Nokia to sell phones with Skype software

17 Feb 2009, REUTERS

BARCELONA: Internet calling company Skype has secured a deal with Nokia under which the world's biggest phone maker will preload Skype software into some of its new smartphones starting from the third quarter of this year.

Skype, whose technology has allowed legions of consumers to make practically free long-distance calls over the Internet on fixed lines, has been moving into the mobile arena with deals with operators such as Hutchison Whampoa's.

"We believe that mobile is incredibly important to our future," Skype Chief Executive Josh Silverman told Reuters in an interview at the Mobile World Congress in Barcelona, the industry's biggest gathering.

He said Nokia would install Skype in its high-end N-series phones, starting with the N-97. "The Nokia announcement is really a major milestone. When we partner with manufacturers we are able to deliver a superior experience," Silverman said.

Skype software is also available to download onto mobile phones after they have been bought, but is then less integrated into features like address books, making it less convenient.

Most mobile operators are wary of Skype, fearing they will lose revenue through consumers paying little or nothing for calls, but Silverman said 3 had actually seen its average revenue rise by 20 percent for consumers using Skype phones.

He said subscribers were encouraged to use their phones more by flat-rate data plans -- boosting usage of 3's other services -- and that customer loyalty increased. Skype also has deals with other operators but 3 is its most successful.

Silverman said more than 300 million minutes' worth of Skype to Skype mobile calls had been made so far, with current rates at about 1 million minutes per day. Skype had 405 million registered users in total at the end of last year.

Skype was bought by online marketplace eBay for $4.3 billion in 2005 with the intention of bolstering its PayPal online payments service but it took a $1.4 billion writedown in 2007 and there have been media reports that eBay may sell Skype.

Silverman declined to comment on the speculation. "EBay is very supportive. We are very happy with the support we get," he said. "I spend 100 percent of my time building the world's best communications company."