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.
Microsoft CEO Steve Ballmer and Skype CEO Tony Bates shook hands during a news conference in San Francisco on May 10, 2011, marking Microsoft’s $8.5 billion acquisition of Skype. The iconic deal symbolized a bold move into the world of internet communications.
The Evolution of Skype: From Breakthrough to Decline
Skype was founded in Estonia in 2003 by Janus Friis and Niklas Zennström as a revolutionary platform for free internet calls. The name “Skype” was derived from “sky peer-to-peer,” reflecting its reliance on VoIP (Voice over Internet Protocol) technology.
By 2004, Skype had amassed 11 million users, and by 2005, eBay acquired the platform for $2.6 billion. During eBay’s ownership, Skype’s user base surged to 405 million by 2008. However, eBay eventually sold Skype in 2009 to a group of investors. Microsoft acquired the company in 2011, aiming to integrate it into its ecosystem.
Despite its initial dominance, Skype struggled to adapt as mobile-friendly communication platforms began to dominate the market. Apple’s iMessage and FaceTime gained widespread popularity, while global players like WhatsApp and WeChat captured massive audiences. Microsoft’s frequent updates and redesigns of Skype failed to reignite interest. In 2016, Microsoft shifted its focus to Teams, positioning it as a competitor to Slack.
The COVID-19 pandemic brought video conferencing into the spotlight, with Zoom emerging as the preferred choice for businesses and consumers alike. Platforms by Facebook, Google, and Cisco also gained significant traction. While Skype saw a brief resurgence, Microsoft prioritized Teams, which surpassed 320 million users by 2023.
Notably, Microsoft CEO Satya Nadella has not mentioned Skype in earnings calls since 2017. In 2023, Microsoft reported that Skype’s daily active users had dropped to 36 million, down from 40 million in 2020. While Microsoft declined to disclose Skype’s current user base, it noted a fourfold increase in Teams call minutes over the last two years.
Reflecting on Skype’s decline, Microsoft executive Jeff Teper pointed to the platform’s inability to adapt to the rise of mobile and cloud-based communication as a critical turning point in its trajectory.
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