Skype – Rise & Fall and Rise Again?

Skype - Rise & Fall and Rise Again?

From its early days as a pioneer in online communication to its struggles to adapt to new competitors, in this article, we’ll examine the factors that led to Skype’s decline and also look at how Skype has made a comeback in 2023. So join us as we explore the rollercoaster journey of Skype and its place in the ever-evolving world of digital communication.

Once upon a time, in a world before Zoom, Facetime, and Microsoft Teams, there was a popular software called Skype. It was the king of video conferencing and a pioneer in the world of online communication. People use it to connect with friends and family, collaborate with colleagues, and make long-distance relationships bearable. Skype was the ultimate tool for virtual togetherness. 

However, an unexpected turn of events occurred, leading to Skype’s diminishing presence in the limelight. It gradually transformed into the overlooked veteran of video conferencing, overshadowed by newer, more captivating applications that captured the attention of users. It was a tale of waning popularity, yet it harbored a glimmer of optimism. Like a resurgent phoenix, Skype staged a remarkable comeback, reclaiming its rightful place. Thus, unfolds the captivating narrative of Skype’s resurgence.

Skype – Rise & Fall and Rise Again?


In the year 2000, Niklas Zennström and Janus Friis, renowned innovators, embarked on the development of Kazaa Media Desktop, a peer-to-peer file-sharing application. However, their visionary minds soon pondered the potential of applying this technology to a more wholesome realm—communication. And thus, the inception of Skype took place.

Niklas Zennström and Janus Friis

The task at hand was to find an appropriate name for this groundbreaking communication tool. Initially, they considered “Sky Peer-to-Peer,” an appealing title albeit rather lengthy. However, it became evident that the corresponding domain names were already claimed. Unfazed by this setback, the solution emerged as they simply omitted the final letter ‘r,’ resulting in the birth of “Skype.”

Skype revolutionized the communication landscape by offering cost-effective phone services to users worldwide. With a simple program download and an internet connection, individuals could make calls to other Skype users without any charges. However, contacting landlines and mobile phones incurred a fee.

During that era, Skype reigned supreme as the leading internet calling platform. This software phenomenon bridged the gap between people across the globe, facilitating casual conversations among friends or facilitating professional meetings among colleagues. It became an invaluable tool for companies seeking a budget-friendly means of staying connected with their employees and customers.

Rise to Fame

After its beta release in 2003, Skype took off like a rocket with Beta 2.0 in 2005, catapulting it to new levels of popularity. That same year, in a landmark transaction, eBay acquired Skype for a whopping $2.6 billion.

eBay acquired Skype for a whopping $2.6 billion

During eBay’s ownership of Skype, the app made incremental advances, but the company became increasingly disenchanted with its investment, losing millions of dollars every year. However, the Skype team continued to evolve the app, shifting their focus towards sociability.

To our surprise, In May 2006, Skypecasts were born, allowing up to 100 participants to use voice conversations that resembled chat rooms directed by a host who determined who could speak next. Fast forward to Version 3.1, and Skype expanded to extended networks for businesses and organizations.

Even with all these upgrades, eBay decided to pull the plug in September 2009, citing a failure to maintain the expected minimum quality standard. However, this setback didn’t keep the Skype team from creating a communication platform that would change the world. Skype’s evolution over the years is like watching a caterpillar turn into a butterfly. Version 4.0 spread its wings with improved video calling in stunning 720p HD. But Skype 4.1 was the real game-changer, introducing screen sharing and offering wireless internet access through Boingo. Later, a pay-per-use service called Skype WiFi was born.

In 2010, it had its sights set on the mobile world, launching on both Android and iPhone the following year. Skype’s wingspan continued to grow, reaching new heights with access to smart TVs, consoles, and Skype phones. With features like shared screen video calls and unlimited calls to one country, users flocked to the new platform.

In 2011, Microsoft swooped in and acquired Skype for $8.5 billion. Microsoft gave Skype a makeover, transforming it into a mainstream messaging service. Skype’s chrysalis had finally opened, and it emerged with a sleek flat interface and a Bing search bar. Just like that, Skype had blossomed into a beautiful butterfly of online voice and video communication.

To reiterate, Skype didn’t achieve its success overnight but gradually gained popularity over time. In April 2006, the number of registered users on Skype reached 100 million. By 2009, this number had grown significantly to 530 million, and then to 663 million by September 2011.

number of registered users on Skype


Skype’s fame skyrocketed during the mid-2000s, and the app even made it into the English language’s vocabulary as a verb. However, a decade later, Skype was outclassed by newer apps like Google Meet, Zoom, and Microsoft Teams. A study reported that Skype held just 7% of the UK video conferencing market share in 2021, while Teams had 20% and Zoom had 55%. In the US, Skype had a meager 4% market share compared to Zoom’s 60%. 

Now the question is, what happened? Why did people all of sudden lose interest? Well, the answer is pretty simple. Between 2010 and 2020, the launch of social media apps, such as Snapchat, Instagram, and Twitch, included video conferencing capabilities, making Skype’s single-use service look obsolete. 

Furthermore, Microsoft’s updates to Skype’s features were considered unnecessary by users who wanted low-latency video and audio calling, leading to negative reviews, and a plummeting app store rating. 

Microsoft responded to customer feedback, but it was too late when the COVID-19 pandemic hit, and people needed a reliable video conferencing app to communicate remotely. While Skype’s focus shifted to social networking, people needed something simple and easy to use, and that’s when Zoom took over. In just one year, between 2020 and 2021, Zoom’s global market share increased exponentially.

in 2020 and 2021, Zoom's global market share

With a focus on delivering seamless communication, Zoom quickly won over users with its superior performance and security. Meanwhile, Microsoft struggled to find the right strategy for Skype, leaving the once-dominant platform struggling to keep up.

While Skype attempted to add new bells and whistles, Zoom went back to basics, perfecting the core elements of video conferencing that Skype had let slide. And it paid off. Zoom’s simple user interface and top-notch audio and video quality set it apart, and users flocked to the service, leaving Skype in the dust.

Skype had it all, but it was the victim of bad parenting. After being adopted by eBay, it quickly became clear that the online auction giant was more interested in selling things than connecting people. EBay’s lack of vision and failure to fully integrate Skype into its operations hindered its growth and led to internal conflicts. The founders left in a huff and Skype was left to languish, gasping for air.

Enter Microsoft, with deep pockets and even deeper ambitions. They swooped in with a massive deal, hoping to capitalize on Skype’s enormous user base. However,  instead of nurturing it, they suffocated it. In an attempt to outdo the competition, Microsoft added a bunch of unnecessary features that cluttered the interface and diluted Skype’s core strengths. It was a classic case of too much, too soon, and Skype paid the price. 

Current State

Aside from all the hardships, Skype has come a long way since its early days, and in 2023, it boasts a whopping 300 million monthly active users. This is quite an achievement considering the competition and the changing landscape of digital communication. But what’s the secret to its success? The answer lies in the new AI-powered Bing in Skype chat.

In 2023, Skype boasts a whopping 300 million monthly active users

Bing in Skype is not just a search engine, it’s your personal copilot, providing you with comprehensive and creative sources of information, inspiration, and answers to your questions, all through a simple chat interface. Whether you’re looking for helpful tips, fun quizzes, or creative suggestions, Bing has got you covered.

The best part is Bing can communicate fluently in more than 100 languages, making it an invaluable tool for people from all over the world. Currently, the latest version of Skype is pretty easy to use. The interface is simple and setup is a breeze. 

Besides, even during the pandemic, Skype had seen a surge in its user count. With 40 million daily active users from all walks of life, Skype is still going strong as a reliable and trustworthy platform for professional and personal communication.

Final Thoughts 

Skype’s journey has been marked by both highs and lows, showcasing the unpredictable nature of the technology landscape. Initially revolutionizing communication with its cost-effective and accessible platform, Skype eventually faced a decline as newer competitors emerged. However, the story of Skype is not one of a complete downfall but rather a testament to its resilience. With determination and adaptability, Skype made a triumphant comeback, reestablishing its relevance and reaffirming its position as a leader in the field of video conferencing. This tale of rise, fall, and rise again underscores the ever-evolving nature of technology and serves as a reminder that innovation and perseverance can lead to renewed success even in the face of adversity.

Nayel Khan

Nayel Khan

Nayel Khan is an accomplished author and writer with a passion for technology and media. He graduated from SEGi University, where he majored in Hospitality Management. Nayel's in-depth knowledge of the tech industry, finance, and marketing have made him a sought-after contributor to various tech publications.