Skype Scores a Deal with Verizon to Provide Cheap Calls

Posted Feb 16th 2010 4:40PM by Tom Taulli
Filed under: Verizon Communications (VZ)

In the third quarter of last year, Skype users accounted for a whopping 8% of global international calling minutes (which translates into 3.1 billion minutes across landlines and mobile phones). And expect the momentum to continue.

Today, Skype announced a deal with Verizon Wireless (VZ) -- which is the biggest U.S. carrier -- to seamlessly integrate its technologies on a variety of smartphones, such as the BlackBerry Storm 9530, Storm2 9550, DROID by Motorola and DROID ERIS by HTC. The partnership is expected to launch some time in March.

In this deal, Skype-to-Skype communications will be free and calls to non-Skype members will be at reduced rates. And, you'll also be able to see your friends' online status updates.

So, why is Verizon willing to go down this path? First of all, the mobile voice business is mature and will likely erode over time. Next, the fact is that smartphones are essentially handheld computers and customers want to use desktop-like applications. No doubt, this has been a key to the success of Apple's (AAPL) iPhone, which has a thriving App Store.

In other words, Verizon certainly needs a way to stand out. And, providing Skype is a smart approach. In fact, as seen with the case of Hutchison Whampoa, Skype has proven effective in retaining and attracting new customers.

Tom Taulli advises on business tax preparation and resolving tax problems. He is also the author of a variety of books, including The Complete M&A Handbook. His website is at Taulli.com.

Tags: Droid, inthenews, Skype, vz