Key topics:Skype officially shut down on 5 May 2025Users urged to switch to Microsoft TeamsSkype’s decline mirrors other tech giants’ downfalls.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Jan Vermeulen*Software giant Microsoft shut down Skype on Monday, 5 May 2025 and is directing users to switch to its Slack rival, Microsoft Teams.News that Microsoft was planning to shut down Skype first leaked at the end of February when a member of the XDA Developers community discovered a message to that effect in the code of a preview version of Skype.Microsoft published a statement shortly afterwards confirming that Skype’s end was nigh.“Skype has been an integral part of shaping modern communications and supporting countless meaningful moments,” said Jeff Teper, Microsoft president of collaborative apps and platforms.“We are honoured to have been part of the journey.”Skype’s shuttering is a stark reminder of how quickly a position of market dominance can be swept from under you in the tech world.Before services like Skype, the only affordable way to communicate with friends and family overseas was by post or email. International voice calls were — and often still are — prohibitively expensive.Skype changed that. It let people connect across continents, not just cheaply, but for free, as long as both sides had an internet connection.As a result, Skype became a verb — much like Google, Photoshop, and Uber. “Skype me” was once the universal shorthand for making voice or video calls over the Internet.Although former fixed-line monopoly Telkom said it was unafraid about Skype’s impact on international call revenues, it was clearly terrified.Before Skype was even a year old, Telkom warned that voice-over-IP calls were illegal in South Africa. As with South Africa’s other dated and nonsensical regulations, the warning stopped precisely no one.However, even though the corporate instant messaging and videoconferencing sector was Skype’s to lose, a series of missteps allowed new kids on the block, Slack and Zoom, to gain their footing in the market.It’s a story often repeated in the tech world: BlackBerry lost to Apple and Android, WhatsApp killed MXit, and Microsoft Internet Explorer lost to Google Chrome despite how entrenched it was.It’s adapt or die. And Skype? It died..End of an era.Skype was founded by Swede Niklas Zennström and Dane Janus Friis in 2003, but its software was built by Estonians Ahti Heinla, Priit Kasesalu, Jaan Tallinn, and Toivo Annus.It originally ran on a hybrid peer-to-peer and client-server system.eBay bought Skype for $2.6 billion (R16.5 billion, at the time) with a mix of cash and eBay stock in 2005.After a consortium of investors bought 65% of the business from eBay in 2009, it was valued at $2.92 billion (R24.5 billion, at the time).Former Microsoft boss Steve Ballmer made an uncharacteristically splashy bet on the market leader in online calls, paying $8.5 billion, a 40% premium to Skype’s internal valuation.Read more:.Microsoft surges as cloud and AI drive blowout quarter .The May 2011 deal was the largest acquisition by Microsoft at the time, and Skype became a key piece of its strategy for the emerging mobile age — including replacing Windows Live Messenger.Microsoft infamously started inserting ads into Skype in September 2011.It didn’t pan out as Ballmer would have hoped. Upstarts like WhatsApp, Telegram, Snapchat, and WeChat solved problems that Skype didn’t.By May 2012, the hybrid peer-to-peer model was gone and Skype had been migrated to Microsoft-operated supernodes.Skype also found itself mired in Microsoft’s corporate bureaucracy, being shoehorned into the Office division and under orders to build tools geared toward a workplace audience as well as a consumer one.It soon shipped features like animated emojis, stickers, and GIFs — undermining Skype’s reputation as a serious business tool.Slack onslaught.Skype was made the default messaging app for Windows 8.1 in 2013 and came pre-installed on every device shipped with or upgraded to the operating system.That was the same year Slack arrived on the scene, and Skype users were complaining that elements of the core experience had started to break down.They cited missed or phantom calls and failures to sync information on different devices. The company worked to improve the service’s reliability, but some loyal users were put off by frequent redesigns, including a short-lived effort to fashion Skype in the mold of Snapchat.In 2017, the service was migrated to centralised Microsoft Azure servers and received several new cloud-based features.That same year, Microsoft launched its more comprehensive collaboration software Teams and announced that Skype for Business would be gradually phased out.Microsoft, which also saw its acquisition of Nokia’s mobile phone business end in failure, is far from alone in encountering rejection by a fickle consumer market.Alphabet’s Google has cycled through several iterations and brands for its online communications tools, which are today known as Chat and Meet.This month, Amazon also said it would be winding down Chime, the video and voice calling service it tried with little success to sell to corporate clients.Teams is “going well and this is a step to double down on it,” Teper said, adding that Microsoft wanted to keep Skype running until it was confident that the Teams version for individual users was fully ready.“It’s the most successful product in its category by far,” he said..This article was first published by Mybroadband and is republished with permission
