How Skype Gave the Video Crown to Zoom

Brian Lipscomb
Apr 10, 2020 10:46 AM ET

In the midst of the coronavirus pandemic, Zoom has emerged as the leading video conferencing platform. Recent discoveries about “Zoombombing” and security may have damaged their reputation somewhat but Zoom remains the leader.

At one time, Skype was the de-facto app for video conferencing and over the internet calls. I would like to share with you, from my perspective, how Skype went from undisputed champion to a virtual also-ran in the video conferencing space.

When skype launched back in 2003, it was somewhat revolutionary; a system that allowed one-on-one calls to just about anyone who also used Skype, as well as low-cost calling to traditional phone numbers just about anywhere in the world. Skype used a peer-to-peer model, where each user acted as a node, transferring part of the Skype traffic to other users. While this setup worked well, it created a lot of network traffic at a time when many businesses were working with limited bandwidth on their internal networks as well as their internet connections. I had several people tell me stories of how their employer had banned Skype because it caused too much network traffic, thereby slowing down other, more important network resources.

In 2005, Skype ws purchased by eBay. At the time, I could not understand what eBay’s motive was, as Skype and eBay had every different purposes. Apparently that lack of understanding was shared by some at eBay, who sold Skype just a few years later to a consortium consisting of Silver Lake, Andreessen Horowitz, and the Canada Pension Plan Investment Board.

In May of 2011, Less than two years after the eBay sale, Skype was sold to Microsoft for $8.5 Billion. By this time, Skype was a behemoth, and basically was the de-facto standard app for internet calls, whether video or audio. Often I would see interviews on television that were made possible by use of Skype. Sure, sometimes the video would pixelate or stutter, but it made remote video mainstream. But what happened later still puzzles me to this day.

I have always felt that when companies become very large, they lose their ability to effectively innovate and improve their products. I think that perhaps Microsoft was in such a position. While in Microsoft’s hands, Skype has gone through a number of revisions and transitions, most notably a switch from the peer-to-peer back end to one hosted on Microsoft’s own Azure cloud platform. While the back end change was welcomed, the changes to Skype’s interface and the associated drops in call quality were not.

Skype at times was a wonderful tool for meeting with people. It was mostly reliable, even on relatively slow DSL connections available at the time. But somewhere along the line, quality started to suffer. Microsoft started to integrate its own Microsoft Accounts with the traditional Skype accounts, and it was confusing for some who didn’t want to make the switch. Also, call and video quality started to suffer. It is unclear if this was due to the change in the back end, or some other cause.

There were many user interface changes under Microsoft’s ownership as well. There was the traditional Skype desktop app, and then there was the web app. Some features that were available on one were not on the other, causing confusion among users. Features also differed between the Windows, Mac, and Linux apps. It was as if Microsoft wasn’t sure what direction they wanted to take Skype in. Because Microsoft makes its real money from large enterprises, I think that many of the steps they took were in an effort to make Skype more enterprise friendly. This however had the side effect of alienating many of the individual users who made Skype a giant in the first place.

Another factor in Skype’s downfall was smartphone video apps. Apple’s FaceTime and Facebook Messenger are just two examples of apps that offered the same functionality as Skype, yet were far simpler to use. Once those apps became ubiquitous, there was little reason to keep using a service like Skype, which did not work very well on phones.

Zoom was founded in 2011, the same year that Skype was bought by Microsoft. What Zoom has done in the years since appears to show a laser focus on making video conferencing as easy and smooth as possible, and to that end they have largely succeeded. One of the best things about Zoom is that clicking on an invitation to a Zoom meeting can get you in without having to do much to your computer or phone. This “it just works” way of doing things was much easier than Skype, and Zoom quickly grew because of it.

Now, I can’t deny that Skype still has millions of users, and Skype is still installed with Office 365. Personal versions get the traditional Skype, while business users get Skype for Business, which in my opinion is a poor naming choice, since it is positioned and works somewhat differently. But I can say that there is no reason that Skype should not still be number one, other than a big fumble by Microsoft.

Fast forward to now, and most businesses, schools, and universities have embraced Zoom as their go-to for conferencing. Virtual classrooms, easy meeting recordings, great control features for meetings hosts, and the aforementioned connection simplicity all equate to a much-deserved number one status. The recent discoveries of security flaws have had some negative effects, but it appears that Zoom will emerge from the controversies relatively unscathed. Perhaps Microsoft is looking to make Microsoft Teams the best of Zoom and Skype, but only time will tell if they will be successful.