Skype in decline: Who broke it?

[German]Not so good news for Skype users – Microsoft has been carving around the Skype clients since taking over Skype in 2011. In the meantime, the clients are difficult to use and are often buggy or lacking functions. Skype has somehow been a story of decline for years and one can get the impression that Microsoft is somehow about to sink Skype. Bloomberg has taken up and analyzed the whole thing in an article.

Some Background

Skype has been founded in 2003 by two Nordic entrepreneurs. It was successful because it freed millions of people from making expensive international calls via telephone companies. Most Skype users chatted for free, and Skype made money with prepaid calls to regular phones. The company has had several owners in the past, including EBay. Until 2011, the company was controlled by a consortium of investors led by Silver Lake. In 2011 the sale to Microsoft took place.

When Microsoft bought Skype for $8.5 billion in 2011, some users joked 'Let's see how long it takes them to break Skype'. At that time I thought it was an 'evil' insinuation; today I find out 'I was wrong'.

User satisfaction decreases

In the past, the Skype client was a clean desktop app – it worked and brought benefits. The only thing, that annoyed me (as an occasional Skype user): The frequent updates of the Skype user interface. Whenever I updated a book in the last few years that contained a section about Skype, I had to axe the text and rewrite everything. Not that the functionality was getting better, it was just some kind of 'hey guys, look, we changed something in Skype' that didn't brought us some benefits.

And Microsoft axed the desktop client and tries to offer the Windows 10 app. And with every update functions get broken or lost. There is a lot of tinkering and change, for the sake of change.

Old Skype fans routinely complain via social media channels that the software has become too difficult to use. The Apple App Store and Google Play Store are getting more and more negative ratings for the smartphone app. The problems cited range from poor call quality to gluttonous battery demand.

In March, tech investor and commentator Om Malik summarized this negative picture, according to this Bloomberg report. He tweeted that Skype was "a turd of the highest quality" and directed his anger against Microsoft as the owner. "A way to ruin Skype and its experience. I had to use it today, but never again." Microsoft thinks the criticism is overblown, it partly reflects the annoyance of people with software updates.

According to Bloomberg, there are other factors that undermine users' preference for Skype, the Skype that introduced the idea of online telephony 15 years ago and radically transformed the telecommunications landscape.

Orientation towards companies

Bloomberg writes, that Microsoft has focused the Skype service on the corporate market since acquiring Skype from private equity investors. Today, Microsoft uses Skype for Business to sell subscriptions to its cloud-based Office 365 and win over Cisco customers. Microsoft has essentially made Skype a replacement for an enterprise PBX – with some modern features taken over from instant messaging, artificial intelligence and social networking.

Teams, the now one year old version of Slack, will be merged with Skype for Business. LinkedIn, another acquisition, aims to provide work biographies of people who are calling Skype. Thanks to Microsoft's pioneering work in AI, Skype can now translate calls into 12 languages.

As proof that the strategy of focusing on business customers works, Microsoft refers to a list of blue chip customers. Among them is General Electric, which provided Skype for Business at the end of last year for 220,000 employees and produces 5.5 million meeting minutes a day. Accenture and some of the largest banks are also big users, says Office 365 Marketing Vice President Ron Markezich. In a Forrester survey of 6,259 information workers, 28 percent said they use Skype for business conferences, compared to 21 percent for Cisco products.

Atkins, a British engineering company belonging to the SNC Lavalin Group, says that its 18,500 employees use Skype for telephone services, conferences and joint projects – in the order of 10 million minutes per month. "We did a full competitive analysis, but we trusted Microsoft's vision," says Atkins Collaboration Manager Nick Ledger, who says he likes the integration of Skype into Office. "Very rarely do we have problems."

The price of success

But Microsoft has paid a high price for businesses taking precedence over consumers in Skype development. Businesses are looking for robust security, but end users want a user-friendly and easy-to-use product that works. The complexity of enterprise software inevitably displaces the simplicity that consumers prefer.

While Microsoft maintains two separate applications (clients) for end users and business customers, the underlying technology is the same and has been further developed with business customers in mind. This makes Skype less intuitive and harder to use and causes many private Skype users to switch to similar services from Apple, Google, Facebook and Snap.

User numbers are stagnating or declining

According to Bloomberg, the company has not updated the number of Skype users since 2016. At that time, the total number of all Skype users was estimated at 300 million. Some analysts suspect that at best the figures remain at this level, and two former employees describe a general feeling of panic among those responsible, as these user figures are actually falling. Ex-Microsoft employees have asked Bloomberg for anonymity to discuss confidential statistics. Bloomberg has learned from two ex-Microsoft employees that until 2017 no number of more than 300 million Skype users had ever been discussed internally at Microsoft.

Chief Executive Officer Satya Nadella has repeatedly said that he wants the company's products to be widely distributed and loved. By making Skype an important part of its lucrative office suite for corporate customers, Microsoft is threatening what makes it primarily attractive to ordinary people. "It's like Tim Tebow is trying to be a baseball player," says Malik. "The product is so confusing, lumpy and unusable."

Further analyses and background information can be found in this Bloomberg article. What's your situation? Is Skype being used or are you switching to alternative platforms?