Microsoft is phasing out Skype, the video-calling service it acquired for $8.5 billion in 2011. The tech giant announced that Skype will be retired in May, with some of its functionalities migrating to Microsoft Teams, its primary platform for video conferencing and team applications. Existing Skype users will be able to use their accounts to log into Teams.
For years, Microsoft has been prioritizing Teams over Skype. This decision to retire the brand reflects the company’s strategy to streamline its main communications application amid a growing number of competitors. Skype, established in 2003 by a group of engineers in Tallinn, Estonia, was a pioneer in internet-based phone calls, utilizing Voice over Internet Protocol (VoIP) technology, which converts audio into a digital signal for online transmission. Following its acquisition by online retailer eBay in 2005, Skype introduced video calls, marking a significant advancement.
“You no longer had to be a senior manager in a Fortune 500 company to have a good quality video call with someone else,” explained Barbara Larson, a management professor at Northeastern University who studies the history of virtual and remote work. “It brought a lot of people around the world closer.” This ability to bypass costly international calls benefited not only startups but also individuals outside of the business world.
“You could suddenly have long calls, frequent calls, that were either free or very inexpensive,” Larson said. However, the platform became a target for scammers as well. By 2011, when Microsoft purchased Skype from eBay, the service had approximately 170 million users globally. At the time of the merger announcement, then-CEO Steve Ballmer noted that “the Skype brand has become a verb, nearly synonymous with video and voice communications.”
Even as recently as 2017, Skype was considered high-tech; the newly inaugurated administration of President Donald Trump used it to field questions from journalists located far from the White House press briefing room. A month later, Microsoft launched Teams, aiming to compete with the growing demand for workplace chatting services, which had been spurred by the rise of Slack Technologies.
Slack and Teams, alongside newer video platforms such as Zoom, experienced substantial growth during the COVID-19 pandemic as companies transitioned to remote work, and families and friends sought out new methods for virtual connections. Though Skype was already declining by then, it had laid the groundwork for enhancing remote communication. “Higher-quality media can really deepen relationships and make people able to work through complex problems much better,” according to Larson. “Suddenly, this was available to anyone with a decent internet connection. And that was the real sort of revolutionary role that Skype had.”
