Swype Raises $5.6M, Looks to Go Global with Text Input Software for Smartphones

12/15/09Follow @gthuang

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consoles. “We need to get out there on a billion devices,” he says.

Swype makes money through per-device software licenses on phones. That means original equipment manufacturers (OEMs) pay the company a royalty every time a Swype device is shipped. I asked Sheedy whether the company is talking with Apple’s iPhone teams. “We’re talking to everyone,” he says. “We’re very close with a couple other big OEMs. It’s fair enough to state that Apple does have a strong sense of their ability in the touch screen space.” (It’s also probably fair to say Apple views Swype being on Samsung phones as a competitive threat, so it may be less likely to make a deal with the startup anytime soon.)

Strategically, having Samsung’s and Nokia’s venture groups involved makes good sense for Swype. “There aren’t any information rights as part of this. They can counterbalance each other and serve other OEMs,” Sheedy says. “We don’t want to be seen as only serving the market for those two guys, though we certainly support them as partners.”

With the costs of touch screens coming down—and the fact that they give a device a larger, more robust interface with fewer moving parts—it sounds like a promising market to tap into. Sheedy says Samsung expects more than half of its phones to have touch screens soon, while he says another large handset manufacturer has said its fraction could be as high as 80 percent.

In the next year, look for Swype to come out on Android devices and at least two other operating systems, Sheedy says. Already underway is an expansion into Europe, where he says the company is “effectively done” with most languages. Then it will be on to China and other Asian countries where Swype can make faster phonetic-based (pinyin) systems to compete with graffiti-based (strokes) text input on phones. “We’ll help increase the penetration of touch screen phones in China, by solving the text input problem they have,” he predicts.

Swype was co-founded in 2002 by Cliff Kushler and Randy Marsden, and is led by CEO Mike McSherry. The company now has 20 employees and is hiring for several open positions on the engineering side, according to Sheedy. “Our ability to close deals [with manufacturers] is more gated by our inability to serve them than by lack of interest,” he says.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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