Microsoft is preparing to retire Skype, the video-calling service it acquired for $8.5 billion in 2011. This decision, announced Friday, marks a shift towards Microsoft Teams, the company’s primary platform for videoconferencing and team communication. Skype users will transition seamlessly, using their existing accounts to access Teams.
Microsoft has strategically prioritized Teams over Skype for several years, and the decision to sunset the Skype brand underlines Microsoft’s intent to streamline its core communications application. This move comes as the tech giant contends with a dynamic competitive landscape.
Skype, originally founded in 2003 by a team of engineers in Tallinn, Estonia, revolutionized online communication. It utilized Voice over Internet Protocol (VoIP) technology, converting audio into digital signals transmitted via the internet. The service incorporated video calls after eBay acquired it in 2005.
“You no longer had to be a senior manager in a Fortune 500 company to have a good quality video call with someone else,” noted Barbara Larson, a management professor at Northeastern University specializing in the history of virtual and remote work. “It brought a lot of people around the world closer.”
Skype’s ability to circumvent costly international phone calls benefited startups and individuals alike. “You could suddenly have long calls, frequent calls, that were either free or very inexpensive,” Larson explained.
By 2011, when Microsoft purchased Skype from eBay, the service boasted approximately 170 million users globally. At the time of the merger announcement, then-Microsoft CEO Steve Ballmer stated, “The Skype brand has become a verb, nearly synonymous with video and voice communications.”
Even as recently as 2017, Skype remained a modern communication tool, used by President Donald Trump’s administration to field questions from journalists located away from the White House press briefing room.
Microsoft launched Teams a month later in an effort to capitalize on the burgeoning demand for workplace chat services, driven by the success of Slack Technologies. Slack and Teams, along with newer video platforms such as Zoom, experienced exponential growth during the COVID-19 pandemic as companies transitioned to remote work, and families and friends turned to virtual platforms to connect.
Though Skype had begun to wane, it had laid the foundation for enhanced remote connections. “Higher-quality media can really deepen relationships and make people able to work through complex problems much better,” Larson stated. “Suddenly, this was available to anyone with a decent internet connection. And that was the real sort of revolutionary role that Skype had.”
