It's a technology word which, like Google, has become a verb in its own right, a word that stitches together software engineering talent in Estonia to a corporate headquarters in Luxembourg.
Last week, Skype also became the world's most expensive verb when Microsoft paid $8.5bn (£5.2bn) in cash for a company best known for linking families and friends in online video conversations across the world. "I'll Skype you," is now a common refrain.
Within minutes, many had diagnosed a costly, if not deadly, case of verb envy. Microsoft, after all, has never come close to moving its status beyond that of a proper noun during its 36-year history. And though the millions of dollars ploughed into Bing, its search engine, have wrestled some market share from Google, everyone knows which one the verb is.
Those sceptical about Microsoft's biggest ever acquisition would have found enough in the filing Skype made last August as part of a planned flotation to harden that conviction. The technology firm made just $13m of profits in the first half of last year, admits some users may be double counted and can't be sure how they will react to more advertising on Skype.
For those convinced that Silicon Valley is in the grip of a second internet bubble a decade after the first burst, Microsoft also just saved fund managers from a severe case of indigestion on overpriced Skype shares. It was a rescue that came, of course, at the expense of shareholders in Microsoft, which remains the world's biggest software maker and made $5.2bn in profits last quarter.
That's not how Ballmer sees it. Like most of the companies that are using the internet to reshape the world, the video and talk services that Skype offers users are largely free.
One exception is a product that allows several people to hold video conversations with each other at the same time, and Tony Bates, the British chief executive of Skype, would have found it useful over the past two months.
Looming out of their respective screens would have been Facebook founder Mark Zuckerberg, Larry Page, the chief executive of Google and John Chambers, the boss of Cisco. Like Ballmer, all were interested in buying the company founded just eight years ago by one entrepreneur from Denmark and another from Sweden.
Whatever the price tag each would have hung on Skype, all, along with iPhone and iPad maker Apple, know that the ground beneath their feet – however big they may be – is rapidly shifting. Boundaries that for the past 30 years kept phone, video, and written communication apart are collapsing as desk-bound computers retreat and mobile devices that allow people to march forward.
And though the landscape is a dizzying one, all the companies know the scale of what's at stake: the chance to deliver the technology, platforms and devices that billions of people are likely to use to communicate with for decades to come.
"We're definitely in the middle of a transformative period and it will take a few years to play out," explains Al Hilwa, who tracks these companies for technology research group IDC. "You don't want to be sitting on the sidelines."
Though fast-changing, a current crop of winners has already emerged during the past decade. There's Facebook with its 600m members; Google and the 250m search requests it gets a day, and Apple and the 18.65m iPhones that it sold in the first three months of the year. As more technology becomes web-based and the traditional edges separating devices softens further, everyone is trying everything in an intense battle for consumers.
Apple, for example, has developed its own video communication platform known as FaceTime. Google's Android operating system, meanwhile, is the most popular among mobile phone manufacturers and is used by Motorola and Samsung. And Bing, according to the latest figures from comScore, controlled 13.9pc of the US search market in March. With its 170m users generating 207bn minutes of voice and video calls last year, Skype is one of a handful of companies that commands a large base of loyal users.
"It's a competition for the hearts, souls and minds of the consumer," says Ted Schadler, an analyst and author at Forrester Research.
It's little wonder, then, that Ballmer saw the appeal of Skype. It's something Simon Patterson knows all about. The 38 year-old is a director at Silver Lake, the largest member of a consortium that bought control of Skype from eBay in September 2009 and sold it at a tidy profit last week. The 2009 deal saw eBay retain a 30pc stake and valued Skype at $2.75bn.
"Video communication is becoming intrinsic to life on the internet," says Patterson, who is based in London. "The strategy for Skype is to be on every sort of device, everywhere."
Silver Lake, which is based in California and focuses on technology investments, and Andressen-Horowitz, the venture capital firm run by Netscape founder Marc Andressen and another member of the 2009 consortium, have enjoyed the sort of returns that don't come around very often.
It's also true that Skype made significant strides in the 20 months they were owners. Registered users climbed from 397m at the end of June 2009 to 560m 12 months later.
The number of people who pay to use Skype to make calls over the internet to landlines and mobiles jumped from 6.6m to 8.1m during the same period. Skype's management was overhauled as a new finance director, marketing director and, eventually, chief executive were installed.
And in March this year, Bates, who was lured from Cisco, where he had been considered a possible successor to Chambers, introduced display advertising. "We felt we were well positioned to take the company public," explains Patterson. "We had an unsolicited approach from Microsoft, and they had clearly been watching us from afar."
Even though Microsoft has drawn some heavy criticism, if not outright derision, for the price it paid, Ballmer will have felt a lot better that it was himself instead of Page or Zuckerberg at the press conference.
As far as internet video and voice communication goes, the deal is a blow to Google, which is left with the Google Voice service it launched in 2009, and Apple, with FaceTime. The best way to think about this evolving battle between the companies, says Hilwa of IDC, is "in terms of them expanding, enlarging and protecting their respective ecosystems". The potential viciousness of the fight was underlined this week when it emerged that Facebook had hired a public relations firm to try to smear Google in the press.
Ballmer insisted this week that as well as integrating Skype into its own products, Microsoft will continue to support it on rivals' devices such as the iPhone, where the Skype app has had 50m downloads. For a company that has historically balked at anything approaching open source – or making public the code behind a piece of software – the acquisition of Skype presents an intriguing conundrum. There's a consensus among observers that Microsoft will keep the majority of Skype's services free. And some believe that in an echo of Google's approach, Microsoft will make the code behind Skype's technology public in an effort to encourage its development.
How big a blow Microsoft has delivered to rivals will depend on what it does with Skype over the next few years. After handing over $8.5bn of the $38bn in cash Microsoft has sitting outside the US, the risks in the deal may start to feel a little more real.
Skype should arguably have come with a health warning, because Microsoft isn't the first corporate behemoth to bet billions on it. On September 12 2005, Meg Whitman, the then chief executive of eBay, said that her decision to pay $2.6bn for Skype would "create an extraordinarily powerful busines platform on the net". EBay assumed users would use it to video-chat over deals. The buyers and sellers on eBay, though, didn't use the service when they were cutting deals, and five years later eBay offloaded Skype after writing down its investment by $900m.
Ed Maguire, who covers Microsoft for Credit Agricole in San Francisco, puts the second major risk bluntly: "They've got to not screw up the brand." Microsoft watchers say the fact that Skype will operate as a separate division and that Bates will report directly to Ballmer suggests the software giant recognises this danger.
Microsoft will, of course, be focused on executing the strategy that led Ballmer and his in-house team of advisers to wrap up the acquisition in under six weeks. Much of that strategy is about strengthening Microsoft's hand with consumers. It hopes its 170m new Skype friends will invigorate all its consumer products.
Some need it more than others. XBox, its video games console, and Kinect, a related device that allows users to control the action on the screen with their bodies, have both been hits for Microsoft and already have video chatting capacity. Users will see Skype and its millions of users integrated into both. Its Window Phone 7 operating software for phones is languishing far behind Android, the market leader from Google, and the iOS system used by Apple in iPhones. It's also highly likely uers will see Skype added to the software.
If Microsoft is going to use Skype as a battering ram to prize open the consumer market further, Schadler of Forrester believes it's a smart time to be doing it. More and more technological change, he says, is starting in the home and moving to the workplace. A recent survey by IDS, for example, found that two-thirds of people under the age of 30 say they have better technology at home than they do at work. Business – an area of historical strength for Microsoft – is alive with new threats that it will hope Skype can help it adapt to. Ballmer has said his chief priority is to drive Microsoft further into cloud computing, the accepted shorthand for a world in which more computing services, such as email and word processing, are delivered via the web and paid for by customers as they use them.
Analysts expect Microsoft to use Skype to polish its offering for business customers. It may well be available both in Windows 8, which is scheduled for release next year, and in some of the web-based services Microsoft has developed such as Azure and Office apps. It will also be joined to Lync, Microsoft's current video communication tool.
"They realise there's a change in the way people are consuming technology," said Maguire of Credit Agricole. "The Skype deal is an embrace of a more cloud-based world."
Whether Microsoft's biggest ever acquisition proves a success will remain shrouded, if not in cloud, then in the work of integration for the next couple of years. Either way, it will make the next chapter in the battle royal between the software maker and its rivals that much more compelling.
