Spotlight on: Swype

SEATTLE — Less than a block from the waterfront and ferry terminal, Swype Inc. is still settling into its new digs near this city’s historic Pioneer Square. Having moved in to its new headquarters just a few weeks ago, there is plenty of room for the company to grow into its space that takes up the entire second floor here at Columbia Street and Western Avenue. With 42 employees on board now, the company shows all the signs of a startup on the verge of that coveted next phase of growth (and profitability). The team include

s engineers, computational linguists, a sales staff and a group of executives and founders with an impressive background in mobile. “We’re today’s media darling and tomorrow we’re just another included feature,” CEO Mike McSherry told RCR Wireless News during our visit last week.

The increasingly popular text input solution for touch-screen devices is now live on at least 15 devices with support for 40 different languages in 15 different keyboard layouts. While Swype’s rise has been fast of late, it wasn’t always that way.

Cliff Kushler, co-inventor of T9, began working on the Swype technology in 2002. Similar to T9, Swype was originally created to enable people with various disabilities to maneuver and interact more freely in the digital world.

The “pure R&D” endeavor was essentially “a grand science experiment” for seven years, McSherry said. During that time, Kushler self funded the project and didn’t show his work to anyone. After meeting Kushler and learning more about his stealth project, McSherry took the helm in 2008 and pumped some of his own cash into the venture as well.

“We were self funded all the way until last year,” McSherry said. “For all of this time we wondered if it would be a science experiment or if people would adopt it.”

Swype for a greater good

The feeling that comes with working toward a much greater good than profit or personal fortune is palpable and unmistakable in how McSherry talks about the company. Swype wasn’t only “born out of disability research,” as he puts it.

At the time of its first major outside investment, 2% of the company was set aside to fund disability research. This sense of giving back is a great source of pride for McSherry and the team he surrounds himself with. It also helps explain why McSherry feels so lucky to know and work with Kushler.

“His heart is in the right place,” he said. Swype’s outside funding came earlier this year in the form of $6.6 million from Nokia Growth Partners, Samsung Ventures and DOCOMO Capital Inc. Though self funding successfully brought the company through to its launch, more cash was needed to expand Swype’s reach on operating systems, devices and more languages. The company has no plans to seek more investment.

OEM as a business model

Even before it’s official launch, Swype’s executives made the decision to focus its business model around the OEM space. While it isn’t easy, being a pre-installed application on a device is simply the best business model that Swype can pursue today, McSherry said. “The keyboard is the most widely used app on a device and every app uses it,” McSherry said. “It’s closer to an operating system integration than just an application.”

If Swype approached the market as an app download from the get go, the amount of work required to do that well would compound almost immediately. As it is, Swype is already short on the engineering talent it needs to meet all of the demands from its OEM partners. The level of quality assurance required or expected of an app download would be even greater, he added. “Mobile’s hard to hire for,” McSherry noted. “We’re at the core code level… We test Swype against every single device.”

Swype currently has contracts with nine OEMs and most of them are pre-loading the software on every new device they ship. As for those OEMs that Swype doesn’t have deals with yet, McSherry is coy but clearly hopeful.

“There’s not an OEM we’re not having conversations with,” he said. BlackBerry-maker Research In Motion Ltd. wouldn’t even meet with Swype until a few months ago. And then there’s Apple Inc., which originally wanted an exclusive deal with Swype, McSherry says. But, the contracts Swype already had in place made that impossible. And besides Swype’s team is looking to be much more than a differentiating feature for one family of devices.

The most recent word from Apple is that it’s trying to work out a way to bring the technology to iOS, but McSherry points out that Apple would first have to open its API. Absent Apple and BlackBerry devices, the bulk of Swype’s growth and development is coalescing around the rise and prominence of Google Inc.’s Android OS. In fact, McSherry told RCR Wireless News that Android comprises about 90% of the company’s work today.

And yet, McSherry adds: “I expect we’re going to support nine different operating systems by the end of the year.” He also expects to have 55 languages supported by the end of year, which is made possible thanks to contributions from several doctorate linguists on the team.

Setting the bar high

When we asked McSherry what Swype has in mind for an end game, he simply said, “We would like to see Swype on a billion devices.” He knows if Swype is ever to reach that goal, it can’t afford to play favorites with OEMs, operating systems or any device type for that matter. As such, Swype will be making more debuts on tablets and eventually, assistive technology devices that aid those with disabilities.

Swype wants to hit multiple device categories soon. It works on various operating systems and devices, including game consoles, kiosks, televisions, GPS units and more. At the company’s new office there were various demo tablets running Swype, including a stripped down version of the technology running on an iPad.

McSherry says the technology will inevitably shift to an app download once he has a large enough team in place to support that business model well. But for now, it’s all about making deals with device manufacturers and meeting their demands. 

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