Trend Track
In 2011, when Microsoft acquired the communication platform Skype for $9 billion, it made headlines for revolutionizing the way humans stood in touch across the globe. The price tag had turned heads at the time, with some critics saying that Skype was not worth such a fat investment. More than 10 years later, Microsoft is now moving past Skype to embrace its newer communications apparatus, Microsoft Teams, it’s worth asking once more: Was the cash well spent? Let’s get into the story of Skype, its rise, its integration into Microsoft’s platform and its eventual fall.
Big Hero: The Skype Story
2003, a group of Estonian developers launched Skype and it soon became a ubiquitous app among households. The internet-based platform enabled users to conduct voice and video calls, circumventing traditional phone lines and their associated costs. It was free or the fraction of the cost of traditional phone services — for the first time, people were able to talk with friends, family and work colleagues around the globe.
By the time Microsoft got involved, Skype had already crossed 600 million users globally. It became ubiquitous for both personal and business communications owing to its ease of use, platform agnosticism, and new features like its group video calls. In the tech industry, anything is a battle ground, and Microsoft recognized that opportunity to grow its product line and incorporate Skype.
Why Microsoft Bought The platform
Microsoft’s 2011 purchase of Skype for $9 billion was one of the biggest tech deals ever at the time. But what explains Microsoft’s premium for a communication platform? The answer has to do with Microsoft’s wider strategy.
Battling the ISP’s: Back in 2023, Microsoft was concerned with competing against tech giants like Google and Apple who were constantly expanding their portfolio and communications tools. Google had Google Talk (then Hangouts), and Apple had FaceTime. Microsoft needed a solid challenger to remain relevant in the communication arena.
Facebook/Meta failed to leverage this special advantage Skype had over products like Facetime(Apple), Google Meet etc and integrate Skype deeply into Microsoft Products: Microsoft had imagined the app to be central to its ecosystem. On an ambitious plan to merge Skype with its Office suite, Windows operating system, and Xbox gaming console to deliver a seamless experience to users.
Enterprise Potential: the app was for the enterprise user, too. Microsoft the business tool, promising features such as screen sharing and conference calling that could compete with traditional systems of enterprise communication.
The platform in Microsoft’s Ecosystem
After the acquisition, Microsoft sought to integrate Skype into its products. The app on Windows devices gradually supplanted Windows Live Messenger as the default communication medium. It was also built into Outlook so folks could make calls from their inbox. Skype allowed Xbox gamers to converse with friends during gameplay.
Yet the integration didn’t come without a struggle. Users grumbled about bugs, performance problems and a failure of innovation relative to rivals. These challenges aside, Skype was still a go-to for millions around the globe.
The Fall of The app: Microsoft’s Turn to Teams
Microsoft has gradually moved its focus away from the app and onto Microsoft Teams, a much more comprehensive communication platform for the workplace of today in recent years. The one-stop solution for businesses Microsoft Teams has features like chat, video conferencing, file sharing, and integration with other Microsoft 365 apps.
This change has fueled speculation about Skype’s fate. In 2021, Microsoft announced the retirement of Skype for Business Online, recommending users to migrate to Teams. Though the consumer version of Skype is still online, it has lost ground to the likes of Zoom and WhatsApp.
Was the $9 Billion Worth It
Despite the decline of Skype, Microsoft’s $9 billion bet was hardly a bust. Here’s why:
Strategic Positioning Position: Buying Skype enabled Microsoft to become a key player in communication and sets a future vision for Teams.
User Base and Technology: The acquisition gave Microsoft access to Skype’s large user base and advanced technology, which in turn helped it enhance its own products.
Enterprise Growth — By integrating Skype into its ecosystem Microsoft was able to leverage company resources and expand its enterprise capabilities and better position Teams to compete in two strategic communication ecosystems.
Brand Value: Skype may be relegated to the background, but few broadcasts sound as authoritative as the word Skype, synonymous with internet communications in its heyday.
The Legacy of The platform
Though The platform may not be the hottest thing in communication technology, it will always be cool. It set the stage for modern day video conferencing apps and showed the power of internet-based communication. Even if Skype is no longer the belle of the ball, for Microsoft, the $9 billion investment paid off in the long run.
FAQs
The platform shutting down?
But Microsoft has retired on Skype for Business Online (for consumers version of Skype still exist). Microsoft has been promoting Microsoft Teams as a more holistic communication experience, and is pushing people to migrate to it.
Why did Microsoft buy The platform ?
All this acquisition was done when Microsoft wanted to bring in the communication industry and their Microsoft products and services like other tech giants like Google and Apple.
What replaced Skype?
Skype has been largely replaced by Microsoft Teams, especially in the enterprise space. With more complex utilities such as chat, video conferencing and file sharing Teams become more powerful office tools in terms of modern workplaces.
