Skype, the app that revolutionized VoIP-based communication in the early 2000s, has suffered a major decline under Microsoft’s leadership. According to a report from French publication L’Informé, Skype’s annual revenue dropped below the $200 million mark last year.
The report reveals that Skype’s annual revenue dropped from $722 million in 2013 to just $184.3 million in 2022, a decrease of 74.5%. During the same period, the company’s annual profit plummeted from $90.8 million to a mere $6.35 million, a 93% decrease in nearly 10 years. The decline in revenue and profit is attributed to several factors, including a drop in demand for Skype credit, which allows users to call mobiles and landlines in over 300 countries, and the cost of offering free calls to Ukraine since the conflict with Russia began.
Microsoft acquired Skype in 2011 for $8.5 billion, but the app has struggled to keep up with the rapid pace of technological change. While Skype was well positioned to become a dominant force in mobile communication, it was slow to evolve compared to new apps like WhatsApp and Facebook Messenger. Additionally, Microsoft’s transition of Skype from a peer-to-peer architecture to a cloud-based one resulted in the loss of many power users, along with a controversial redesign that removed basic features.
The COVID-19 pandemic also played a role in Skype’s decline, as the app was eclipsed by Zoom and Microsoft Teams. Now, Microsoft wants Teams to become its default messaging app for consumers, with Windows 11 coming with a new Chat app powered by Teams for Consumers.
Despite these challenges, Microsoft remains committed to Skype, which still has 100 million monthly active users. However, as Microsoft Teams continues to grow, reaching 270 million monthly active users last year, it may come to a point where it no longer makes sense for both apps to coexist.