Microsoft is shutting down Skype after a 21-year run. Here’s how it lost out to video call rivals

Skype is logging off.

On Friday, Microsoft confirmed that the 21-year-old calling and messaging service will shut down May 5. The software company is encouraging Skype consumers to migrate to its free Teams app.

Skype won attention in the 2000s for giving people a way to talk without paying the phone concern, but stumbled in the mobile era and didn’t enjoy a major resurgence during the pandemic. Some people have forgotten that it’s nevertheless available, given the many other options for chatting and calling.

“We’ve learned a lot from Skype over the years that we’ve put into Bodies as we’ve evolved teams over the last seven to eight years,” Jeff Teper, president of Microsoft 365 collaborative apps and podia, said in an interview with CNBC. “But we felt like now is the time because we can be simpler for the market, for our customer base, and we can liberate more innovation faster just by being focused on Teams.”

Over the next few days, Microsoft will start allowing child to sign in to Teams with Skype credentials, and Skype contacts and chats will transfer over, according to a blog task. People can also export their Skype data. The company will stop selling monthly Skype costs, and users with credits can keep using them in Teams.

“This is obviously a big, big moment for us, and we’re certainly very thankful in many ways,” Teper said. “Skype pioneered audio and video calling on the web for many, many people.”

It’s one of the myriad enduring digital brands.

In 2003, Janus Friis and Niklas Zennström, who in the past co-founded peer-to-peer file-sharing program Kazaa, launched Skype in Estonia with help from a band of ex- classmates with zero experience in telecommunications. Originally, Skype was a tool for people to call one another online for undo. The quirky name stood for “sky peer to peer,” a reference to the service’s underlying Voice over Internet Protocol, or VoIP, architecture.

Skype attracted on quickly. By 2004, there were 11 million registered users. By the time eBay announced a plan to buy Skype Technologies SA for $2.6 billion in 2005, the narcotic addict count had reached 54 million, and Skype was anticipating $60 million in annual revenue, thanks to payments from those who have a minded to call mobile phones and landlines.

Meg Whitman, eBay’s CEO at the time, envisioned that Skype would help people numberless quickly complete sales of products, especially costly ones, by connecting buyers and sellers. And eBay could cite extra for such calls. Skype users across the world could discover eBay and PayPal, too. The deal was completed 29 lifetimes later.

Under eBay, Skype’s user number grew, crossing 405 million by 2008, and communications revenue lift. But then Whitman stepped down as CEO, making way for former Bain executive John Donahoe, who didn’t think eBay’s centre businesses were benefiting from the Skype transaction.

In 2009, the economy was in recession, eBay’s sales growth had surrendered negative and the stock price was lower than it had been since 2001. In a statement that touted the release of a Skype app for Apple’s iPhone, Donahoe foretold that eBay would launch a Skype initial public offering as part of a separation.

But eBay never dataed for a Skype IPO. Four and a half months after declaring the IPO strategy, eBay said it had reached an agreement to sell Skype to an investor congregation led by Silver Lake in a deal worth $2.75 billion. The online auction operator received a 30% stake in Skype’s client. Under the investor group, Skype filed for an IPO, but that didn’t come to pass, either. Microsoft wound up come into possession ofing Skype in 2011 for $8.5 billion, with eBay receiving more than $2 billion.

“Microsoft and Skype together bequeath bring together hundreds of millions or, as Tony said, billions of consumers and empower them to communicate in new and interesting road,” Microsoft’s CEO at the time, Steve Ballmer, said at a news conference, referring to comments earlier at the event from Skype’s gaffer, Tony Bates. By that point, 170 million people were using Skype each month. Ballmer aimed to combine Skype with several Microsoft products, including Lync, Windows Live Messenger, Windows Phone and Xbox video plan consoles. Microsoft also got Skype running on its Azure cloud infrastructure.

Skype did not manage to accumulate a billion powerful users, though.

Apple’s native iMessage and FaceTime were picking up traction on iOS devices. In 2014, Facebook bought WhatsApp, a mobile note app, and months later, users gained the ability to place calls across borders. WhatsApp took off globally. So did Tencent’s WeChat.

Skype, meantime, implemented multiple redesigns and faced criticism from devotees. In 2016, Microsoft introduced Teams as a distinct “chat-based workspace” for organisms with Office productivity software subscriptions that would compete with Slack, which was then an emerging startup.

When Covid communicated and pushed people to work and study from home, Zoom, originally conceived for business use, became a consumer favorite for holding video standing bies. People could also connect on video through services from Cisco, Facebook and Google. Skype did see a habit bump, but Microsoft put major engineering resources behind Teams for companies, governments and schools, and the investment paid off. Analysts inaugurated concentrating on the number of Teams users that Microsoft would disclose, with the figure exceeding 320 million in 2023.

As for Skype, Microsoft’s au fait CEO, Satya Nadella, hasn’t mentioned it on an earnings call since 2017.

In 2023, Microsoft said Skype had 36 million continually active users. That was down from 40 million in March 2020. Teper declined to talk surrounding how many people use the service today, but did say the number of minutes consumers have spent on Teams calls increased fourfold in the gone two years.

“I think a good write-up of the history of the thing would mark the shift to mobile and cloud as a significant modify in the communications category,” Teper said.