Microsoft is killing Skype: Why the app couldn't keep up
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Skype, once the go-to app for making calls on the internet, is shutting down after several key missteps and the rise of more user-friendly competitors.
The big picture: Skype, a big hit during the early 2000s, failed to keep up with competitors and wasn't able to claw back during the pandemic when demand for video calling spiked.
Driving the news: Microsoft announced on Friday that it will shut down Skype on May 5 and replace the 21-year-old calling and messaging service with the free version of Microsoft Teams for consumers.
- Current Skype users will have about two months to decide whether they want to switch to Microsoft Teams or export their data.
Context: Microsoft acquired Skype in 2011 for $8.5 billion from eBay and an investor group led by Silver Lake Partners.
- The deal was meant to increase Microsoft's presence in real-time communication, integrating Skype into Windows, Xbox and other products.
Six years later, Microsoft introduced Teams, positioning it as a collaboration tool for businesses and enterprises in the face of Slack, growing as a platform for workplace communication.
- Teams gradually overtook Skype in professional settings Teams became the hub for Office 365 where users can chat, make video calls and share files.
- Unlike Skype, Teams had built-in features like threaded conversations and channels, and users didn't have to purchase Skype Credits.
Between the lines: During the pandemic, apps like Zoom, WhatsApp and Teams stole the spotlight from Skype.
- Zoom allowed users to join calls with a single link and they didn't need to have an account to join.
- To make international calls, send messages, share links, images, videos and files for free, WhatsApp only needed a phone number. Skype required a Microsoft account to make cheap international calls.
- For remote workers, Teams made Skype obsolete
By the numbers: Microsoft said Skype had 36 million daily active users in 2023.
- Jeff Teper, president of Microsoft 365 collaborative apps and platforms, declined to tell CNBC about how many people currently use Skype, but said the number of minutes consumers have spent on Teams calls increased fourfold in the past two years.
- Microsoft's last public data for Teams monthly active users was 320 million.
Fun fact: Microsoft CEO Satya Nadella hasn't mentioned Skype on an earnings call since 2017.
