Categories: NetworksVoIP

Tales In Tech History: Skype And How It Changed Worldwide Communications

Skype was a genuine game changer in the how the world communicated and heralded the end of costly international telephone calls.

Its history is rooted in a peer-to-peer music sharing program called Kazaa, and it hailed not from Silicon Valley, but Estonia and then London.

Communication Revolution

Kazaa was initially built by some programmers in Estonia and then purchased by Niklas Zennstrom of Sweden and Janus Friis of Denmark.

They, alongside a number of Estonian developers, used the basis of Kazaa to create Skype, which officially launched as a voice-over-IP beta service on 29 August 2003.

For those that don’t know, Skype actually stands for “Sky Peer to Peer.”

The original version allowed for free calls from PC to PC, anywhere in the world free calls for anyone with an Internet connection.

Later additions added the ability to call landlines and mobiles for which a small fee was required. Users brought Skype Credit to fund this, and international calls landlines and even mobiles, was much cheaper than using a conventional telephone.

It is worth noting that Skype was not the first VoIP application on the market. Other packages such as Vonage had been available for some time, but it could be argued that the world’s data networks were not up to scratch for them to achieve critical mass.

Skype’s timing on the other hand was impeccable and it crested the wave of growing uptake of the Internet.

By 2005 it was hugely popular, and it came to the attention of the auction website eBay, which purchased Skype for an eye watering $2.5bn (£2bn). It intended to integrate Skype into its auction process, but that never happened.

Several months after its acquisition by eBay, Skype introduced video calls for the very first time, and its popularity surged once again.

But Skype never sat easy within eBay and the firm later admitted it had overvalued the unit by around $900m (£560m).

New Owners

By early 2008, the tumultuous ownership relations between the founders and eBay resulted in several leadership shake-ups.

Zennström and Friis left the company they had created, and in 2009, 70 percent of Skype was sold to a combination of venture funds, including Netscape’s founder Marc Andreessen.

In May 2011, Microsoft acquired Skype for $8.5 billion, which was at the time its largest ever acquisition.

Skype became a division of Microsoft, with Skype’s former CEO Tony Bates becoming its president. The Skype unit took over the management of Lync – Microsoft’s own VoIP service, which was subsequently made interoperable with Skype.

Microsoft then re-branded Lync to Skype for Business, and more recently launched five new chat bots for the communication service. And on the consumer side, Skype eventually replaced the much-loved MSN / Windows Live Messenger. But as Skype has evolved, so has the way it operates Last month Microsoft closed Skype’s London office, its spiritual home for many years.

Skype may not have been the first VoIP application but it certainly popularised the concept and made the world a little smaller. It has more competition these days, with WhatsApp, Facebook and Apple’s FaceTime offering voice and video calls, alongside instant messaging.

But Skype is synonymous with VoIP and Microsoft’s involvement means it will be a far more valuable business tools than its rivals. It has appeared on countless platforms, including the PSP, and is as invaluable as ever in a mobile-first world.

Today, Skype provides users with the ability to carry out video voice messaging, as well as instant messaging, file sharing, and even screen sharing. It has had an eventful 13 years, but it is the market leader and  remains an essential communications platform.

What do you know about Skype? Find out with our quiz!

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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