Why Microsoft decided to 'kill' Skype after 21 years

Launched in 2003, Skype was once one of the most popular communication tools, allowing users to make free calls over the Internet. Photo: Techlist .

On May 5, Skype - one of the world's most revolutionary calling and messaging platforms - will officially shut down after 21 years of existence. Launched in 2003, Skype quickly became popular because it was the first software that allowed users to make free calls over the Internet. This technology provided a new solution, replacing expensive traditional phone calls.

Skype's golden age is gone forever

In just one year, Skype attracted 11 million users. By 2005, the platform was acquired by eBay for $2.6 billion . However, the deal did not bring the expected profits. eBay had to sell most of Skype's shares to outside investors at a loss of $1.4 billion .

In 2011, Microsoft entered the game and agreed to spend $8.5 billion to own Skype. This was the corporation's largest acquisition to that point. At that time, Skype had more than 100 million active monthly users and was expected to become a pillar of the Microsoft ecosystem.

Indeed, under Microsoft, Skype reached 170 million monthly users in 2011 and grew to over 300 million in 2016. However, from its initial peak, Skype began to slow down. As free mobile messaging and calling apps like WhatsApp, FaceTime, and Zoom emerged, Skype gradually lost its competitive edge.

Despite Microsoft's efforts to integrate Skype into its ecosystem, the company has failed to bring the platform back to its glory days. By 2023, Skype will have only about 36 million monthly users.

Skype CEO Tony Bates (left) and Microsoft CEO Steve Ballmer (right) at a press conference on May 10, 2011 in San Francisco, California. Microsoft has agreed to buy Skype for $8.5 billion . Photo: Wired Japan.

Even when the Covid-19 pandemic broke out in 2020, the demand for online meetings increased sharply due to social distancing, but Skype could not take advantage of the opportunity to get back on track.

Instead, Zoom has become the go-to choice for millions of people around the world for online meetings, classes, or family birthdays. The problem isn’t a lack of technology, but rather a lack of flexibility and slow adaptation to market demands.

Microsoft Teams is the “destroyer” of Skype?

In fact, Microsoft isn't really abandoning the online calling and messaging market, it's simply focusing on Microsoft Teams, the communication and collaboration platform it launched in 2017.

Originally designed to compete with Slack for team collaboration, Teams quickly became the primary communications platform for businesses during the pandemic, integrating messaging, calling, document sharing, and remote work into a single app.

Microsoft 365 president Jeff Teper said the decision to kill Skype was to focus solely on Teams, which he described as “more powerful and flexible.”

“We’ve learned a lot from Skype and brought those lessons to Teams over the last seven years. Now is the right time to simplify the market and focus on innovation by putting all our efforts into Teams,” Teper said in an interview with CNBC .

Unlike Skype, Teams not only supports calling and messaging but also integrates collaboration tools such as document sharing, meeting scheduling, and creating user communities. Photo: Microsoft.

Thanks to quickly grasping the trend, Teams usage is 4 times higher than 2 years before the pandemic. With this growth momentum, Microsoft believes that Teams is the platform that can meet users' communication needs in the future, completely replacing Skype.

To mitigate the impact, Microsoft is allowing users to sign in to Teams with their existing Skype accounts. All contacts and chat history will be transferred to Teams.

If you don't want to continue using Microsoft's platform, you can also export your Skype data for archiving or transferring to another app. The company is stopping selling Skype service plans, but users can still use their Skype balance on Teams.

Skype has fulfilled its mission.

Despite its demise, no one can deny the legacy Skype left behind. This was the pioneering platform that brought Internet calling technology to millions of people, bringing the world closer together.

Carolina Milanesi, an analyst at Creative Strategies, isn't surprised that Microsoft is shutting down Skype. "Frankly, I thought it would happen sooner. The people who still use Skype are probably just using it out of habit, not because it has any unique features," Milanesi told CNET .

She also likened Skype to an old-fashioned dial-up phone, which is iconic but no longer relevant to the younger generation.

From May 5, Skype will officially stop working. Photo: PA.

JP Gownder, an analyst at Forrester, agrees that Microsoft’s decision makes perfect sense. “The world Skype once dominated is gone. Like any technology, it has to give way to something more modern,” he said.

Throughout the history of technology, there are many examples of products that were once dominant only to be replaced by the innovations they created. Steve Jobs once said: “If you don’t innovate yourself, someone else will do it for you.”

Microsoft did this with Windows Phone, when its smartphone line couldn’t compete with the iPhone and Android. Now, history is repeating itself with Skype, which changed the way people communicate, but ultimately failed to keep up.