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In a significant shift for digital communications, Microsoft has announced the impending closure of Skype, a service that has been a cornerstone of online calling and messaging for over two decades. The official shutdown date is set for May 5. Microsoft is now encouraging users to transition to its Teams application, which is offered for free.
Founded in 2003, Skype was revolutionary in providing free voice and video calls over the internet, allowing users to sidestep traditional phone charges. However, as technology and user preferences evolved, Skype faced challenges, particularly in the mobile landscape, and ultimately experienced a downturn in popularity even during the pandemic.
According to Jeff Teper, Microsoft’s president of 365 collaborative apps and platforms, the decision to retire Skype was influenced by the lessons learned from the service and the focus on enhancing Teams. “We felt like now is the time because we can be simpler for the market, for our customer base, and we can deliver more innovation faster just by being focused on Teams,” Teper commented in an interview.
Microsoft plans to facilitate a smooth transition for users, allowing them to log into Teams using their Skype credentials. Additionally, Skype contacts and chat histories will transfer to the Teams app. Users can also export their data from Skype before the service shuts down. While the company will cease selling Skype subscriptions, those with remaining credits can continue using them within Teams.
Skype’s legacy is notable. Co-founded by Janus Friis and Niklas Zennström, the service quickly gained traction, reaching 11 million registered users in just a year and skyrocketing to 54 million by 2005, when eBay acquired it for $2.6 billion. The hope was that Skype would facilitate transactions on eBay, particularly for high-value items, by enabling direct communication between buyers and sellers.
Throughout its early years under eBay, Skype’s user base expanded to over 405 million by 2008. However, a change in management led to eBay reconsidering its investment in Skype. By 2009, the company announced plans for an initial public offering that ultimately never materialized, leading to its sale to an investor group in 2009 for $2.75 billion. Microsoft’s acquisition followed in 2011 for a staggering $8.5 billion, at a time when Skype had maintained a user base of 170 million monthly active users.
Despite the integration of various Microsoft products with Skype, the service struggled to keep pace with the rising competition from platforms like WhatsApp and FaceTime, which became increasingly popular among mobile users. Microsoft rolled out multiple updates to Skype in an effort to remain relevant but faced backlash from loyal users due to these changes.
As remote communication surged during the COVID-19 pandemic, Microsoft redirected its efforts toward Teams, which gained immense popularity as a collaborative platform. In contrast, Skype saw a temporary increase in usage but failed to sustain it. Current statistics show Skype has approximately 36 million daily active users, a decline from its peak. Meanwhile, Teams has experienced exponential growth, boasting over 320 million users as of 2023.
Reflecting on the transition, Teper noted, “I think a good write-up of the history of the thing would mark the shift to mobile and cloud as a significant change in the communications category.” As Microsoft moves forward, the legacy of Skype will remain intertwined with the evolution of online communication, illustrating both the potential for innovation and the challenges of maintaining relevance in a rapidly changing technological landscape.
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