• In 2011, Skype has 100 million active users and nearly 8 million paying customers.
• To capitalize on integration of Windows Phone and mobile apps the company transitioned the app from P2P networks to cloud-powered servers.
• The transition resulted in calls, messages, and notifications repeating on devices making Skype unreliable.
• In November 2016, Microsoft shifted its focus from Skype and launched Teams.
• Skype users were disappointed, so, Zoom focused on the struggles of its user base and offered high-quality audio and video calls.
• Pandemic amplified demand for the app boosting its sales and stock price to paving a path for its success.

Offices and other places of social interactions such as schools and universities have shifted at home. The only way for people to interact with friends, family, and colleagues is through the internet. 

This has led to an increase in internet activity for several mobile and computer applications that provide productivity and easy communication. This drastic change in society has shifted focus from messaging app to teleconferencing software.

Since the beginning of the lockdown, Zoom has considerably dominated the global teleconferencing market. Teams and Google followed its lead closely behind. However, in between all the chaos Skype – a popular video calling app for nearly two decades failed miserably to make any headline. This posed the two most important questions for everyone – What happened to Skype? and How did Zoom surpass an app twice older?

What happened to Skype?

Nevertheless, once Microsoft successfully acquired Skype technologies it faced some big challenges. This happened during the initial period of turning Skype into a profitable business while simultaneously keeping it relevant for consumers. 

The acquisition took place around the time when chat apps like WhatsApp and WeChat were gaining momentum. This was also the same time when Zoom and Snapchat were founded. These apps were starting to challenge the dominance of Skype.

The first step Microsoft took for the Skype app was to ditch its own popular Windows Live Messenger service. However, the company still had a major problem – Skype’s service was based on P2P technology. This started a series of problems such as skype security issues. In 2013, to capitalize on integration of Windows Phone and mobile apps the company transitioned the app from P2P networks to cloud-powered servers.

The company also made Skype its default messaging app for Windows 8.1. and took the app on the web as part of Outlook. However messy it was, these steps made the transition from the app’s traditional P2P networks. The transition resulted in calls, messages, and notifications repeating on devices making Skype unreliable.

This transition took years and during this time several rivals started to rise. They were offering alternatives that not just incorporated messaging functionality but also synced across devices. Instead of fixing underlying issues, Microsoft was still spending heavily and putting in time trying to redesign Skype. This made the app both unreliable due Skype’s security issues and bad in terms of user experience.

So, in 2017, the company went off-road with the design. This new design turned the app into something similar to Snapchat. The design still failed to please people and attacked a lot of criticism. Eventually, they were forced to kill off Snapchat-like features. By this time Microsoft acknowledged that there are some serious problems Skype had.

During November 2016, the company shifted its focus from Skype and launched Teams. The company also integrated video calls into Teams. It was designed to take over Slack as a sophisticated tool for workplaces. In September 2017, Microsoft notified Skype’s business department that it will be replaced by Teams and its consumer version of Skype. Microsoft said that it will keep investing in Skype.

However, finally, in July 2021, Skype disappeared. 

When did Skype Become Popular?

To understand why Skype failed, we need to first understand – How Skype technologies dominated the market in the first place?

Back in 2011, Microsoft acquired Skype app for $8.5 billion. During this time the app not only had more than 100 million active users but also nearly 8 million paying customers.

The reason for the app’s success can be traced to the new and exciting communication tool it offered. It provides users the ability to talk via the internet. Additionally, Skype app provides quality audio and video service that was way ahead and better than its competitors. In the early stages, the founder of the app patented their technology which was another crucial reason for its success.

The app has become the main way for consumers to talk to each other with video calls over the internet. Voice and video calls made up 40% of all Skype usage back in 2011. The app had become a grand success, The Onion joked that the word “Skype” would be added to the dictionary. Nearly three years later, the verb was added to the Oxford English Dictionary. This highlighted the success and popularity of the service.

Skype Usage Statistics

In a press conference, Microsoft revealed that Skype has 200 million active users which rose to 40 million during the coronavirus pandemic, up 70% month-over-month.

Rise of Zoom

Skype users were disappointed after giving several chances. While Microsoft was focusing on adding and designing new features, the video and audio quality of Skype never improved. People started switching to similar alternative options (which were offering better quality for free).

During this time Zoom focused on the struggles of its user base. In contrast to Skype, their users were offered high-quality audio and video calls. It also offered good quality recording and sharing of conversations. This started to increase the users while simultaneously increasing its popularity.

Moreover, the video calling app offered a useful and unique beauty filter and virtual background instead of emoji and Snapchat like features. The built-in beautification filters smooth out skin tone and blemishes to give a polished appearance.

The virtual background features help user’s with custom backgrounds to cover the clutters, running pets and children, and others. Milky Way galaxy and Burj Khalifa top have become one of the most popularly used backgrounds. Users are also provided several options to add images and customize their videos.

Why do people start using zoom instead of skype?

One of the most important features that gave enormous Zoom over Skype and other video conferencing apps was its ability to allow the host to split participants into different rooms. Similar to how colleagues in different departments sit separately for work at workplaces. The hosts can split their employees into 50 breakout rooms (different sessions). This allows the employee’s room to discuss and collaborate with teammates. It also allows bosses and managers to pop-in and out of the breakout room to follow up and get updated. These features have only helped Zoom become one of the most popular apps and dominate the market.

Lastly, the selling point for an app to the broader consumer world was its free 40-minute conference calls for up to 100 attendees. The app has a simple and intuitive user interface, the app is extremely easy to use, and people wanting to join meetings don’t need to login for accessing meetings.

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