- Microsoft will be closing the doors on Skype on May 5. The company wants users to transition to its more used product, Teams.
- Skype was once the leader in video calls, but success breeds competition. In the end, Skype lost significant market share to its newer rivals.
- The final nail in the coffin may have been the COVID-19 pandemic, leading to Zoom’s rise to prominence, but Microsoft stopped mentioning Skype years before that.
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Skype, the app that brought video calls to the masses, is signing off for good on May 5. Microsoft will try to transition Skype users to its Teams video conferencing platform.
Existing Skype users will be able to log into Teams with their Skype credentials to transfer contacts and chat history. For users trepidatious about Teams, they can export all of their data for integration on another platform.
Skype had a promising start but a rocky acquisition history
Entrepreneurs Janus Friis and Niklas Zennström launched Skype in 2003. The pair had previously made a name for themselves by creating a peer-to-peer file-sharing program called Kazaa.
Skype’s ability to let users call friends and family around the globe caught on quickly. It had 54 million registered users by 2005. That same year, eBay announced it would buy the app for $2.6 billion.
The online auction powerhouse’s leadership planned to allow buyers and sellers to connect on Skype to make transactions quicker for a little extra charge. They also thought it would expose Skype users to eBay and PayPal.
Skype’s user base surged to more than 400 million by 2008. But new leadership at eBay didn’t think Skype was helping its core business. A year later, eBay announced it was selling Skype to a group of investors led by Silver Lake for $2.75 billion.
Microsoft calls on Skype
It turned out to be a great investment. Microsoft bought the app from Silver Lake for $8.5 billion in 2011.
“Skype is very consistent with what Microsoft has made one of its core businesses, and that, for us, is helping people communicate and collaborate,” Microsoft’s then-CEO Steve Ballmer said at the time.
Microsoft had big plans to integrate Skype with other products like Windows Live Messenger, Windows Phones and Xbox video game consoles.
Skype starts to fall from the clouds
Skype’s success bred competition. Right around the time of Microsoft’s acquisition of Skype, Apple unveiled its video call feature, FaceTime. As more and more users entered the iPhone and broader Mac ecosystem, it ate away at market share.
Meanwhile, Facebook acquired WhatsApp in 2014. Shortly after the purchase, it allowed users to make calls to users in other countries. In 2016, Microsoft introduced Teams. At the time, Teams was more focused on business customers.
While the two products had different customers, the launch of Teams took a toll on Skype. Microsoft CEO Satya Nadella hasn’t mentioned Skype in an earnings call since 2017, according to CNBC.
Following the start of the COVID-19 pandemic in 2020, Zoom took off with consumers. Meanwhile, companies from Cisco to Facebook to Google offered ways to hold video calls with business acquaintances and loved ones alike.
In 2023, Microsoft said Teams users exceeded 320 million, while Skype had just 36 million daily active users.
