear that we’re here as defenders of their privacy, not

intruders.

A lot of very neat feature ideas come from our users, who email us with their ideas and post them on our forums at

http://forums.imsmarter.com/. We had one fantastically neat suggestion to let people upload exported calendars and

automatically get reminders; we’ve got that on our TODO list now. Many of the other suggestions range from layout

comments to radical new ways of using IM. We look forward to hearing about, implementing, and deploying lots of other

neat features suggested by our users – they really enjoy being able to talk directly with the developer of a service

they care about and influence its direction.

Can anyone with a device that runs an im client can use IMsmarter?

While most IM clients can use IM Smarter, there are unfortunately a few clients/devices that are not supported at this

time. Some devices that support instant messaging, like the Sidekick, do not have any way to configure the client to

use our service. We do hope to partner with organizations like T-Mobile at some point to be able to provide IM Smarter

functionality to these devices, but that’s probably more than a month away.

What’s the future of IM? is email on its way out?

Email isn’t on the way out; IM is simply a different medium! IM may end up overtaking a number of the things for which

we currently use email, simply because IM is better at them. Email is good at some things that IM is not, like

composing a long, thoughtful reply, writing poetry or essays, or really anything where you need more than the

granularity of a single line of text in which to compose your thoughts. You can write out an email, think about it,

save it for later, then decide not to send it. You don’t have that kind of flexibility with IM, nor do I think should

you – it’s just the wrong medium for that kind of interaction. So I don’t think email will go the way of the dodo. But

I do think that places where email can be annoying – like lots of tiny little notification emails and so forth – may

well end up migrating to IM, where they belong.

IM has many advantages to email in terms of timeliness, but the part I think a lot of people miss when reporting about

things like “SPIM” (IM SPAM) is that IM is fundamentally a centrally-authenticated protocol. The whole message delivery

process is through a single agent! Fundmentally, this makes spam on IM a much more tractably-solveable problem than

spam on email. And spoofing is incredibly harder on a mature IM system than on a mature email system. Generally, if you

get an IM from someone with whom you’ve chatted before, you can be fairly sure it’s them[*]. At least much more so than

could be said for an email.

I think that in many ways IM has been kind of a second-class citizen, a bastard child of cyberspace. Business has

understood and embraced email, but IM is viewed as a kind of renegade thing; something that needs to be monitored,

controlled, and suppressed. When I first started getting into the IM enhancement market I was amazed to find a plethora

of services offering centralized logging, none of which actually provided any value to the people whose messages were

being logged! The “features” could *only* be used against you and couldn’t help you do anything. They were only for

corporate compliance. While there’s good money in that market, I’d rather write non-evil software. I wanted to make

something that could enhance people’s IM experience and make IM a mature first-class Internet citizen with a service

that really changes the way that people look at IM. Obviously, IM Smarter has a long way to go, but I think that with

the help of our users, we’ll quickly continue along that path.

Thanks so much for this interview!

Visit and try out IMSmarter for free.

[*] Cypherpunks reading this may point out that not only is IM not anywhere near end-to-end secure but that my entire

service is based upon this flaw. They’d be right. They might point out that email-compatible systems like PGP provide a

much better proof of identity than an IM handle. They’d also right about that. But for the average user, IM is a much

more secure and trustworthy communications environment than email.

For this week’s Engadget Inteview veteran journalist J.D. Lasica spent a few minutes with Anthony Wood, founder and CEO of Roku, to discuss digital media, digital music, DRM wackiness, and Mona Lisa smiles.

For readers who aren’t familiar with Roku, what are you guys about?

We’ve been around since October 2002 and we’re based in Palo Alto, Calif. Our focus is building digital media players for home. Our core expertise is to produce great-looking products and great user interfaces.

Such as?

Our product line includes the Roku SoundBridge and the HD1000. We tell people, wouldn’t you love to see a slide show of your family pictures in full-quality digital on your flat-panel TV in your living room? That resonates.

And Roku means what?

“Six” in Japanese. It’s the sixth company I’ve been involved with.

Tell us about your main product lines.

The HD1000 launched in October 2003 and now comes in two versions. The base version is $299, and the gallery version, at $499, is geared toward owners of HDTVs, flat-panel TVs and the like. A lot of folks love to display artwork on their flat-panel TVs when they’re not watching a show.

Sounds like what you might see on Bill Gates’ walls.

That’s right. The gallery collection comes with still images of classic art but also moving art of mountain streams

and other looping high-def video clips.

What’s your favorite?

I like the clocks – you can add analog clocks with pictures of your kids in the background – and the geo-clock, with a

map of the world showing where it’s day and night, and the robo clock. The most popular seller is the classic art packs

- people get it, ‘Oh, the Mona Lisa on my TV.’ Second is the aquarium, followed by nature – like fields of poppies

swaying in the breeze – and images from deep space, and clocks.

Plus, there are third-party apps you can download, like an app that retrieves weather from the Weather Channel with

the current forecast for your area, and you can press buttons on your unit to see a satellite view. And there are

third-party apps that display eight different webcams from around the world on your TV.

Just to be clear, this is not a personal video recorder.

Right. There’s no hard drive in it. Its purpose is to play media that you have on your computer or on a Memory Stick

or Compact Flash card. You can take your digital photos, plug them in, and they’ll come up in high-def on your screen.

Its primary focus is as a consumer-friendly media adapter.

When people think of high def, they think of television. But this isn’t about television.

Correct, although it will play back high-def video. If you record high-def video on your PC, you can play it back with

this. But it’s less about MPEG-2 than about the other features we talked about: displaying family photos and art packs

that look stunning on a flat-panel display.

movies on the HD1000.

You can get an ATFC capture card for your PC and capture TV shows over the air and play them back on your PC. A lot of

people use it to play back standard MPEG-2 DVD clips that they’ve ripped.

There are really two markets for this. There are people who want to display the art. And there are people who are

ripping DVDs who buy the $299 version.

So it won’t play DVDs, but it will play DVD files that you’ve ripped.

Yes. It plays VOD files that you’ve ripped to your hard drive, and you need to connect your computer to a home

network.

Is that legal?

I’m not a lawyer. These are DVDs that they’ve bought and are watching at home, not sharing with others.

That’s a pretty small market at this point.

This product is targeted toward the early adoption market. For the HD1000 product line, our run rate is 20,000 units a

year. We’re going after flat-panel TV owners who want to use the TV for something other than watching something

else.

What role does Roku play – software, hardware or both?

We write the software and design the hardware. We work with factories in Asia and contract out to build them. We have

sales teams that sells them to dealers.

Where can people buy them?

You can find the HD1000 at Best Buy, Magnolia, Tweeter, Good Guys. Crutchfield, Fry’s or online from us.  

Let’s move to the SoundBridge.

Sure. The SoundBridge started shipping in August. There are two versions, for $250 and $500. Both products are

designed to play music you have stored on your computer in another room in the house. You can listen to your iTunes

collection in your bedroom or your kitchen. You hook them up to a pair of power speakers or your stereo.

They come in two display sizes, both of which support iTunes directly – we’re the only music player with a license

from Apple that a protocol that supports iTunes. It’s plug and play. If you have wifi, you plug it in a wall socket,

turn on iTunes and it’ll find it and play it.

The big one is 17 inches, designed to go on a rack. The small one people usually place on a table with power

[multimedia] speakers.

How does this sound through a good pair of Bose speakers? I imagine pretty shitty if you’re playing MP3 files

from Kazaa.

It depends on the bit rate. Some customers play a .wav file or uncompressed AFF file. If you’re ripping CDs, with

iTunes’ AAC format you can get a 192kps bit rate. It’s up to the user what quality level they want.

How is the SoundBridge selling?

Between now and Christmas we’ll sell 25,000 and next year 100,000 to 150,000.

How does the SoundBridge compare to the other music players on the market?

There are only a couple of others out there from the networking companies, Linksys [a division of Cisco Systems] and

Netgear. So they kind of look like routers. In terms of industrial design, our products look really nice. The other

guys don’t even play AAC files, just MP3 and WMA [Windows Media Audio].

Our other advantage is we have a big display that’s easy to read. You’ll see the name of the song, the artist, genre,

album. Another other popular feature with the SoundBridge is Internet radio, about 100 stations. And finally, the

SoundBridge has a very cool-looking vacuumed fluorescent display.

Does the SoundBridge play Windows Media files?

We’re adding it Oct. 12.

What about if you buy music from the online music stores – iTunes, Rhapsody, Napster,

MusicMatch?

Unfortunately, today the songs you purchased are protected with DRM and will only play on authorized players. There

are a lot of different DRM vendors, from Microsoft, Apple, Real and Sony.

Right now we don’t support DRM and there are no network streaming devices that support DRM, other than Rhapsody and

one or two others. We’d like to support as many of the popular DRMS as possible. That will be done through software

updates for existing products.

So you’re saying a user who buys songs legally from Napster can’t play them on the SoundBridge, but a user who

downloads songs illegally from eDonkey can?

That’s right.

That’s nuts.

Even Apple doesn’t support streaming network devices. So if you buy songs from the iTunes store, you can’t play them

on the SoundBridge, and we have an Apple license – but only for music you ripped off your CD.

Now, there are users who buy the songs and download free software off the Net that will strip off the DRM protection,

and that way you can listen to them on the SoundBridge. But we don’t encourage that. But if you buy a song download,

you can burn a CD without the DRM protection.

That’s not ideal. The DRM vendors are just starting to add support for third-party devices and we are in the process

of adding it, but we don’t have a date yet.

When people who buy songs from the iTunes store or Napster can’t play them on their SoundBridge, won’t they be

mad at you?

That’s why we tell them up front – on our website and on our product packaging – that this is a limitation if that’s

what they want to do. We’re talking to Apple about opening their platform up.

What other devices are you working on?

We don’t announce upcoming products, but over time we expect to add new products to both our video and audio lines.

Different versions, features, form factors. All our products are software updatable as well. The HD1000 is up to

version 1.5, the SoundBridge is coming out with a big update this week.

J.D. Lasica is author of the upcoming book

Darknet: Remixing the Future of Entertainment.

Flickr is quickly becoming one of the most popular

“moblog” and photo sharing site, is it the interface? The APIs? Caterina talks about this and more!

Name, rank, serial number…(who you are).

Caterina Fake, co-founder and jill of all trades. As you know, this being a small startup I do a lot of everything:

marketing, pixel pushing, strategy, product development, janitorial duties, money raising—you name it.

In a nutshell, what’s Flickr (including cost for user, etc..).

Flickr’s originality as an online photo sharing site comes from the marriage of content that users create the online

community that they share their photos with…

The network creates a kind of self-organization that makes all kinds of things possible: collaborative curation,

group scrapbooking, easy search, dynamically assembled galleries and has resulted in the best organized collection of

photos in the world. Over 80% of the photos in

Flickr are public you can make it so only your friends or family sees your photos which makes all kinds of

creative collaboration possible.

We also make it really easy to get your photos into Flickr, and really easy to get them out again in whatever way you

like, whether that be by RSS feed, posting them to blogs, or, as some of our users have done, making dynamic

screensavers built on the Flickr API.

There is a free version of Flickr, limited to 10 MB uploads a month and 100 photos displayed on Flickr; the paid

version permits 1GB uploads a month, and unlimited storage (as well as unlimited photosets, no ads and other

things).

Do you plan to support video in the future?

We would like to support short-form video like the kind of video you can take with your digital camera.

What are your favorite Flickr sites?

My personal favorite is the Squared Circle group.

It was started by a user named Striatic, and all submissions are of

something circular set in a square frame. The amazing thing is to watch

the slidehow:

http://www.flickr.com/groups/circle/pool/show

It is fascinating! You see plates of food, clocks, water towers,

airplanes that have been cut in half and when you watch the slide

show they fade into one another. Its amazing. One of the things thats

great about Flickr is you can remix your own photos with other peoples,

by forming groups or using tags.

Some other great groups are Obscure Obverse, which shows the

back sides of picture frames, mirrors and other cool things;

Molskinerie, which shows cool things people have done with

their Moleskine notebooks; The Secret Life of Toys which has

great pictures of

toys acting like people its really endless. I can, and do, spend

hours just surfing around looking at this stuff. People are so

inventive.

Tag surfing is another thing that I do. Some great tags include:

Space Invaders.

Sleeping.

Creepy.

Decay.

What digital camera do you use (its interesting that you can see the EXIF data, is there a most popular

camera on Flickr?

I mostly use the cameraphone on my Nokia 6600. Because I always have it with me. Even though the picture quality,

admittedly, leaves a lot to be desired. There *is* a most popular camera on Flickr, according to the EXIF data, and

that is the Canon Powershot, though depending on how you

cluster the makes and models, the Sony Cybershot comes pretty close. Well see what happens after Christmas too!

Another thing to note is that no Nokia phones include EXIF data with their photos, so we dont know about any of

those.

What gadgets do you use? Tivos, which phone, etc..?

Im not much of a gadgeteer, but I love my cameraphone so much! All those cool-weird-interesting-beautiful things that

you see when youre out in the world: you can finally save them and share them because youre carrying the camera with

you everywhere.

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, 8×8, 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.

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.