Focusing on corporations was a reasonable strategy and one shared by Skype’s prior management. Originally Ballmer and company pledged to let Skype operate independently from Lync, Microsoft’s nascent internet phone service for corporations. But two years later the company began merging the two into Skype for Business and folded that into Office.
Today, Microsoft is using Skype for Business to help sell subscriptions to its cloud-based Office 365 and steal customers from Cisco. Microsoft has essentially turned Skype into a replacement for a corporate telephone system—with a few modern features borrowed from instant messaging, artificial intelligence and social networking. Teams, the company’s year-old version of Slack, is being merged with Skype for Business. LinkedIn, another acquisition, will provide work bios of the people Skypers are about to call. Drawing on Microsoft’s pioneering work in AI, Skype can now translate calls into 12 languages.
As proof that the strategy is working, Microsoft points to a roster of blue-chip customers. Among them is General Electric, which says it rolled out Skype for Business to 220,000 employees late last year and is logging 5.5 million meeting minutes a day. Accenture and some of the largest banks are also big users, according to Office 365 marketing vice president Ron Markezich. In a Forrester survey of 6,259 information workers, 28 percent said they used Skype for Business for conferencing, compared with 21 percent for Cisco’s products.Atkins, a U.K. engineering-design company that’s part of SNC Lavalin Group, says its 18,500 workers use Skype for telephone service, conferences and sharing projects – to the tune of 10 million minutes a month. “We did a full competitor analysis but we trusted Microsoft's vision,” says Atkins collaboration manager Nick Ledger, who says he likes how Skype is integrated with Office. “Very rarely do we have any problems.”
But Microsoft has paid a price for prioritizing corporations over consumers. The former seek robust security, search and the ability to host town halls; the latter ease-of-use and decent call quality. Inevitably, the complexity of the corporate software crowds out the simplicity consumers prefer. While the company maintains two separate apps, the underlying technology is the same and it's built with workers in mind.
Skype has tried to be all things to all people, “and almost all those things are executed better elsewhere,” says Matthew Culnane, a user experience and content strategist at the U.K.’s Open University.
It doesn’t help that Microsoft keeps overhauling the app. A redesign last summer sent ratings plunging. In a scorching Twitter commentary, security journalist Brian Krebs said finding basic buttons was a PITA (pain in the ass) and that the recent update was “probably the worst so far.” The tweet—and retweets—got the attention of Skype’s social network team. “Brian, we’re sorry to hear this,” a representative replied. “Would love to hear more feedback and see if there’s anything we can help with.”
“There was a demographic that loved Skype for what it was; it was clean and simple,” says Carolina Milanesi, an analyst at Creative Strategies. “That's no longer the case.” Milanesi once paid for a Skype subscription for her mother in Italy. Then her mom got an iPad and now they talk on Apple Facetime. Millions do the same, despite the fact that Skype apps are a download away on iPhone and Android smart phones and tablets.
Microsoft’s focus on the corporate market may also have blinded it to the rise of WhatsApp, Facebook Messenger and Tencent’s WeChat. Microsoft killed off Windows Live Messenger five years ago, right when WhatsApp was amassing hundreds of millions of users around the globe. The instant messaging service now has 1.5 billion users and has started adding key Skype features. Meanwhile, upstarts like Discord, a free voice and text chat app for gamers, are gaining users.
People who have remained loyal to Skype despite all the alternatives complain most about service quality—calls that don't connect, connections that drop every other word, address books that disappear after software updates. Business customers have similar issues too, according to Forrester analyst Nick Barber. “It's not uncommon for me to talk to companies that have Skype for Business, yet they are still looking at other options because it's not working for them,” he said. “It's usually around the call quality and consistency both with audio and video.”
Microsoft says it takes quality seriously and tracks dropped calls to ascertain what went wrong. Wright says sometimes the customer’s network is at fault, not Skype. She argues that most companies are struggling to perfect the technology. “People get frustrated that it doesn’t work like dial-tone and say ‘I am just going to switch to the next app or service,’ only to find out that the next service has the same issue,” she says. “We are making rapid progress.”