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China passes U.S. as Skype's top market

A model displays a new IPEVO Free.2 Skype internet phone during a news conference in Taipei January 17, 2007. Skype, the Internet telephony service owned by eBay Inc., said on Thursday that China recently passed the United States to become its biggest market by subscribers, as Asia takes on growing importance to its business. REUTERS/Richard Chung

TAIPEI (Reuters) - Skype, the Internet telephony service owned by eBay Inc. EBAY.O, said on Thursday that China recently passed the United States to become its biggest market by subscribers, as Asia takes on growing importance to its business.

“China has increasingly become very important for our business and we see it as a main driver for us,” Scott Bagby, new market development director, told Reuters in Taipei.

Asia now accounted for 30 percent of Skype’s 171 million global subscribers, up from 20 percent last year, largely due to the growth in China, said Kelly Poon, market development manager for Greater China.

“We will really see huge growth in China this year,” said Poon, declining to give specific figures.

Skype operates in China under a partnership with Tom Online Inc. 8282.HKTOMO.O, which recently announced that it would be privatized, amid an increasingly difficult market in China for its core mobile services.

Skype’s parent, eBay, also recently put its China online auction unit into a joint venture that will be run by Tom Online, in what many saw as a setback for eBay’s high hopes for the fast-growing but competitive and fragmented China market.

Bagby said that Tom Online’s plan to privatize had not affected the Skype partnership or businesses in China, and that Skype’s main source of revenue still came from charging for its “Skype out” call service.

One third of Skype’s current users are business clients, and therefore the company is still in the process of rolling out the global Skype for Business plan, as corporations can use Skype credits to call out to mobile phones or landlines.

Ebay paid up to US$4.1 billion to acquire Skype, a European start-up, in September 2005, after the popular Internet company hit quick success worldwide with its free phone services.

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