Jun 11 2014, 2:14am CDT | by Forbes
SwiftKey has just made a gutsy move. The popular Android keyboard app has dropped the $3.99 price tag that’s driven its revenue over the last few years and is going free from here on out.
It’s the kind of make-or-break decision that could help it scale up in fast-growing developing markets, and in SwiftKey’s case, also help it in going head-to-head with similar, free technology that Apple will soon offer to iPhone users.
“We’re focused not only on reaching more users with our powerful technology, but on building great content and features to engage them,” said the company’s CEO Jon Reynolds in an official statement. SwiftKey’s business model till now has been to use its paid-for Android app as a way to prove out its natural language processing (NLP) technology. This underpins SwiftKey’s ability to predict what word users will type next, with three suggested words above the keyboard.
Along with the app, SwiftKey also sells white-label technology to the likes of Samsung, which embeds SwiftKey’s algorithms in its Galaxy line of smartphones, and the BlackBerry 10 mobile OS that’s on several of the company’s recent smartphones. As a result it claims to be on more than 200 million devices worldwide.
Now on the consumer side, the four-year-old company will make money solely from enhancements to the free app — ie. premium keyboard themes.
SwiftKey is one of the best selling Android apps of all time, having spent more days at number one on Google Play than any other paid app. But it’s never managed to get on iPhones because Apple hasn’t released the relevant instruction set that would allow third party developers like SwiftKey to sell keyboard enhancement for iPhones.
That all changed last week at Apple’s WWDC keynote , when the Cupertino-based company announced it would finally allow third-party keyboard apps on its App Store.
Then came the blow to SwiftKey. At the same time, Apple also announced a crucial improvement to the built-in keyboard on the forthcoming iOS 8 platform: Quick Type, a kind of predictive keyboard that looks almost identical to SwiftKey’s three-word predictive interface.
We understand from a source close to the company that SwiftKey did not license its technology to Apple, as it did to Samsung and BlackBerry. This means Apple went on its own to develop the NLP technology necessary for its own predictive keyboard, and that when iOS 8 comes out, SwiftKey’s technology will go head-to-head with Apple’s.
SwiftKey didn’t mention Apple in its official announcement about going free, but the timing can’t be pure coincidence. With a proprietary offering from Apple now built into iOS, SwiftKey is being forced to go the extra mile to make its product even more appealing to iPhone users, and that includes dropping the price tag. That’s something SwiftKey wouldn’t be able to do if it was still charging $4 to Android users.
To keep those Android users extra happy, SwiftKey is also releasing an update to its Android app, which we’ll likely see reflected in the iOS version that’s released alongside iOS 8. It includes 30 new keyboard “themes,” predictions on what emojis you might want to use (because who uses words anymore? ) and improvements to SwiftKey’s core prediction engine.
“This is the start of an incredibly exciting phase for us as a business,” said Reynolds.
Fortunately SwiftKey has $17.6 million in recent funding to fall back on after turning off its revenue spigot from Android.
In total the London-based business has raised $21.6 million from venture capital funds including Index Ventures and Accel Partners.
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