Microsoft blew $8.5 billion on Skype only to spend 14 years killing it
Skype will be closed down in May 2025, but it really died in 2011 when it was bought by Microsoft. It's just been a death by a thousand slow-motion cuts.
How we used to live. This is Skype on the Mac back in prehistory
You didn't know Skype was still a thing, and in a few weeks' time, it won't be. Once a revolutionary app that brought free voice calls over the internet, it was important enough and valuable enough that in 2006, eBay bought it for $2.6 billion.
If it seems peculiar that eBay would be the one that bought it, give the auction site some credit -- it flipped the service and sold Skype on in 2011 for a huge profit. Five years is a long time to have it on "Buy it Now," but Microsoft eventually snapped it up for $8.5 billion.
It's what Microsoft did next that set Skype directly onto its slow path to extinction. We will surely never really know, but it looks like that it originated outside the corporation was the problem.
For a firm that bought DOS and, ahem, was inspired by Apple to make Windows, Microsoft sometimes has a very strong Not Invented Here ethos. So Skype immediately gave Microsoft a massive presence in this conferencing technology, but that wasn't good enough.
What Microsoft seems to have wanted was its own in-house version, and it got it. Eventually.
For a time, Skype continued to be the one everybody used. Our Managing Editor Mike Wuerthele interviewed me over it more than a decade ago, and while prepping this piece also said that he played tabletop games over it. Podcasters also used in the earliest days, with the individual presenters recording their audio for best quality, much the same as FaceTime or Riverside are used today.
Five years after acquisition, though, Skype got sidelined by Microsoft as it launched Teams in 2016. Unofficially it was a replacement for the old, fiddly and unreliable application.
Officially it was nothing of the sort as Microsoft Teams was clearly and unquestionably an entirely different fiddly and unreliable service. Despite the difficulties of Teams, which have continued to this day, Microsoft was aiming it at that market which was willing to pay to get a chat, voice and then video service that worked.
Just by doing that, though, just by aiming at that market, Microsoft was saying Skype didn't work and wasn't worth paying for. Skype had reputational damage from its owner, and while there was the odd update, what it didn't get was any attention.
"Skype pioneered audio and video calling on the web for many, many people," Microsoft's Jeff Teper told CNBC as the end of Skype was announced. "We've learned a lot from Skype over the years that we've put into Teams as we've evolved Teams over the last seven to eight years."
"But we felt like now is the time because we can be simpler for the market, for our customer base," continued Teper, "and we can deliver more innovation faster just by being focused on Teams."
"This is obviously a big, big moment for us," he said, "and we're certainly very grateful [to Skype] in many ways."
Skype was a transformative app and one that helped establish the internet as the ubiquitous necessity it is today. But Microsoft's slow strip-mining of it to make Teams was cruel.
It was also a bit ineffective. Back in the day, Skype was an amazing new use of the internet that only actually amazed a quite specific audience. Teams didn't amazed anyone.
But Zoom did.
Come the pandemic, Skype was nowhere to be seen and Teams was doing well with universities and corporations. But Zoom exploded with ordinary users, even with its own problems, and once regular people were exposed to Zoom, they stuck with it.
Microsoft should have owned video conferencing during COVID. Microsoft should have run with Skype or killed it off and stuck to only Teams in 2016.
Mind you, Apple should've made FaceTime the open-source standard that Steve Jobs said it would be when he launched it with the iPhone 4 in 2010.
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Comments
Microsoft ‘invested’ $8 Billions 14 years ago… to buy tech and system… in which they bases the actual Team offerings.
It would be like saying that Apple ‘blew’ $3B to buy Drew's company… to build up Apple Music streaming service.
and yet… the IT people at my very large institution have guzzled the Redmond Flavr-Aid and are doing all they can to kill use of Zoom and cram Teams down everyone’s throats. They seem to think Zoom and Teams are interchangeable videoconferencing solutions which is hilarious coming from people who are paid to understand technology. They actually consider Zoom to be a toy and Teams to be a professional solution 🙄🙄🙄🙄🙄🙄🙄🤣🤣🤣🤣🤣
Very fortunately our c-suite people love Zoom.
skype sucked since microsoft bought it
and even though they pushed it out to all windows PCs
no one uses it
and everyone i know of that has used both zoom and teams, hates teams
i am not sure what microsoft has done since windows and office that would be a success
We use teams at work and I find it to be fine. Teams chat is like iMessage. A teams calls allow screen sharing and remote control. It’s Outlook integrated for calendars and cloud folders. I don’t understand the complaints.
A learning experience, like Zune.
For my purposes, FaceTime is and has been vastly preferable to Teams, but to be fair I'm not really Teams' target market.