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Skype for iPhone Lands at Apple App Store

Skype for iPhone
Skype has released its highly anticipated Apple iPhone application today, putting the Voice over IP (VoIP) company in a position to leverage the Apple App Store's broad reach to find new users while callers get the benefit of free and low-cost calls.

But while the new app -- officially called Skype for iPhone, supports the iPhone's Wi-Fi and cellular data connections for features like its contact list, calls can only be made when on a Wi-Fi network.

That limitation aside, the launch of the new app means owners of Apple's (NASDAQ: AAPL) popular smartphone can essentially bypass long-distance fees and calling plan coverage because it uses a data connection instead of the cellular network.

For eBay-owned (NASDAQ: EBAY) Skype, which is trying to double its revenue by 2011, the hope is to increase its user base by making its app more convenient to use by having it on mobile phones instead of on computers.

That plan will also see Skype further expanding the number of devices that can use its software. The company plans a "lite" version of its software for Research in Motion's (NASDAQ: RIMM) BlackBerry smartphones by the end of May 2009, a Skype spokesman told InternetNews.com.

"When that application is released, Skype will be available for [download] by consumers on 89 percent of all smartphones, as we'll have downloadable Skype mobile applications available for all six of the major mobile OSes -- Android, BlackBerry, iPhone, Java, Symbian and Windows Mobile."

Skype for iPhone requires a Wi-Fi connection to make free Skype-to-Skype calls and Skype calls to mobiles and landlines, which carries Skype's standard rate of 2.1 cents a minute.

The app also enables users to sign into Skype, send and receive instant messaging, view and update their contact lists and status through Wi-Fi, 3G, GPRS or EDGE networks, depending on iPhone model and network availability.

Limited features

The launch has already generated huge buzz in the industry -- even ahead of its official launch later today at the CTIA Wireless 2009 trade show in Las Vegas.

However, because Skype calls can only be made using the iPhone's Wi-Fi connection, the app is already being criticized for its limitations.

According to critics, requiring a Wi-Fi connection for actual calls limits the app's usefulness, because most callers access a Wi-Fi network from home or the office, where they'd be near a desktop computer or regular phone anyway.

Naturally, Skype disagrees, citing Apple's policy regarding telephony apps.

"This is in keeping with the rules of Apple's iPhone app SDK, which prohibits third-party voice apps from using the 3G network. Currently there are no other true VoIP applications available for the iPhone that allow VoIP calling over 2G or 3G networks," a Skype spokesman told InternetNews.com in an e-mail.

[cob:Special_Report]"Another thing to keep in mind is that AT&T offers iPhone users free access to their Wi-Fi network (for example, at all Starbucks locations) and many offices now offer Wi-Fi networks to their employees, so there are quite a lot of locations from where consumers can make Skype calls."

Additionally, AT&T, the iPhone's exclusive U.S. carrier, purchased WayPort in 2008 to expand its hotspot coverage, which means the iPhone Skype app can be used in places such as McDonald's and hotels.

The Skype spokesperson added that the app is not limited in use because compared to other applications available for the iPhone, "it delivers enhanced audio, presence, multi-party IM and Skype conference call participation," he said. "Plus, Skype for iPhone is a native voice application, which uses Wi-Fi for voice calls."

Plus, callers who don't have landlines may in fact want to use their iPhone to make Skype calls from home so they don't have to sit at a computer.

Finally, while there are other Internet phone players in the mobile market, such as Truphone, recent research predicts that smartphone app usage will quadruple in the next five years. Combined with the popularity of Skype and the iPhone, that trend could bode well for eBay's VoIP firm -- assuming the prediction comes to pass.