Smule CTO Dr. Ge Wang.

Smule, which practically invented the smartphone-as-musical instrument category, is consolidating power with the recent acquisition of Khush and a $12 million round of funding this year. 

We caught up with Smule co-founder and CTO Ge Wang to learn more about the Khush acquisition along with the company’s product development philosophies and plans for next year. The Khush deal extends Smule’s lead in the music category. While terms weren’t disclosed, Wang said that the acquisition is a combination of stock and cash that brings the 35-person Smule team and Khush’s eight employees under the same corporate umbrella. But the teams will remain independent and in their respective locations. Khush products will keep the Khush branding for the foreseeable future.

The acquisition has all of the ingredients necessary to make for a productive cultural match. Both Khush and Smule were launched at major universities on opposite coasts and both companies have co-founders, who currently hold faculty positions at their respective schools of Georgia Tech and Stanford University.

I asked Dr. Wang if Smule and Khush would venture beyond iOS to produce creative music apps for Android. He said that while they have been exploring that platform, the high audio latency found in most Android devices makes it difficult to develop the kind of apps for Android that they have for iOS. He also said that no other platforms like Windows Phone are currently being considered for future app development.

Both Smule and Khush have been experimenting with revenue models over the past year. Some apps are free with in-app song purchases while some are paid apps with in-app purchases.

Wang said the Magic Piano apps for the iPad and iPhone illustrate the shift in their revenue model. The iPad app was released first as a paid app. However, the iPhone app that followed as released as a free app. This shift to free reduces barriers to entry for apps and could potentially funnel more users into generating revenue for the company from in-app purchases.

Smule is one of the few developers outside the games category that has managed to attract and retain users at a respectable level. With the Khush deal, Smule now has 30 million downloads on iOS so far. Obviously, that’s not as high as gaming-centric companies like Outfit7 or Pocket Gems. But it’s a very, very respectable number.

Smule also tracks other types of activity across its app portfolio. For example, more than 13 billion notes were played using Magic Piano a month after its release. Then there are more meaningful of examples underscoring user engagement. A Japanese user of Smule’s Glee Karaoke app recently organized a singing collaboration around the song “Lean on Me” as a show of support for the victims of the earthquake and tsunami that devastated Japan in March. Five thousand voices have joined in at this point according to Wang.

With more than $25.5 million in funding from investors including Bessemer Venture Partners, Granite Ventures, Shasta Ventures and Floodgate, Smule is one of the more heavily backed mobile app companies around.