Few things go together better than Skype and smartphones. That's why the Skype application for the iPhone has been so successful. It was released at the end of March and, as of this May, it's been downloaded over 4 million times. That means that roughly one out of every ten of the 40 million iPhone users out there has Skype on their phone.
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For a lot of people it's much cheaper and easier to use Skype on their phone to place calls. Long distance calls especially are often cheaper with Skype credit than through a carrier. I'm not sure how happy AT&T is with Skype right now, but it's existence has meant very good business for Apple.
Now the first ever Skype iPhone update is out. Version 1.1 includes a bunch of useful new features, like the ability to send SMS messages using Skype credit, voicemail support, and improved dialing. It also contains support for a whole bunch of languages, including Chinese.
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You can find more details about the Skype update here. Sadly, push notifications have not yet made it to Skype. It's taking some app developers a long time to get with the program on that one.