Video calls have become a fundamental digital communication channel both in our personal and professional lives. As remote work boomed since 2020, the video conferencing software market surged 30% to be worth $14.8 billion.
Once leading the way, legacy platform Skype has lost momentum to the viral upstart Zoom. In this comprehensive analysis, we‘ll contrast their key capabilities, security practices, market trajectories and strategic outlooks.
Whether you primarily use video calling for business meetings or catching up with friends, by the end understand the ideal platform for your needs in 2023 and beyond.
What is Video Conferencing Software?
Before diving the Zoom vs Skype showdown, let‘s quickly recap what these platforms allow us to do:
Video conferencing software enables face-to-face digital interactions between 2 people or 500+ using the cameras on our smartphones, laptops, tablets or dedicated hardware systems with mics and speakers.
By transmitting synchronized audio and video feeds across the internet, participants can talk naturally as well as share screens and supplementary content. Meetings can be recorded for future playback too.
Key use cases include:
- Business meetings
- Webinars & virtual events
- Remote learning or training
- Telehealth patient consultations
- Job interviews
- Personal video calls with friends & family
Now let‘s overview both competitors…
Skype – Pioneering Video Calls for the Masses
Skype stands as perhaps the most influential video chat app, bringing the capability to the mainstream for the first time.
Origins
It originated from Swedish entrepreneur Niklas Zennström in 2003, who previously founded iconic file-sharing platform Kazaa.
Seeking to enable free voice and video calls globally, Skype leveraged revolutionary peer-to-peer (P2P) streaming instead of costly centralized infrastructure. This helped it rapidly gain over 100 million active users by September 2005.
To accelerate growth, eBay acquired Skype Technologies SA in October 2005 at a valuation of $2.6 billion. But by 2007, Skype shifted away from primarily P2P delivery to improved reliability on conventional servers.
Following eBay‘s failed integration efforts, Microsoft snatched up Skype in May 2011 for a staggering $8.5 billion to incorporate its video capabilities more deeply into Microsoft products.
Growth & Business Model
As broadband internet and cameras spread through the late 2000s, Skype became synonymous with video calls for many.
By 2016, Skype had over 300 million monthly active users – an immense base, although growth was plateauing.
Free Skype calls enabled via P2P instead of infrastructure costs drove early adoption. And its cheap international calling rates appealed broadly too.
But over time a key revenue stream became paid subscriptions like:
- "Skype Unlimited World" packages for extra call destinations/minutes beyond free tier
- "Skype Number" to obtain a dedicated virtual phone number
Unfortunately, details on Skype‘s current usage and revenues are rare as Microsoft no longer reports the segment explicitly. But its churn to enterprise-favorite Zoom speaks volumes…
Zoom – Startup Born to Unseat Enterprise Video Incumbents
Of course, the video conferencing incumbent that has truly capitalized on remote work trends is relative newcomer Zoom.
Origins
Motivated by past frustrations using web conferencing programs that were unreliable and difficult to use, former Cisco executive Eric Yuan founded Zoom in 2011.
“I would use video conferencing systems in my previous job and those systems were overly complicated. That inspired me to develop something easier to use.” – Eric Yuan, Zoom CEO [1]
This consumer-friendly focus contributed heavily to Zoom’s eventual viral adoption and $1 trillion valuation.
Exponential Growth
Zoom launched in January 2013 and proved popular initially among tech circles in Silicon Valley. But March 2020 signaled a watershed moment.
With COVID-19 quarantines beginning, Zoom usage exploded 30x [2] that month to over 200 million participants as remote work boomed globally.
Zoom seized the moment, racing to enable reliability and security at massive scale. By October 2020, its daily participant count peaked at approximately 350 million – far surpassing Skype.
And its meteoric rise never slowed down according to financials:
| Year | Revenue | % Annual Growth |
|---|---|---|
| 2019 | $622.7 million | 88.37% |
| 2020 | $2.65 billion | 326% |
| 2021 | $4.1 billion | 54% |
Meanwhile, Skype languished without matching innovation. Let‘s analyze why Zoom pulled so far ahead…
Zoom vs Skype: Key Feature Comparison
With hundreds of millions flocking to video conferencing practically overnight, the lackluster Skype began losing major ground to nimble teams at Zoom continuously shipping hot new capabilities.
Above we can see at a glance major areas where Zoom innovated past Skype:
Meeting Capacity
- Skype maxes out at 50 participants in group video calls.
- Zoom enabled sessions with up to 1,000 video participants.
- Plus up to 10,000 viewers in webinar mode.
Clearly transformative for enterprise events, training, etc.
User Experience
- Skype remains difficult for first-time users to configure audio/video and lacks customization.
- Zoom offers extreme ease of use for organizing and joining meetings with virtual backgrounds, whiteboard, polling, breakout rooms and more.
Vastly increased engagement and creativity.
App Integrations
- Skype integrations limited; no automation workflows.
- Zoom ties into 1500+ apps via Zapier plus Slack, Dropbox, etc.
Opens possible use cases.
Infrastructure Investment
While Microsoft seemed to take Skype for granted, Zoom invested heavily in its proprietary media backbone Zoom Meetings infrastructure to enable superb reliability even at enormous scales.
This paid off big time once COVID sent user counts rocketing virtually overnight.
Free Tier
- Skype requires a paid subscription for multi-user group video calls.
- Zoom permanently offers free 40 minute sessions for up to 100 participants.
Mass appeal to consumers and small groups unlocked viral growth.
With such limitations holding Skype back as demand boomed, Zoom began rapidly conquering business, education, healthcare and more.
Next let‘s contrast how each platform balanced security and privacy…
Privacy and Security: Building User Trust
Given their exploding user bases and centrality in sensitive business/government contexts, shoring up privacy protections became urgent for Zoom and Skype.
Zoom‘s Security Reckoning
In April 2020, a Citizen Lab report exposed troubling facts like Zoom:
- Using non-end-to-end encryption vulnerable to surveillance
- Leaking personal data to third parties
- Allowing hackers access via unnamed company in China
With public pressure sweltering as its flaws emerged…
Zoom had little choice but to devote massive resources into auditing and securing the entire application stack.
Quickly they launched bug bounty programs, acquired encryption keyhouse Keybase and released detailed roadmaps regaining institutional trust.
Skype Compliance Struggles
Skype too faced controversies like 2018 security flaws enabling call hijacking and data issues.
However, more ominous was Skype’s pattern of secret compliance with government surveillance programs:
- 2013 leaks confirm Skype feeds into NSA mass surveillance system PRISM
- Russian government given widespread access to Skype comms since April 2022 per laws to censor and monitor permitted internet activity.
This cooperation alienated many human rights supporters.
In this arena, no video chat provider has achieved ideal credibility yet – but Zoom recovered well from initial missteps.
Censorship and Restrictions
Related to privacy debates is government censorship pressuring platforms to silence and punish dissidents.
Both Zoom and Skype have drawn fire for appearing to aid repression in exchange for market access in countries like China at times.
Skype Compliance
Rife examples exist of Skype filtering politically sensitive keywords/phrases and banning accounts discussing Chinese state abuses:
- Talk of 1989 Tiananmen Square massacre automatically disabled
- Accounts of human rights activists mysteriously disabled without clear violations
This seems to be undergirded by an internal 2012 partnership between Skype/Microsoft leadership with China‘s state surveillance apparatus.
Zoom Controversies
Famously, Zoom deactivated multiple accounts of Chinese political dissidents and American Tiananmen commemoration hosts in 2020 after pressure from Beijing. [3]
Critics blasted Zoom for abandoning its commitments to respecting customer rights:
“This is the quintessential example of political censorship in the private sector…They want to earn profits while people in China are jailed for using their platform.”
Ultimately, public scrutiny pushed Zoom to reverse some policies like allowing all video call topics globally. But the tensions continue given government contracts and China’s massive population.
Neither company has sorted an ideal response to authoritarian demands of censorship yet.
Zoom Surges Ahead for Enterprise Video Communications
Despite some headaches around privacy and policies, Zoom continues holding its significant lead over Skype from product experience to public perception.
Let‘s recap their strategic positions starting with Skype‘s identity crisis as Microsoft touts Teams but keeps Skype lingering…
Skype Falters
Usage metrics remain opaque but clearly Skype is fading from its peak mindshare under continued Microsoft ownership.
Redmond invests more into its workplace chat platform Teams which also offers video meetings, leaving Skype to slowly pivot towards solely consumer focus.
Zoom Soars Sky High
Meanwhile, Zoom freshly became a market cap $1 trillion mega-cap tech stock – thanks to seemingly unstoppable momentum through 2022.
Zoom stays laser-focused on video meetings alone but enhances the experience tremendously via constant feature rollouts like Virtual Events platform OnZoom or Zoom Phone cloud call center.
Work From Home tailwinds will support growth short term before likely slowing a bit.
Gartner Magic Quadrant currently scores Zoom substantially ahead for both vision and overall capability:
By 2025, projections suggest the video conferencing market balloons to $50B+ with Zoom controlling 30% share or more, while Skype ranks outside top 5. [4]
Which Platform Should You Choose Today?
For Enterprise & Productivity ▶ Zoom
If you or your organization depends on effective video meetings day-to-day, Zoom remains the gold standard for features, expansive plans and ubiquitous accessibility.
For Personal & Casual Use ▶ Skype
If connecting family/friends informally, Skype still offers a solid free option internationally. But exploring freemium Zoom works great for many private uses too.
Verdict on Skype vs Zoom
Zoom definitively leads business video communications for the 2020s after winning over workplaces globally. Skype laid pioneering groundwork but stagnated as Zoom kept leapfrogging capabilities specifically for enterprise buyers‘ needs.
However, Skype endures serving personal connections reliably (if you don‘t mind some ads). With Microsoft deprioritizing it for Teams though, expect Skype‘s mindshare to keep diminishing amongst consumers too.
Video calls feel indispensable nearly overnight – but power users should ensure the right platform for their needs looking ahead at this crucial digital frontier.
