Happy birthday, Skype

By Rebecca Davis 31 August 2011

A mere eight years ago, we were all racking up vast landline bills calling friends in London, or shoving overpriced phone-cards into tickey-boxes. Then Skype came along and changed everything. By REBECCA DAVIS.

Skype turns eight this week. That’s not a particularly landmark anniversary, but the internet calling company is so much a part of our professional and business lives these days that it’s hard to imagine how we ever did without it.

In terms of market penetration, Skype is an incredible success story. Almost 1/10th of the planet uses Skype: as of the end of last year it had 663 million users, and it’s estimated that Skype accounts for 25% of the world’s international calling minutes. It was the brainchild of Scandinavians – funny how often Scandinavians are involved with the development of free peer-to-peer information-exchanging technology.  Denmark’s Janus Friis and Sweden’s Niklas Zennström launched Skype in 2003, initially dubbing it “Sky peer-to-peer”, which was then shortened to “Skyper”. But “Skyper” was taken as a domain name, so they dropped the final “r”, and the rest is history.

Zennström and Friis sold Skype to eBay in 2005, but in May of this year, Microsoft announced it would be purchasing the company as their largest acquisition ever, for a reported $8,5 billion. This is a lot of wonga for a business that has always struggled with one basic problem: it doesn’t make enough money. Skype took in a healthy revenue of $860 million last year, but still managed to come away with a loss of $7 million. Skype’s number of paying users has increased over the past few years, but it also faces growing competition from the likes of Google Talk and Google+’s “Hangout” app. We wish them luck in growing the bottom line – but please don’t take away our free calls. DM

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