Startup Obituary : Skype

🍼 Origins and Early Growth

Skype was launched in 2003 in Estonia as a revolutionary internet-based communication platform. It quickly gained popularity for offering free international calls, a significant advantage given the high costs of traditional phone services at the time. The platform's rapid ascent led to its acquisition by eBay in 2005 for $2.6 billion.

💰 Microsoft Acquisition and Integration

In 2011, Microsoft acquired Skype for $8.5 billion, marking its largest acquisition at that time. Following the purchase, Microsoft integrated Skype into various products, including Office and the now-defunct Windows Phone mobile operating system.

✅ Features and Functionality

Skype offered a range of communication features, including:

• Instant messaging and voice chat

• Video calls and conference calling

• Screen sharing

• File transfer

• Online number services for receiving calls from conventional phones

At its peak, Skype supported conference calls, video chats, and screen sharing between 25 people for free, later increased to 50 in April 2019.

📈 Growth and Usage Statistics

Skype experienced significant growth over the years:

• By late 2005, it had 74.7 million total user accounts.

• In 2008, it reached 405 million users.

• By 2010, Skype was routing 190 billion minutes of calls per quarter.

• In 2011, Skype had 663 million registered users.

🤺 Competition and Decline

Despite its initial success, Skype faced increasing competition from various platforms:

• Apple's FaceTime

• Meta's WhatsApp

• Zoom

• Google Meet

• Cisco WebEx

During the COVID-19 pandemic, while other platforms saw substantial growth, Skype only experienced a 70% increase in daily users from February to March 2020. Its market share continued to decline, with daily active users falling from 40 million in March 2020 to 36 million in 2023.

🛑 Reasons for Shutdown

Microsoft has decided to shut down Skype on May 5, 2025, citing several reasons:

1. Stagnant User Base: While Skype saw initial growth at the pandemic's onset, its user numbers have remained relatively stable since then.

2. Shift in Consumer Trends: Users have gravitated towards platforms like FaceTime, Messenger, and WhatsApp for messaging, voice calls, and video chats.

3. Focus on Microsoft Teams: Microsoft has been investing heavily in Teams, which offers many similar functionalities to Skype.

4. Streamlining Offerings: Microsoft aims to simplify its communication platforms by focusing on Teams as its primary tool for both business and personal use.

🤝 Transition to Microsoft Teams

Microsoft is encouraging Skype users to migrate to Microsoft Teams Free:

• Starting March 2025, Skype users can access Teams Free using their existing Skype login details.

• Contacts and message history will be automatically transferred.

• Users can export their conversation history if desired.

However, some Skype features, such as paid calling services, will be discontinued in Teams.

Skype Scorecard

🎯 Conclusion

While Skype was once a pioneering force in internet-based communication, its inability to keep pace with rapidly evolving competitors and changing user preferences has led to its eventual shutdown, marking the end of an era in digital communication.

…

Startup success is rare, but learning from failures gives us an edge. Keep an eye out for cometitions and change in technological and user landscape to avoid the same fate as Skype. I hope this story helps you navigate your own venture wisely.

Cheers,

Ram

StartupObituary.com 

👉 My simple ask: It took hours to put together this post for you. I hope you forward this email to at least one founder friend or share on your social channels 🙏.

Startup Obituary is for educational purpose only not a business advice.