Microsoft is closing down Skype after more than twenty years of service.

Skype gained popularity in the 2000s by offering a way for people to communicate without incurring phone charges, but it struggled to adapt during the mobile era and didn’t see a significant revival during the pandemic. Many users may have forgotten that it’s still an option, given the plethora of other chat and call services available.

“We’ve learned a lot from Skype over the years that we’ve integrated into Teams as we’ve developed it over the last seven to eight years,” said Jeff Teper, president of Microsoft 365 collaborative apps and platforms, in an interview with CNBC. “But we felt that now is the right time to simplify things for the market and our customers, allowing us to deliver more innovation at a faster pace by focusing solely on Teams.”

In the coming days, Microsoft will enable users to log into Teams using their Skype credentials, and Skype contacts and chats will be migrated over, as stated in a blog post. Users will also have the option to export their Skype data. The company will discontinue monthly Skype subscriptions, but users with existing credits can continue to use them in Teams.

“This is obviously a significant moment for us, and we’re very grateful in many ways,” Teper remarked. “Skype was a pioneer in audio and video calling on the web for countless people”

It remains one of the most enduring digital brands.

In 2003, Janus Friis and Niklas Zennström, who had previously co-founded the peer-to-peer file-sharing program Kazaa, launched Skype in Estonia with the help of a group of former classmates who had no experience in telecommunications. Initially, Skype was designed as a tool for people to make free online calls to each other. The unique name was derived from “sky peer to peer,” highlighting the service’s underlying Voice over Internet Protocol (VoIP) technology.

Skype gained popularity rapidly. By 2004, it had 11 million registered users. When eBay announced its plan to acquire Skype Technologies SA for $2.6 billion in 2005, the user base had grown to 54 million, and Skype was projecting $60 million in annual revenue, largely from users who wanted to call mobile phones and landlines.

At that time, eBay’s CEO, Meg Whitman, believed that Skype could facilitate quicker sales of products, particularly expensive ones, by connecting buyers and sellers. Additionally, eBay could charge extra for these calls. This way, Skype users around the globe could also discover eBay and PayPal. The acquisition was finalized just 29 days later.

Under eBay, Skype’s user base expanded significantly, surpassing 405 million by 2008, and communications revenue increased. However, after Whitman stepped down as CEO, former Bain executive John Donahoe took over and believed that eBay’s core businesses were not benefiting from the Skype acquisition.

In 2009, during a recession, eBay faced negative sales growth, and its stock price fell to levels not seen since 2001. In a statement promoting the launch of a Skype app for Apple’s iPhone, Donahoe announced plans for a Skype initial public offering as part of a separation strategy.

However, eBay never proceeded with the Skype IPO. Just four and a half months after announcing the IPO plan, eBay revealed it had agreed to sell Skype to an investor group led by Silver Lake for $2.75 billion. As part of the deal, eBay retained a 30% stake in Skype’s new owners. The investor group did file for an IPO, but that also did not materialize. Ultimately, Microsoft acquired Skype in 2011 for $8.5 billion, with eBay receiving over $2 billion.

“Microsoft and Skype together will connect hundreds of millions, or as Tony said, billions of consumers, enabling them to communicate in new and exciting ways,” said Steve Ballmer, Microsoft’s CEO at the time, during a news conference, referencing earlier remarks from Skype’s leader, Tony Bates. By then, 170 million people were using Skype each month. Ballmer intended to integrate Skype with various Microsoft products, including Lync, Windows Live Messenger, Windows Phone, and Xbox video game consoles. Microsoft also ensured Skype operated on its Azure cloud infrastructure.

Despite these efforts, Skype never reached a billion active users.

Apple’s native iMessage and FaceTime gained popularity on iOS devices. In 2014, Facebook acquired WhatsApp, a mobile messaging app, and shortly after, users were able to make international calls. WhatsApp quickly became a global sensation, along with Tencent’s WeChat.

On the other hand, Skype underwent several redesigns and faced backlash from its loyal users. In 2016, Microsoft launched Teams as a separate “chat-based workspace” aimed at organizations with Office productivity software subscriptions, positioning it as a competitor to the then-nascent Slack.

When the Covid pandemic hit and forced people to work and study from home, Zoom, which was initially designed for business purposes, emerged as a popular choice for video calls among consumers. Users could also connect via video through platforms from Cisco, Facebook, and Google. While Skype did experience a temporary increase in usage, Microsoft focused its engineering efforts on Teams for businesses, governments, and educational institutions, which proved to be a wise investment. Analysts began to pay close attention to the number of Teams users that Microsoft reported, with the count surpassing 320 million in 2023.

As for Skype, Microsoft’s current CEO, Satya Nadella, has not mentioned it during an earnings call since 2017.

In 2023, Microsoft reported that Skype had 36 million daily active users, a decline from 40 million in March 2020. Teper refrained from discussing the current user count but noted that the time consumers spent on Teams calls had quadrupled over the past two years.

“I believe a thorough overview of the history would highlight the transition to mobile and cloud as a pivotal change in the communications landscape,” Teper remarked.

Microsoft will retire Skype, the 21-year-old calling and messaging service, in May.

Skype grew quickly in the 2000s and ended up in Microsoft’s hands in 2011.

But Skype lost steam in the 2010s as people adopted smartphones.

People will be able to use their Skype credentials in Microsoft’s Teams communication app, or they can export their data.