Feb 28 (Reuters) - Skype will ring for the last time this May as owner Microsoft retires the two-decade-old internet calling service that redefined how people connect across borders.

Shutting down Skype will help Microsoft MSFT.O focus on its homegrown Teams service by simplifying its communication offerings, the software giant said on Friday.

Founded in 2003, Skype's cheap audio and video calls quickly disrupted the landline industry in the early 2000s and made the company a household name boasting hundreds of millions of users at its peak. But the platform has struggled to keep up with easier-to-use and more reliable rivals such as Zoom and Salesforce's Slack in recent years.

The decline was partly because Skype's underlying technology was not suited for the smartphone era.

When the pandemic and work-from-home fueled the need for online business calls, Microsoft batted for Teams by aggressively integrating it with other Office apps to tap corporate users — once a major base for Skype.

To ease the transition from the platform, its users will be able to log into Teams for free on any supported device using their existing credentials, with chats and contacts migrating automatically.

With that, Skype will become the latest in a series of high-flying bets that Microsoft has mishandled, such as the Internet Explorer web browser and its Windows Phone. Other big tech firms have also struggled with online communication tools, with Google making several attempts through apps including Hangouts and Duo.

When Microsoft bought Skype in 2011 for $8.5 billion after outbidding Google and Facebook — its largest deal at the time — the service had about 150 million monthly users; by 2020, that number had fallen to roughly 23 million, despite a brief resurgence during the pandemic.

Microsoft said on Friday "Skype has been an integral part of shaping modern communications".

"We are honored to have been part of the journey."

(Reporting by Aditya Soni in Bengaluru; Editing by Devika Syamnath)

((Aditya.Soni@thomsonreuters.com; +91 80 6210 0555;))