Skype Technologies

Skype Technologies S.A.R.L (also known as Skype Software S.A.R.L, Skype Communications S.A.R.L, Skype Inc., and Skype Limited) is a Luxembourgish telecommunications company headquartered in Luxembourg City, Luxembourg, whose chief business is the manufacturing and marketing of the video chat and instant messaging computer software program Skype, and various Internet telephony services associated with it. Microsoft purchased the company in 2011, and it has since then operated as their wholly owned subsidiary; as of 2016, it is operating as part of Microsoft's Office Product Group. The company is a ''Société à responsabilité limitée'', or SARL, equivalent to an American limited liability company.

Skype, a voice over IP (VoIP) service, was first released in 2003 as a way to make free computer-to-computer calls, or reduced-rate calls from a computer to telephones. Support for paid services such as calling landline/mobile phones from Skype (formerly called SkypeOut), allowing landline/mobile phones to call Skype (formerly called SkypeIn and now Skype Number), and voice messaging generates the majority of Skype's revenue.

eBay acquired Skype Technologies S.A. in September 2005 and in April 2009 announced plans to spin it off in a 2010 initial public offering (IPO). In September 2009, Silver Lake, Andreessen Horowitz and the Canada Pension Plan Investment Board announced the acquisition of 65% of Skype for $1.9 billion from eBay, valuing the business at $2.75 billion. Skype was acquired by Microsoft in May 2011 for $8.5 billion.

As of 2010, Skype was available in 27 languages and has 660 million worldwide users, an average of over 100 million active each month, and has faced challenges to its intellectual property amid political concerns by governments wishing to control telecommunications systems within their borders.

History

* Skype was founded in 2003 by Janus Friis from Denmark and Niklas Zennström from Sweden, having its headquarters in Luxembourg with offices now in Tallinn, Tartu, Stockholm, London, Palo Alto, Prague, and Redmond, Washington.

* The Skype software was originally developed by Estonians Ahti Heinla, Priit Kasesalu and Jaan Tallinn, who together with Janus Friis and Niklas Zennström were also behind the peer-to-peer file sharing software Kazaa. In April 2003, Skype.com and Skype.net domain names were registered. In August 2003, the first public beta version was released.

* One of the initial names for the project was "Sky peer-to-peer", which was then abbreviated to "Skyper". However, some of the domain names associated with "Skyper" were already taken. Dropping the final "r" left the current title "Skype", for which domain names were available.

* In September 2005, SkypeOut was banned in China. In October of the same year, eBay purchased Skype for $2.6 billion. (In 2011, the ''Ars Technica'' estimated the purchase price at $3.1 billion, not $2.6 billion.) In December 2005, videotelephony was introduced.

* In April 2006, the number of registered users reached 100 million. In October 2006, Skype 2.0 for Mac was released, the first full release of Skype with video for Macintosh, and in December, Skype announced a new pricing structure, with connection fees for all SkypeOut calls. Skype 3.0 for Windows was released.

* In 2006, a feature called "Skypecasting" was introduced as a beta. It allowed recordings of Skype voice over IP voice calls and teleconferences to be used as podcasts. Skypecasting remained in beta until it was discontinued on 1 September 2008. Skypecasts hosted public conference calls for up to 100 people at a time. Unlike ordinary Skype p2p conference calls, Skypecasts supported moderation features suitable for panel discussions, lectures, and town hall forums. Skype operated a directory of public Skypecasts.

* Throughout 2007, updates (3.1, 3.2 and 3.5) added new features including Skype Find, Skype Prime, Send Money (which allowed users to send money via PayPal from one Skype user to another), video in mood, inclusion of video content in chat, call transfer to another person or a group, and auto-redial. Skype 2.7.0.49 (beta) for Mac OS X released adding availability of contacts in the Mac Address Book to the Skype contact list, auto redial, contact groups, public chat creation, and an in-window volume slider in the call window. During several days in August, Skype users were unable to connect to full Skype network in many countries because of a Skype system-wide crash which was the result of exceptional number of logins after a Windows patch reboot ("Patch Tuesday"). In November, there was controversy when it was announced that users allocated certain London 020 numbers (specifically those beginning '7870') would lose them, after negotiations with the provider of this batch of numbers broke down.

* By early 2008, the tumultuous ownership relations between the founders and eBay had resulted in significant leadership churn, with a succession of Skype presidents including Niklas Zennström, Rajiv Dutta, Alex Kazim, Niklas Zennström (again), and Henry Gomez, all holding that title at various points between 2005 and 2007. The business had failed to meet certain earn-out targets, growth was decelerating, product development had slowed significantly, and in October 2007 eBay took a $1.4 billion 'impairment' on the value of Skype, admitting it had overpaid, and now valuing the company at about $2.7 billion.

* In October 2008, analysis revealed TOM-skype â€” the Chinese version of Skype run by TOM Online â€” sends content of text messages and encryption keys to monitoring servers.

Two original founders depart, new CEO and the eBay years

* For the six months after the departure of Zennström and Friis, Michael van Swaaij led the company as interim CEO, until the appointment of Josh Silverman in February 2008. Silverman was "widely viewed as bringing in stability to Skype after a tumultuous phase that followed the exit of the two Skype co-founders." Under Silverman's two-and-a-half year tenure, the company focused its product efforts around video calling, ubiquity (gaining high penetration on smartphones, PCs, TVs, and consumer-electronic devices), building tailored offerings for enterprise customers, and diversifying revenue through subscriptions, premium accounts and advertising.

* In advancing this strategy, Skype released many new products, substantially revamping its flagship Windows software (3.8 -> 4.0), and its macOS and Linux software; while introducing new software products for smartphones, and consumer electronics. In 2009, Skype 4.0 was released, featuring full-screen high-quality video calling. the Linux client was updated, and an iPhone application was launched which topped the charts with over 1M downloads in its first two days. Skype also announced the launch of its software for the Android platform.

* During this period Skype also discontinued lesser-used services such as support for the "Skype Me" presence indicator, which meant that a user was interested in receiving Skype calls from a non-contact. Skype also discontinued its SkypeCast service without explanation and added internal monthly and daily usage caps on their SkypeOut subscriptions, which had been advertised as "unlimited". Skype also discontinued its "dragonfly" feature, a community-generated yellow-pages product, and other features which were deemed to be under-performing or a distraction to management. Many users and observers had commented on the high rate of dropped calls and the difficulty reconnecting dropped calls. Updates including versions for the Sony PSP hand-held gaming system, version 2.0 for Linux with support for video-conferencing.

* As part of its efforts to diversify revenues, Skype launched in April 2008 ''Skype for SIP'', a service aimed at business users. At that time around 35 per cent of Skype's users were business users. In targeted premium products to consumers, Skype launched new monthly premium subscriptions products in May 2010.

* Marketing efforts were also re-vamped, with a particular focus on innovative partnerships with TV broadcasters to integrate Skype into their programming. The Oprah Winfrey Show began using Skype regularly to host video calls between Oprah and her viewers at home, culminating in a show dedicated exclusively to the wonders of Skype ("where the Skype are You", aired first in May 2009). Skype also became commonly used by network news stations around the world, as a cost-effective replacement for sending satellite trucks, and enabling fast response from citizen journalists. Skype was also integrated into scripted TV programming, such as Californication; and in the seventh season of the U.S. syndicated version of the British game show ''Who Wants To Be a Millionaire'' in a new ''Ask the Expert'' video chat lifeline.

* These efforts led to accelerating growth of Skype's Connected Users and Paying Users and by 2009 Skype was adding about 380,000 new users each day. By the end of 2009 Skype was generating around US$740 million in revenue.

* In January 2010, Josh Silverman was recognized for his accomplishments at Skype by being named First Runner Up in the TechCrunch "Crunchies" award for "Best CEO", beaten only by Mark Pincus of Zynga.

Independence and Silver Lake

* Building on the revitalization which had begun in 2008, eBay announced, in April 2009, plans to spin off Skype through an initial public offering in 2010. In August, Joltid, Ltd. filed a motion with the U.S. Securities and Exchange Commission, seeking to terminate a licensing agreement with eBay which allowed eBay (and therefore Skype) to use the ''peer-to-peer communications technology'' on which Skype is based. If successful, this could have caused a shutdown of Skype as it existed, and made an IPO challenging to execute. In September, eBay announced the sale of 65 per cent of Skype to a consortium of Index Ventures and Silver Lake Partners. Early in September, Skype shut down the Extras developer program. In November, Skype settled the Joltid litigation and acquired all Skype technology in exchange for equity in the company and eBay completed the sale of 70% of Skype to a consortium comprising Silver Lake Partners, Joltid, CPPIB, and Andreessen Horowitz for approximately $2 billion, valuing the entire business at US$2.75 billion.

* In May 2010, Skype 5.0 beta was released, with a capacity to support group video calls involving up to four participants. Also in May, Skype released an updated client for the Apple iPhone that allowed Skype calls to be made over a 3G network. Originally, a 3G call subscription plan was to be instituted in 2011, but Skype eventually dropped the plan. Rounding out its ubiquity push, Skype also announced deep integration of Skype software into the IP-connected TVs from Panasonic, Samsung and Sony.

* In June 2010, following the rapid departure of Daniel Berg, the chief technology officer, and then chief development officer Madhu Yarlagadda, Mark Gillett, an operating partner at Silver Lake Partners, assumed the role of chief development officer, taking responsibility for development of Skype's client software, cloud services and product management following a period of several months working closely with Joshua Silverman to drive the transformation of the business, and the acceleration of cross platform and mobile product delivery.

* With its newfound independence and under ownership, Skype's growth accelerated and by 2010, Telegeography estimated that Skype accounted for 25 per cent of the world's international calling minutes. According to their research, the overall international calling market grew a tepid 5 to 6 per cent annually in 2010. "Skype, however, has seen a huge uptick in growth, particularly in the last two years."

* On 9 August 2010, Skype filed with the United States Securities and Exchange Commission (SEC) to raise up to US$100 million in an initial public offering. Sources reported that the company expected to raise at least US$1 billion. In October 2010, Skype announced the appointment of Tony Bates as CEO; Bates was a senior VP at Cisco and was responsible for its multibillion-dollar enterprise, commercial and small business division. On 14 October 2010, Skype 5.0 for Windows was released with a number of improvements and feature additions, including a Facebook tab to allow users to SMS, chat with, or call their Facebook friends via Skype from the News Feed. The "Search for Skype Users" option was omitted from this version.

* On 14 January 2011, Skype acquired Qik, a mobile video-sharing platform. In March 2011, Skype named Jonathan Chadwick as its new chief financial officer and confirmed that Mark Gillett would serve full-time as chief development and operating officer following the departure of chief financial and administrative officer Adrian Dillon.

Microsoft subsidiary (2011–present)

* On 10 May 2011, Microsoft announced it had agreed to acquire Skype for $8.5 billion. This marked a 300% increase in value for the company in the three years since the eBay write-down in October 2007. This constitutes Microsoft's second largest acquisition to date. It was announced that Skype will become a division within Microsoft, with Skype's former CEO Tony Bates â€”now its president— reporting to Microsoft CEO Steve Ballmer. The price Microsoft agreed to pay for the company is 32 times Skype's operating profits. According to the ''Financial Times'' this raises fears of a new "tech bubble". Ars Technica and the BBC
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