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Summary:

Skype turned 10 years old today. After disrupting the telecommunications industry, Skype is facing an uncertain future and increased competition. It is increasingly being assimilated into Microsoft and its enterprise communications business. Will the brand last another 10 years? I am not so sure.

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Very quietly today, Skype turned ten years old. Ironically, I didn’t even remember its 10th birthday. I forgot, mostly because ever since it was acquired by Microsoft, Skype as we know is slowly losing its identity. It is merely a pale imitation of its former rebellious self, a Microsoft product that is there just to further Microsoft’s vague and unclear ambitions about unified communications.

It is like a rock star who has lost his edge.

janusniklasStill, I choose to remember the Skype of the early days — that little startup that brought blood into the eyes of telecom executives everywhere. That tiny startup that forced eBay’s management to put its head into the lion’s mouth. That tiny little startup that single-handedly did what no trustbuster had been able to do — put the telecoms on the defensive.

Skype was my kind of startup. Crazy founders with an ambitious idea that involved not just changing the status quo, but redefining the idea of what it meant to communicate. I loved the product and its technology underpinning and I loved the simple notion that we should all be communicating with each other, all the time.

On August 29th 2003, Niklas Zennström and Janus Friis started the company and sometime thereafter I downloaded the software. A week later, I walked into my then boss Josh Quittner’s office and proclaimed to him, “this shit is going to be big.” I remember being so excited that I was visibly shaking; I had in one quick instant seen the future of communications, that software was going to be the new phone. It was such a sketchy little application and it came bundled with Kazaa; gnarly software by anyone’s standards. And it was developed by some dudes in Sweden.

Skype in browser

I wanted Business 2.0 to write about it, but like most of my pitches, it took some convincing. Of course, there was this guy, Dan Roth, who worked for our bigger sister publication, Fortune, who convinced his editors first and wrote the most definitive piece on Skype. I hated him for that for next few years but I did spend a long time following Skype like a hound. From the eBay merger to the ensuing drama and to the eventual spin-out and re-acquisition of the company by Microsoft, Skype was one of the greatest business stories of my twenty-plus year-long career following the technology industry.

It also was a company that helped me form deep friendships and great relationships.

The great disruptor

The unfortunate part of the Skype story is the story itself. The mergers, the drama and the corporate follies masked what I believe is one of the most disruptive internet companies of our time. Skype, if anything, is in the same league of companies — Amazon, Apple, Google, Facebook and Twitter — that changed the internet and in the process changed society itself. If Google democratized access to information, then Skype democratized the idea of communications.

Today when Marc Andreessen talks about how software is eating the world, the companies he evokes are merely parroting the playbook of Skype, which did eat the phone companies and thus set the template for the notion that software is eating the world. When people talk about network effects, they don’t remember that Skype had the ultimate network effect. When people boast about network-based communications, they are simply taking what Skype did and improving on it. Skype used P2P software and paved the path to collaborative consumption. If Amazon’s cloud services made it easy for startups to get in business, then Skype helped tiny startups go global and hire talent from across the planet. Today’s distributed workforces, for companies like Automattic (see disclosure), live on Skype.

The impact of Skype is reflected in a simple statistic: in 2012 it accounted for 167 billion minutes of international voice traffic. A Microsoft-Skype press release pointed out that “more than 1.4 trillion minutes of voice and video calls have been made using Skype. That’s the equivalent of more than 2.6 million years of conversations made in only ten years’ time!”

What’s the future?

As they say, the past isn’t really an accurate predictor of the future — and Skype’s future is looking increasingly murky.

Skype was about messaging, voice calls and later video calling. It worked because it was simple and easy to use. Today, it is neither. The elegant and minimal interface of the past is gone. Instead it has been replaced by an interface that can be described at best as clunky and cluttered.  Whenever I do need to use Skype these days, it is on my iPhone, where the user interface isn’t that bad.

Skype for Android Metro

About a year ago, I pointed out in a blog post that Skype, when it came to market, was virtually one of a kind. Today, many of its functions are being nibbled away by rivals — whether they are messaging upstarts, video conferencing startups such as UberConference or Google with its Hangouts.

Today, our office uses Google Hangouts for video. Messaging is free thanks to dozens of specialized apps. Phone calls are pretty darn cheap and in this age of smartphones, voice calls are for special and increasingly rare occasions. Skype has started to kill its app ecosystem. The cold embrace of Microsoft is slowly turning Skype into some strange mutation married to something called Microsoft Lync. The focus, of course, is the enterprise and “unified communications.”

SkypePhone

It is simply too bad that Microsoft hasn’t realized what a powerful brand it had acquired. Skype as a brand represented a rebel, devoid of convention and totally free. It was about communicating with your network of friends and family. It was immensely social and modern.

Imagine if Microsoft called its Windows Mobile 7/8/whatever OS simply the SkypePhone, with Skype services – Qik, GroupMe, Skype IM, and Voice — as the core of its operating system. More than a billion people are familiar with the Skype icon. Even the Skype sign-in and incoming-call sounds are unique. Instead, Microsoft decided to superimpose a tired old brand — Windows — into a brand new market. Windows was never really personal in an intimate sort of way. Alas, for Microsoft, it was, and still is, a missed opportunity.

What happens to Skype next? I don’t know; its utility will trump its (lack of) experience and Microsoft’s meddling for a few more years, enough of a time for others to step in and fill the gap.

Until then, happy 10th birthday Skype. You changed my life and the lives of millions of others.

Disclosure: Automattic, the company that developed WordPress, is backed by True Ventures, a venture capital firm that is an investor in the parent company of GigaOM. Om Malik, founder of GigaOM, is also a venture partner at True.

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  1. On Windows8, I still haven’t figured out how to get skype settings and how to pair it with a bluetooth headset!

  2. OM – nice write up. I too was amazed with Skype when I first stumbled across it. As a telecom guy, I was really intrigued with their P2P design. It was everything that we wanted SIP to be at the time, but Skype enjoyed a proprietary network design (like Apple today) and didn’t have to worry about standards or Service Provider luddites, so their roll-out went much more viral. I remember meeting with NZ at their office in London to try to convince them to work with us on a Service Provider gateway solution so that Skype could connect digitally with the Service Provider networks, but the look on NZ’s face told me that he wasn’t interested in getting into bed with the Carriers. He was right. it would have killed them.

    Interestingly, when we arrived back in the US after our meeting in London, it was only a couple of days before men in dark suits and sunglasses showed up to ask questions about our meeting with NZ. I think they viewed Skype as a threat.

    The modern version of Skype – the Tony Bates Cisco-style ‘Microsoft’ version – lost touch with the end-user. As with all things Microsoft, I think there is too much focus on business needs, and that is not Skype’s market. Skype is a wonderful consumer SOHO solution, but it does not compete well with Citrix enterprise solutions. Sorry.

    1. Like the “Tony Bates Cisco-style ‘Microsoft version” :)

    2. The consumer is the least loyal customer. Enterprise and business are loyal customers. Microsoft is still very much in touch with its user base on the enterprise. They are the same users, it’s only a matter of time before they fine tune the ecosystem to support both play and work. The strategy and vision is to do that. Now it comes down to execution.

    3. Contrary to @Mcbeese, I wasn’t terribly impressed when Skype came out. As far as I was concerned, existing IM and/or VOIP software had the market covered.

      But over time, I watched Skype grow into *the* chat/voice/video app of choice, and was won over — especially as most competing apps either stagnated or died altogether.

      Sad that the company seems to be losing its way now, especially buried deep in Redmond’s labyrinth.

  3. Om I am a bit disappointed in your harsh assessment of Skype’s future.

    I think one area where Skype had not made much headway has been Enterprise. Integrating Lync with Skype is a natural outcome in my opinion.

    Microsoft’s corporate customers (their bread and butter) are adopting Lync and Office365. They’re not interested in Skype. The ones who are going to sign up for a competing offering from Google, are you going to need Skype to communicate with these entities. This is a tactical play to keep Microsoft’s foot in the door even at customers who opted to go with the competition. There is always a cycle in IT. If you don’t get them on the CapEx side then maybe the Opex side might be a good place to look.

    More over, Skype on XBOX is another area where Microsoft can compete with teleconferencing Giants like Cisco. Lync is not destined for the XBOX. Nor it should.

    SkypePhone sounds like a good idea on a blog, but seriously, you know and everyone knows, no carrier would have agreed to even give the device a chance! I am almost shocked that you would propose such garbage.

    Is the Skype brand powerful,? Yes!Is Microsoft integrating them into their core apps? Yes. Were they an offensive chip? No. Skype is Microsoft’s Trojan horse onto competing devices. Androids, iPhones, iPads, Macbooks. I think it’s serving its purpose quite well.

    1. Alik. RIP Skype, its dead controled by MS. It was nice to use it in my android phone a lot of yeas. After last MS update it is unusable. Nice for eyes but not for communication. “Good job microsoft” ;) almost all people put minimum star review, only 1*.

  4. you should be hired by microsoft to help restrategize skype’s future

  5. Still the prosepct of 3D calls looks cool . https://storageous.wordpress.com/

  6. Skype is not “totally free”. Mumble, SIP (which predates Skype by almost a decade) and webrtc are all free and open VOIP communication platforms.

    Skype is a closed platform owned and controlled by MS that is currently free to use, if known to be at the mercy of the whims of the NSA, GCHQ and their pals.

    I encourage everyone to at least give Mumble a shot. I find it much more reliable and bandwidth/CPU/RAM efficient than Skype.

  7. michel memeteau Friday, August 30, 2013

    With webrtc coming , Idon’t see how plugin stuff like skype could survive.

    1. What are you talking about? Microsoft itself is involved on the WebRTC specification. They’ve already expressed interest on WebRTC because of Skype, so in the future it can work plugin-free.

  8. Still wonder how WhatsApp, WeChat etc can grow like crazy while skype is mostly a mute spectator. This despite WhatsApp not having any VoIP option.

  9. Ma Bell tried for a hundred tears to field a toll videophone, and when it happened it was free and my third-grade grandchildren can use it unassisted from London.

  10. Harsh but valid critique – Great example of why Ballmer must go. Still making the same mistakes.

    1. I think there are too many companies where innovation is dead either because of status quo or by sales-thinking CEOs. Many more CEOs should follow Balmer and give the industry and their companies a makeover. Cisco, Intel, HP …to name a few

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