CES 2009

LAS VEGAS--The sinking economy has actually been a good thing for Internet telephony service Skype.

Scott Durchslag, the company's chief operating officer, told reporters during a press conference here at the Consumer Electronics Show that Skype is actually seeing a surge in new users as people look for ways to cut their phone bills.

"We are seeing consumer take-up of Skype accelerating because people feel they can get value and quality without making a huge trade off," he said. "And we're seeing a whole new opportunity in the business market, as companies that I'd never have thought would be a target for Skype are pro-actively coming to us and asking for a solution."

Skype, which is owned by eBay, offers downloadable software that allows people to make free calls to other Skype users and low-cost calls to cell phones and regular phones. The service also offers free video chat. The company boasts it now has over 370 million registered users. It's been adding about 30 million subscribers a quarter, Durchslag said. And these users are making lots of phones calls. Today, about 8 percent of the world's voice minutes originate from a Skype call, he said.

All told, Durchslag said Skype has been growing about 50 percent compared to the previous year in almost every metric from minutes used to new subscribers to revenues. He also said the company just had its seventh straight quarter of profitability.

All this is happening while other technology companies are hunkering down for a long, dark recession. Meanwhile, Skype is looking to expand its services and address new markets. In particular, the company sees opportunity to develop special services for the business market, offer more video , and expand its presence on mobile phones.

As part of this effort, the company announced here that an enhanced version of its software Skype 4.0, which drastically improves the quality of voice and video, will finally come out of beta in February. It also announced it will be offering its Skype software for mobile devices preloaded on Google Android phones along with about 100 Java-enabled handsets, including some sold in the U.S.

Sadly, Skype is still not available for Apple's iPhone, but Durchslag said an iPhone version will be available in the App Store, someday. But exactly when is still up in the air.

"We have to make sure the call quality is there and the application works really well before we can announce the software for any device," he said in an interview after the press conference. "But we will have something for the iPhone as soon as it's perfect."

The Consumer Electronics Show has become a mammoth event every January in Las Vegas, but the down economy is paring it back as Cisco Systems, Yahoo, and other companies scale back their presence.

CES remains a useful way for technology companies to meet with retailers, press, and the media. But for some in the current economic climate, it's not useful enough to pay $35 per square foot for a sprawling booth on the Las Vegas Convention Center's cavernous interior.

"This was to have been Cisco's first time as a formal exhibitor," said spokesman Jim Brady. "Given (Cisco's) focus on reducing costs, the company has decided to scale down its participation in CES in Las Vegas in January 2009." Instead, the networking giant is sticking with a more modest space rented at the Venetian Hotel supplemented with videoconferencing technology.

Cisco isn't the only one to scale back. Also on the list are Yahoo, Seagate, Logitech, and Belkin, company representatives confirmed. Philips won't have a space on the CES show floor, either, though Funai, which has taken over manufacturing and selling TVs under the Philips brand in the United States, will pick up some of the slack.

The Consumer Electronics Association, which runs the show, said the show will be the third largest in terms of floor space, shrinking from its size the peak years of 2007 and 2008.

"The economy is causing some companies that may have had booths to say, 'Maybe we want to be in a meeting room instead,'" said association spokeswoman Tara Dunion. Despite it, the total number of exhibitors is level from 2008's show at about 2,700. "We're also seeing companies on the show floor for first time," including Verizon Wireless, T-Mobile, Iomega, and Mattel, she said.

And there's a silver lining, too. "Vegas hotel rates are coming down because tourism travel to Vegas is slower than it's been in years. That provides an opportunity for business professionals," she said.

Incentives to show
But the organizers are working hard to keep the show as lively as possible. One promotion is aimed at technology buyers--the middlemen who buy all those TVs, gadgets, cameras, and other devices before selling them to ordinary folks.

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