The Rise and Fall of Skype

IT March 20th 2025

Once a dominant platform for video and voice communication, Skype will soon cease operations on 5th May 2025. However, the platform has experienced more issues in the past few years, raising questions about its future viability. Once ruling the world of communication, Skype has struggled to compete in an increasingly crowded market.   

In this article, we will walk through Skype’s journey from its success to its fall. We will try to gain more insights into how even the most established and reputed tech giants can struggle to maintain relevance in a rapidly changing innovative market. 

The Advent of Skype: A Video Communication Revolution

Niklas Zennström and Janus Friis founded Skype in 2003 intending to make video and voice communication free and accessible to all. Its peer-to-peer technology made internet voice and video calls free across the globe. In just one year, Skype has already 100 million users, and it has become more popular.   

Speaking about its strength, Skype’s potential was its cross-platform availability. Unlike desktop-only solutions, it provided seamless connectivity across tablets, laptops, and mobile devices. This flexibility allowed users to stay connected anytime and anywhere.  

Whether it was catching up with colleagues, group calls with friends, or any other business discussion, everyone preferred the platform. It was the perfect fit for companies looking to communicate across the globe at minimal cost.   

By the mid-2000s, Skype become the tech giant in the world of communication with millions of users. 

Roadmap Journey of Skype

In 2003: Skype was first launched on Windows and later on macOS and Linux.

April 2003: Domains of Skype, Skype.com, and Skype.net were registered.

August 2003: The first public beta version was released.

September 2005: Skype for calling was banned in China.

October 2005: eBay Acquired Skype.

December 2005: Skype introduced video calls.

April 2006: Skype has 100 million users.

October 2006: Skype 2.0 for Mac has been released, the first full release of Skype with video for Macintosh.

December 2006: As of January 18, 2007, Skype introduces a new pricing structure, adding connection fees to all SkypeOut calls.

March 2007: Skype 3.1 is released, introducing Skype Find and Skype Prime. A 3.2 beta follows with a “Send Money” feature for PayPal transfers between users.

August 2007: Skype 3.5 for Windows launches, adding video content in chats and call transfers.

August 15, 2007: Skype 2.7.0.49 (beta) for Mac OS X is released, integrating Mac Address Book contacts, auto redial, contact groups, public chats, and an in-window volume slider. 

August 16-17, 2007: Skype experiences a major outage, leaving users in many countries unable to connect. 

November 2007: London-based Skype users with 020 numbers lose access to their Skype-connected phone numbers after December 2007.

Skype International Market Share 

Year	International call market share
2005	2.9%
2006	4.4%
2008	8%
2009	12%
2010	13%
2012	33%
2013	36%
2014	40%

– In 2005, Skype held a modest 2.9% market share.  

– By 2006, it had risen to 4.45%, showcasing early adoption growth.  

– A significant jump occurred by 2008, reaching 8 % and further to 12% in 2009.

– Growth continued, hitting 13% in 2010.

– A significant surge happened by 2012, with Skype hitting 33% of the market, nearly 3X from 2010.

– By 2013, its share spiked to 36%; by 2014, it peaked at 40%, marking a dominant presence in the international call market.   

System and Software Updates

Since its inception, multiple versions of Skype have been developed for Windows. The original Skype applications evolved from version 1.0 to 4.0, remaining a desktop-only program since its launch in 2003. Later, a mobile version was introduced for Windows Phones. 

In 2012, Skype released a version for Windows 8, designed to resemble the Windows Phone interface. On July 7, 2015, Skype redirected Windows users to download the desktop version, though it remained functional on Windows RT until October 2016. 

By November 2015, Microsoft introduced three integrated Skype applications—Messaging, Skype Video, and Phone—for Windows 10. However, these applications failed to meet user expectations, leading to Skype’s decision in March 2016 to replace them with a Universal Windows Platform (UWP) application.

Initially launched as a preview with the Windows 10 Anniversary update, it became the stable version with the Windows 10 Creators update. In late 2017, Skype was updated to version 12.9, featuring both additions and removals of certain functionalities.

What factors contributed to Skype’s downfall?

Let’s uncover the facts and factors that contributed to the fall of Skype.   

eBay Acquired Skype  

After gaining more popularity, in 2005, a leading online auction platform, eBay acquired Skype for $2.6 billion. The exact reason behind the acquisition was not mentioned. eBay thought of integrating Skype’s communication tools into their marketplace platform, as it would allow buyers and sellers to connect directly through video calls.   

eBay’s  Skype ownership was not fully committed to expansion and growth. Its primary focus remained on eCommerce, and it did not give Skype the resources it required to grow. This impacted Skype’s ability to compete and innovate with other contenders.   

To make matters worse, eBay announced that they had overvalued Skype, which led to further tensions between the founders and eBay. This resulted in Zennström and Ferris leaving the company in 2008.   

Meanwhile, eBay also sold a majority of its stake in Skype to other investor groups led by private equity firm Silver Lake for $ 2.7 billion.  This deal became a helping hand for the struggling platform to refocus and recover its services..

Mircosoft’s Acquisition gave a major turn

In 2011, Microsoft took over Skype for $8.5billion.  One of the major challenges following Microsoft’s acquisition of Skype was the shift away from its core strength—Voice over Internet Protocol (VoIP). Rather than focusing on enhancing Skype’s signature calling capabilities, Microsoft introduced features that deviated from its original purpose as a communication tool.   

In an attempt to outpace competitors, these additions often misaligned with Skype’s identity as a user-friendly collaboration platform, ultimately diluting its unique value and contributing to the fall of Skype.

Post Acquisition

August 2013: Skype released the 4.10 update for Apple iPhone and iPad apps that allowed HD quality video for iPhone 5 and fourth-generation iPad.

November 2014: Microsoft Office’s team announced that a new chat powered by Skype will be implemented in their software, allowing users to chat with co-workers in the same document.

September 2015: Skype introduced Mojis, short video clips, and GIFs featuring characters from popular films and TV shows, allowing users to express themselves in conversations like emoticons. Skype collaborated with Universal Studios, Disney Muppets, BBC, and other studios to expand the Mojis collection. 

July 2016: Skype introduced an early Alpha version of a new Skype for Linux client, built with WebRTC technology after several petitions asked Microsoft to continue development for Linux.

February 2017: Microsoft announced plans to discontinue its Skype Wi-Fi service globally. The application was delisted, and the service itself became non-functional on 31 March 2017.

April 2017: Microsoft eventually moved the service from a peer-to-peer to a central server-based system, enabling cloud-based storage of text messages/pictures and temporary 30-day storage of videos/file attachments/voice messages/call recordings.

Rise of Microsoft Teams

Microsoft launched a revamped version of Skype, Microsoft Teams, in 2017; since its launch, Microsoft has always prioritized Teams rather than Skype. During a pandemic, in 2020 Teams noticed significant growth. Its integration with Microsoft 365 made it the preferred choice for most of the businesses and institutions. As per the latest stats, Teams have daily 320 million active users (Source: Statista).

The Future of Communication

As Skype is all set to discontinue, the future of communication mostly depends on platforms like Microsoft Teams, Zoom, and Google Meet, which may continue to evolve in the upcoming years.   

These tools offer not only video calling but also advanced collaboration features, making them irreplaceable. As we bid farewell to the platform that changed the way of communication, we also encourage the next chapter in the evolution of technology.  Let’s compare the top alternatives to Skype.

Comparing Top Skype Alternatives 

Skype vs Microsoft Teams

Skype Alternatives for Business was launched in 2015, offering features mainly focusing on business communication and collaboration, competing with other tools like Google Meet and Zoom. However, Microsoft then launched Microsoft Teams to focus on a unified communication platform.

By considering business, Microsoft Teams offered features beyond Skype’s capabilities, incorporating file sharing and real-time document editing. With integration with the entire Microsoft 365 office suite, Teams gained attention and distracted users to shift from Skype.

Therefore, To allow users to move from Skype to Teams, Microsoft ended support from Skype for business. This made all businesses shift from Skype.  

Skype vs Zoom

Zoom is another renowned communication tool, which gains popularity during lockdown. From a technical standpoint, Zoom offers higher scalability, supporting meetings with up to 1000 participants, whereas Skype is limited to 100 users per call. Also, Zoom provides cloud recording, advanced host controls, and extensive third-party integrations.

Zoom also supports breakout rooms, virtual backgrounds, and real-time transcription, extending its functionality for professional usage. Skype lacks many of Zoom’s business-focused features like webinar hosting and enterprise-grade security controls.

Skype vs Google Meet

Skype was mostly designed for personal use and small-team collaboration, while Google Meet is built for professional and enterprise communication, seamlessly integrating with Google Workspace. 

From a scalability perspective, Google Meet supports up to 500 participants in business plans, while Skype allows only 100 participants per call. Google Meet also offers real-time captions, noise cancellation, and live streaming, making it more suited for professional environments. 

In terms of integration, Skype works independently but has limited third-party support, whereas Google Meet integrates seamlessly with Gmail, Google Calendar, and Google Drive, allowing users to schedule and join meetings effortlessly. 

Regarding security, Google Meet provides enterprise-grade encryption, compliance certifications, and advanced admin controls.

Skype Microsoft Teams vs Zoom vs Google Meet: Comparison Table

Feature	Microsoft Teams	Zoom	Google Meet
Primary Purpose	Unified communication & collaboration	Video conferencing & webinars	Video meetings for businesses & education
Target Audience	Businesses, enterprises, education	Businesses, educators, general users	Google Workspace users, businesses, education
Video & Audio Calls	High-quality video & audio	High-quality video & audio	High-quality video & audio
Meeting Capacity	Up to 1,000 participants	Up to 1,000 participants	Up to 500 participants (with premium)
Chat Features	Persistent chat, team channels, threaded conversations	In-meeting chat, no persistent chat	In-meeting chat only
File Sharing	Deep integration with OneDrive & SharePoint	Limited file sharing	Integration with Google Drive
Collaboration Tools	Whiteboard, document collaboration via Office 365	Whiteboard, breakout rooms	Google Jamboard, document collaboration via Google Docs
Screen Sharing	Yes, with multiple presenter support	Yes, with multiple presenter support	Yes, limited options
Security & Compliance	End-to-end encryption, Microsoft 365 compliance	End-to-end encryption, role-based security	End-to-end encryption, Google security standards
Integration	Microsoft 365, third-party apps via Teams store	Third-party integrations via Zoom App Marketplace	Google Workspace & third-party add-ons
Best For	Large enterprises, businesses using Microsoft 365	Webinars, virtual events, and general meetings	Businesses & schools using Google Workspace

Summing Up

For the longtime users of Skype, it’s been a bittersweet moment. As Skype was a part of their lives with countless connections and memories. As we say goodbye to Skype, its journey will always be remembered for its innovation in VoIP technology, making global communication more seamless. However, strategic missteps, shifting market demand,d, and strong competition led to the fall of Skype.

Its journey highlights the importance of consistent innovation, adaptability, and client-focused development in a rapidly changing competitive world. While it may no longer dominate, its legacy remains as a pioneer in shaping modern communication.

Frequently Asked Questions

Q 1. What was the downfall of Skype?

Ans. Skype’s downfall was primarily due to a lack of innovation, competition from better alternatives, and Microsoft’s strategic missteps. The platform failed to adapt to modern communication needs, struggled with performance issues, and lost its user-friendly appeal. Meanwhile, competitors like Zoom, Google Meet, and Microsoft Teams offered more seamless experiences with better integrations, security, and scalability.

Q 2. Why did Skype become less popular?

Ans. Skype became less popular due to poor user experience, lagging performance, and stronger competition. Frequent updates made the interface more complicated, while platforms like Zoom and Google Meet provided faster, more reliable, and feature-rich solutions. Microsoft’s push towards Teams also shifted business users away from Skype.  

Q3. Why is no one using Skype anymore?

Ans. People have moved away from Skype because it’s all set to discontinue its services soon. You can look for its alternatives and select the one that fits your requirements

Q 4. Why is Skype banned in some countries?

Ans. Skype is banned in some countries due to government regulations, censorship, and telecom industry restrictions. Some governments block VoIP services to control communications, while others impose restrictions to protect local telecom providers from losing revenue.

Q 5. Why has Skype stopped working?

Ans. Microsoft has officially announced that Skype will shut down in May 2025. Therefore, Microsoft has been gradually shifting focus to Microsoft Teams, leading to a decline in support and updates for Skype.