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The Skin Business

Posted on: Wednesday, 19 February 2003, 06:00 CST

The News & Observer

Richard C. Krueger, 40, is in the skin business. No, he doesn't hawk those sleazy magazines with scantily clad models. He's the chief executive of Skinux, a Cary company that designs a kind of computer software, known as skins, that makes interacting with computers more lively. Instead of getting information in a blue rectangular box on your screen, for example, it can be presented inside a transparent circle or an image that looks like an old record player. Krueger discussed with Connect's Jonathan B. Cox his 3-year-old business, which has five employees, and the outlook for his industry. Following is an edited transcript of their conversation.

QUESTION: Tell me what your company does.

ANSWER: What we do is a custom user -- a skin -- interface software. What that is, if a company has a Windows interface and they want to make it more photorealistic and they need a certain degree of design... we come in and custom-design an interface. We have a system here that enables us to very rapidly build these skinnable interfaces, because normally they are very time-consuming to build. It's an engine we've developed over the past two and a half years to support this kind of interface very easily.

Q: So it makes it easier for consumers to use the product?

A: It makes it more enjoyable. The term "easier" is kind of a loaded term. I'm not going to say easier necessarily. It's the same as a car. We saw when cars were invented back in the 1920s. You had the model T Ford and it had limited industrial design. The color tended to always be the same color, black. Why? Because it made Ford's job easier to produce. The same kind of trend has been there in software, where the emphasis is on ease of production, not on the customer. But as industrial design migrated into other products, it's also migrating into the user interface, and that's where skinnable interfaces come in. They're really interfaces that support industrial design. You can have semitransparent, glossy-edged windows that are not necessarily rectangular.

If you look at most Microsoft Windows [user interfaces], they all conform to the same look and feel... All of the dialog boxes more or less look the same. That's great from a user's perspective because it means the user always has the same experience. From a software vendor's perspective, they can no longer differentiate their products from the mass of products that are out there. With the commodification of software, this has become a real concern for software vendors.

Q: Why is it called a skin?

A: I don't know really. It may be because you can, you know, take on multiple skins and change the look from here to there. I know it started being used with the Winamp [music player] folks. The actual people who really created this, I'd say kind of the seminal company that created this look and feel, was MetaCreations back in 1995... They really came up with an innovative interfacing technique.

Q: How did you get into this business?

A: My background was developing paint programs.

Q: What do you mean?

A: I developed a painting system back in the early 1990s called Matisse. That system allowed you to kind of simulate watercolor media, oil brushes... So my background is in image processing and artistic software. After I sold my company [Phave Software] to Macromedia [in 1995] I couldn't, for legal reasons, be in that same business. I had an interest in user interfaces, I was very impressed by the work that MetaCreations had done and I felt that the user interface was capable of a new revolution. I had been at IBM in the early 1980s working on trying to develop a windowing system for IBM here.

Q: By windowing system, do you mean something like Microsoft's Windows?

A: It was actually before Microsoft Windows came out. IBM had an effort here to develop a window system back in the 1980s. I felt that these guys were really onto something revolutionary. Microsoft kind of beat IBM to the punch. It wasn't by any... technical problems, it was mainly internal political problems at IBM that eventually killed that project. There was a lot of resistance internally at IBM. I remember just being denigrated by some senior [vice presidents] at IBM that were telling me... this windowing technology was something new and it was a toy and not a serious business. They were wrong. When I presented the skins to a lot of people I get the same kind of reaction: Well, that's a cute toy... but that will never be in a serious productivity application. I believe that they're also wrong in this case.

Q: Why? Is this something you think users are demanding?

A: What I think is going to happen as computers go from being 100 megahertz, which is what we saw around three years ago, and now the standard is around a gigahertz computer for the sub-$1,000 PC, the horsepower that these processors are capable of can support a much more interesting user interface than what we have today... That's really where we want to be.

Q: How would you describe the market now?

A: We're at the very early stages of skinnable [user interfaces].

Q: How do you make money?

A: The revenue model that's working for us is, we charge customers for skin design and we do the custom implementations... Another emerging model is kind of advertising. The use of these skins can convey brand information so much better than traditional [user interfaces]. They're going to be, in a sense, the billboards of the modern world. Just think about how much time a person spends in front of a computer versus driving down a highway. All of the computer's [user interfaces] are a great billboard, which is completely unexploited at this time.

Q: So you're saying, then, that through the proliferation of skins, ads could be placed on your desktop computer screen?

A: Yeah. An example is you could easily have an application, say a mortgage calculator, that had a Wachovia skin. Why not? That application is free. Does that mean that nobody paid for something? It shows the person advertising is paying. We may see a model switch into that area. So there's the general consulting model, which we use, and that's paying the bills around here. But I think there's going to be an emerging advertising model.

Q: What's the average cost for a skin?

A: We generally charge a competitive consulting rate. The object code license for our system is around $1,000 and then the source code license is significantly more, like $20,000 and up.

Q: So in order to get something from you, a company has got to pay on the order of $21,000?

A: If you want us to handle all of the code, then you would only have to buy the object code license and pay the consulting fees.

Q: Are you profitable?

A: We're profitable at this point. Every employee gets paid.

Q: Clearly this area has been hurt by the economic downturn. Is it still a good place to be in business?

A: Yeah. One, it's a nice place to live. I mean quality of life. I lived in Paris for 15 years, I lived in San Francisco for two, I lived in Singapore for two. I like this place the best of any place I've lived... You have access to unbelievable talent here. You can get very good talent here because of the three universities. That's a big consideration. Plus, it's reasonably good weather -- except for the last two months.

Q: How did you get the name Skinux?

A: When we started this company, right at the time there was a big Linux euphoria and we kind of got swept up in that euphoria. We initially developed this on Linux. Our angle was going to be developing skins for Linux... Then the whole market collapsed and took down all the Linux people... I said do we just keep on plugging along on this or do we go where the money seems to be. At the end of the day, the money seems to be in Microsoft Windows. We still have a Linux product. We just didn't see there was a huge market there at the time.

Q: What's the outlook for your company? How big do you see this getting?

A: I think we could easily be between 10 and 15 people at the rate we're growing in another year.

Q: When you tell people that you design skins for a living, what kind of reaction do you get?

A: Some people think we're, like, in the adult film business because of our name, Skinux. I have a very difficult time explaining what I do.

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(c) 2003, The News & Observer, Raleigh, N.C. Distributed by Knight Ridder/Tribune Business News.

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