Microsoft turns consumers against a beloved brand
SINCE ACQUIRING SKYPE IN 2011, MICROSOFT HAS REFOCUSED THE ONLINE CALLING SERVICE ON THE CORPORATE MARKET, MAKING INDIVIDUAL USE MORE CUMBERSOME
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It’s relatively easy these days to find critics of Skype, the popular online calling service that Microsoft acquired in 2011 for $8.5 billion. Former devotees routinely gripe on social media that the software has become too difficult to use. On the Apple App Store and Google Play store, negative reviews of the smartphone app are piling up, citing everything from poor call quality to gluttonous battery demand.
In March tech investor and commentator Om Malik summarised the negativity by tweeting that Skype was “a turd of the highest quality” and directing his ire at its owner. “Way to ruin Skype and its experience. I was forced to use it today, but never again.”
Microsoft says the criticism is overblown and reflects, in part, people’s grumpiness with software updates. There are also other factors undermining users’ affection for an internet tool that 15 years ago introduced the idea of making calls online, radically resetting the telecommunications landscape in the process.
Since acquiring Skype from private equity investors, Microsoft has refocused the online calling service on the corporate market, a change that has made Skype less intuitive and harder to use, prompting many Skypers to defect to similar services operated by Apple, Google, Facebook and Snap.
The company hasn’t updated the number of Skype users since 2016, when it put the total at 300 million. Some analysts suspect the numbers are flat at best, and two former employees describe a general sense of panic that they’re actually falling. The ex-Microsofters, who requested anonymity to discuss confidential statistics, say that as late as 2017 they never heard a figure higher than 300 million discussed internally.
Chief Executive Officer Satya Nadella has repeatedly said he wants the company’s ■ products to be widely used and loved. By turning Skype into a key part of its lucrative Office suite for corporate customers, Microsoft is threatening what made it appealing to regular folks in the first place. “It is like Tim Tebow trying to be a baseball player,” Malik says. “The product is so confusing, kludgey and unusable.”
Keen to reduce Microsoft’s reliance on the personal computer, former CEO Steve Ballmer saw in Skype an internet brand that was so popular it had become a verb. Having erred previously by acquiring No. 2 players to save money, Ballmer decided to buy the leading incumbent and pay a 40 per cent premium over what Skype valued itself at the time. “It was the biggest asset in the space at the time with the most recognised brand,” says Lori Wright, who joined the Skype team as general manager last year from video-conference rival BlueJeans. “It was an opportunistic way for Microsoft to enter into something that was going to be significant.”
Focusing on corporations was a reasonable strategy and one shared by Skype’s prior management. 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 systemwith a few modern features borrowed from instant messaging, artificial intelligence and social networking.
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 per cent said they used Skype for Business for conferencing, compared with 21 per cent for Cisco’s products.
But Microsoft has paid a price for prioritising corporations over consumers. The former seek robust security, search and the ability to host town halls; the latter easeof-use and decent call quality. Inevitably, the complexity of the corporate software crowds out the simplicity consumers prefer.
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.
Service quality
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.
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.”
Downloads of Skype’s Android app reached 1 billion in October, although Microsoft doesn’t say how often people log on. Ratings are starting to recover from the initial nosedive as customers become accustomed to the changes. “It’s a really radical redesign, so we thought there was going to be a pretty negative reaction; we were braced for that,” Wright says. “What we are seeing now is they don’t hate it anymore.”