Microsoft has announced plans to cut off Skype, its 21-year-old calling and messaging service, on May 5. It is encouraging its users to switch to its free Teams app.
Skype came to prominence during the 2000s through its ability to conduct free calls over the internet but was not able to rebounce itself with the onset of the pandemic and make a switch towards the mobile era. The greater part of users has gone for alternative video call and message-based apps.
“We’ve learned a lot from Skype over the years, and we’ve integrated those learnings into Teams,” said Jeff Teper, president of Microsoft 365 collaborative apps and platforms, in an interview with CNBC. “Now is the right time to simplify our offerings and focus on delivering more innovation through Teams.”
Microsoft will get under way later this year to allow Skype users to sign in to Teams with their existing credentials, bringing their contacts and chat history with them. Users will also be able to transfer their Skype data with them, and Skype credit customers can redeem their credits in Teams. Microsoft will discontinue selling Skype by the month, however.
“This is an interesting time for us, and we appreciate the role Skype has played in pioneering online audio and video calling,” said Teper.
The Rise and Fall of Skype
Skype was created by Janus Friis and Niklas Zennström in Estonia in 2003 as a free internet calling application. “Skype” was borrowed from “sky peer-to-peer” since the technology employed VoIP or Voice over Internet Protocol.
By 2004, Skype boasted 11 million registered users, and by 2005, it was acquired by eBay at $2.6 billion. Under eBay’s ownership, Skype’s users rose to 405 million by 2008. EBay, though, eventually decided to leave Skype and the company was eventually bought by an investor group in 2009. Microsoft later acquired Skype at $8.5 billion in 2011, targeting to merge it into its environment.
While it was the market leader at first, Skype could not match the growing mobile-friendly platforms. Apple’s iMessage and FaceTime gained traction, and WhatsApp and WeChat turned into a global phenomenon. Microsoft’s constant overhauls of Skype could not draw the attention of users, and in 2016, the company introduced Teams as a competitor to Slack.
Zoom was the favored video conferencing tool for companies and consumers during the COVID-19 pandemic, followed by consumer and business offerings from Facebook, Google, and Cisco. Though Skype saw an initial surge, Microsoft focused more on Teams, which reached over 320 million users in 2023.
Microsoft CEO Satya Nadella has not mentioned Skype in an earnings call since 2017. Microsoft has reported in 2023 that Skype had 36 million daily active users, down from 40 million in 2020. Teper declined to state the number of Skype users at present but added consumer minutes used on Teams calls had increased fourfold over the past two years.
Reflecting upon Skype’s failure, Teper identified the transition to mobile and cloud communication as a turning point for the company.
