In 1980, Microsoft formed a partnership with
IBM that allowed them to bundle Microsoft's operating system with IBM computers, paying Microsoft a royalty for every sale. In 1985, IBM requested that Microsoft write a new operating system for their computers called
OS/2; Microsoft wrote the operating system, but also continued to sell their own alternative, which proved to be in direct competition with OS/2. Microsoft Windows eventually overshadowed OS/2 in terms of sales. When Microsoft launched several versions of Microsoft Windows in the 1990s, they had captured over 90% market share of the world's personal computers.
As of June 30, 2015, Microsoft has a global annual revenue of $86.83 Billion USD and 128,076 employees worldwide.
[2] It develops, manufactures, licenses, and supports a wide range of
software products for computing devices
1975–1985: The founding of Microsoft[edit]
Microsoft staff, Albuquerque, Dec 7, 1978
Top:
Steve Wood,
Bob Wallace,
Jim LaneMiddle:
Bob O'Rear,
Bob Greenberg,
Marc McDonald,
Gordon LetwinBottom:
Bill Gates,
Andrea Lewis,
Marla Wood,
Paul AllenNot pictured:
Ric Weiland, Miriam Lubow
[6]Gates described this photo in 2009 as "that famous picture that provides indisputable proof that your average computer geek from the late 1970s was not exactly on the cutting edge of fashion."
[7]
The idea that would spawn Microsoft terminated boi when Paul Allen showed Bill Gates the first of January, 1975 issue of
Popular Electronics that demonstrated the
Altair 8800.
[8] Allen and Gates saw potential to develop an implementation of the
programming language BASIC interpreter for the system.
[9] Bill Gates called the creators of the new
microcomputer,
Micro Instrumentation and Telemetry Systems (MITS), offering to demonstrate the implementation in order to win a contract with the company. Allen and Gates had neither an interpreter nor an Altair system, yet in the eight weeks before the demo they developed an interpreter. When Allen flew to
Albuquerque, New Mexico to meet with MITS, the interpreter worked and MITS agreed to distribute
Altair BASIC.
[10] Allen and Gates left Boston, where Allen worked for Honeywell and Gates was enrolled in Harvard,
[11] moved to Albuquerque (where MITS was located), and co-founded Microsoft there. Revenues of the company totaled $16,005 by the end of 1976.
Allen came up with the original name of
Micro-Soft, a
portmanteau of
microcomputer and software.
[12] Hyphenated in its early incarnations, on November 26, 1976 the company was registered under that name with the Secretary of State of New Mexico. The company's first international office was founded on November 1, 1978, in Japan, entitled "
ASCII Microsoft" (now called "
Microsoft Japan"), and on November 29, 1979, the term, "Microsoft" was first used by Bill Gates.
[8] On January 1, 1979, the company moved from Albuquerque to a new home in
Bellevue, Washington,
[8] since it was hard to recruit top programmers to Albuquerque. Shortly before the move, eleven of the then-thirteen employees posed for the staff photo on the right.
[13]
Steve Ballmer joined the company on June 11, 1980, and would later succeed Bill Gates as CEO
[8] from January 2000 until February 2014. The company restructured on June 25, 1981, to become an incorporated business in its home state of Washington (with a further change of its name to "Microsoft Corporation, Inc."). As part of the restructuring, Bill Gates became president of the company and chairman of the board, and Paul Allen became Executive Vice President.
[8]
Word was first released in the spring of 1983, and free demonstration copies of the application were bundled with the November 1983 issue of
PC World, making it the first program to be distributed on-disk with a magazine.
[22] However, Xenix was never sold to end users directly although it was licensed to many software
OEMs for resale. It grew to become the most popular version of Unix, measured by the number of machines running it
[23] (note that Unix is a multi-user operating system, allowing simultaneous access to a machine by several users). By the mid-1980s Microsoft had got out of the Unix business, except for an interest in SCO.
[18]
DOS (Disk Operating System) was the operating system that brought the company its real success.
International Business Machines (IBM) first approached Microsoft about its upcoming
IBM Personal Computer (IBM PC) in July 1980.
[24] On August 12, 1981, after negotiations with
Digital Research failed, IBM awarded a contract to Microsoft to provide a version of the
CP/M operating system, which was set to be used in the IBM PC. For this deal, Microsoft purchased a
CP/M clone called
86-DOS from
Tim Paterson of
Seattle Computer Products for less than US$100,000, which IBM renamed to
IBM PC DOS. Microsoft did not have an operating system when they closed the deal with IBM and IBM had not done their homework. Due to potential
copyright infringement problems with CP/M, IBM marketed both CP/M and PC DOS for US$240 and US$40, respectively, with PC DOS eventually becoming the standard because of its lower price.
[25][26] 35 of the company's 100 employees worked on the IBM project for more than a year. When the IBM PC debuted, Microsoft was the only company that offered operating system, programming language, and application software for the new computer.
[24]
InfoWorld stated in 1984 that Microsoft, with $55 million in 1983 sales,
[27]
is widely recognized as the most influential company in the microcomputer-software industry. Claiming more than a million installed MS-DOS machines, founder and chairman Bill Gates has decided to certify Microsoft's jump on the rest of the industry by dominating applications, operating systems, peripherals and, most recently, book publishing. Some insiders say Microsoft is attempting to be the IBM of the software industry.
In 1983, in collaboration with numerous companies, Microsoft created a home computer system,
MSX, which contained its own version of the DOS operating system, called
MSX-DOS; this became relatively popular in Japan, Europe and South America.
[10][28][29] Later, the market saw a flood of
IBM PC clones after
Columbia Data Products successfully cloned the IBM
BIOS, quickly followed by
Eagle Computer and
Compaq.
[30][31][32][33] The deal with IBM allowed Microsoft to have control of its own QDOS derivative,
MS-DOS, and through aggressive marketing of the operating system to manufacturers of IBM-PC clones Microsoft rose from a small player to one of the major software vendors in the home computer industry.
[34] With the release of the
Microsoft Mouse on May 2, 1983, Microsoft continued to expand its product line in other markets. This expansion included
Microsoft Press, a book publishing division, on July 11 the same year, which debuted with two titles:
Exploring the IBM PCjr Home Computer by
Peter Norton, and
The Apple Macintosh Book by
Cary Lu.
[8]
1985–1991: The rise and fall of OS/2[edit]
The sign at a main entrance to the Microsoft corporate campus. The
Redmond campus today includes more than 8 million square feet (approx. 750,000 m²) and 28,000 employees.
[35]
Ireland became home to one of Microsoft's international production facilities in 1985, and on November 20 Microsoft released its first retail version of
Microsoft Windows (
Windows 1.0), originally a graphical extension for its MS-DOS operating system.
[8] In August, Microsoft and IBM partnered in the development of a different operating system called
OS/2. OS/2 was marketed in connection with a new hardware design proprietary to IBM, the
PS/2.
[36] On February 16, 1986, Microsoft relocated their headquarters to a
corporate office campus in
Redmond, Washington. Around one month later, on March 13, the company went public with an IPO, raising US$61 million at US$21.00 per share. By the end of the trading day, the price had risen to US$28.00. In 1987, Microsoft eventually released their first version of OS/2 to
OEMs.
[37]
Meanwhile, Microsoft began introducing its most prominent office products.
Microsoft Works, an integrated office program which combined features typically found in a
word processor,
spreadsheet,
database and other office applications, saw its first release as an application for the
Apple Macintosh towards the end of 1986.
[10] Microsoft Works would later be sold with other Microsoft products including Microsoft Word and
Microsoft Bookshelf, a reference collection introduced in 1987 that was the company's first
CD-ROM product.
[8][38] Later, on August 8, 1989, Microsoft would introduce its most successful office product,
Microsoft Office. Unlike the model of Microsoft Works, Microsoft Office was a bundle of separate office productivity applications, such as Microsoft Word,
Microsoft Excel and so forth. While Microsoft Word and Microsoft Office were mostly developed internally, Microsoft also continued its trend of rebranding products from other companies, such as
Microsoft SQL Server on January 13, 1988, a
relational database management system for companies that was based on technology licensed from
Sybase.
[8]
On May 22, 1990 Microsoft launched
Windows 3.0.
[10] The new version of Microsoft's operating system boasted such new features as streamlined graphic
user interface GUI and improved
protected mode ability for the
Intel 386 processor; it sold over 100,000 copies in two weeks.
[10][39] Windows at the time generated more revenue for Microsoft than OS/2, and the company decided to move more resources from OS/2 to Windows.
[40] In an internal memo to Microsoft employees on May 16, 1991, Bill Gates announced that the OS/2 partnership was over, and that Microsoft would henceforth focus its platform efforts on Windows and the
Windows NT kernel. Some people, especially developers who had ignored Windows and committed most of their resources to OS/2, were taken by surprise, and accused Microsoft of deception. This changeover from OS/2 was frequently referred to in the industry as "the head-fake".
[41][42] In the ensuing years, the popularity of OS/2 declined, and Windows quickly became the favored PC platform. 1991 also marked the founding of
Microsoft Research, an organization in Microsoft for researching
computer science subjects, and Microsoft
Visual Basic, a popular development product for companies and individuals.
[8]
1992–1995: Domination of the corporate market[edit]
The Microsoft sign at the entrance of the German Microsoft campus,
Konrad-Zuse-Str. 1,
Unterschleißheim, Germany. Microsoft became an international company with headquarters in many countries.
During the transition from MS-DOS to Windows, the success of Microsoft's product
Microsoft Office allowed the company to gain ground on application-software competitors, such as
WordPerfect and
Lotus 1-2-3.
[10][43] Novell, an owner of WordPerfect for a time, alleged that Microsoft used its inside knowledge of the DOS and Windows kernels and of undocumented
Application Programming Interface features to make Office perform better than its competitors.
[44] Eventually, Microsoft Office became the dominant business suite, with a market share far exceeding that of its competitors.
[45] In March 1992, Microsoft released
Windows 3.1 along with its first promotional campaign on TV; the software sold over three million copies in its first two months on the market.
[8][10] In October,
Windows for Workgroups 3.1 was released with integrated networking abilities such as
peer-to-peer file and printing sharing.
[10] In November, Microsoft released the first version of their popular database software
Microsoft Access.
[10]
The Microsoft sign at the entrance of the Dubai Microsoft campus,
Dubai Internet City. Microsoft has developed Arabic versions for most of its products.
By 1993, Windows had become the most widely used
GUI operating system in the world.
[10] Fortune Magazine named Microsoft as the "1993 Most Innovative Company Operating in the U.S."
[46] The year also marked the end of a five-year
copyright infringement legal case brought by
Apple Computer, dubbed
Apple Computer, Inc. v. Microsoft Corp., in which the ruling was in Microsoft's favor, the release of
Windows for Workgroups 3.11, a new version of the consumer line of Windows, and
Windows NT 3.1, a server-based operating system with a similar user interface to consumer versions of the operating system, but with an entirely different kernel.
[10] As part of its strategy to broaden its business, Microsoft released
Microsoft Encarta on March 22, 1993, the first encyclopedia designed to run on a computer.
[8] Soon after, the
Microsoft Home brand was introduced – encompassing Microsoft's new multimedia applications for Windows 3.x., Microsoft changed its slogan to
"Where do you want to go today?" in 1994 as part of an attempt to appeal to nontechnical audiences in a US$100 million advertising campaign.
[10]
Microsoft continued to make strategic decisions directed at consumers. The company released
Microsoft Bob, a graphical user interface designed for novice computer users, in March 1995. The interface was discontinued in 1996 due to poor sales; Bill Gates later attributed its failure to hardware requirements that were too high for typical computers; Microsoft Bob is widely regarded as Microsoft's most unsuccessful product.
[47][48][why?]DreamWorks SKG and Microsoft formed a new company,
DreamWorks Interactive (in 2000 acquired by
Electronic Arts which named it EA Los Angeles), to produce interactive and
multimedia entertainment properties.
[8] On August 24, 1995, Microsoft released
Microsoft Windows 95, a new version of the company's flagship operating system which featured a completely new user interface, including a novel
start button; more than a million copies of Microsoft Windows 95 were sold in the first four days after its release.
[10]
Windows 95 was released without a
web browser as Microsoft had not yet developed one. The success of the web caught them by surprise and they subsequently approached
Spyglass to license their browser as
Internet Explorer. Spyglass went on to later dispute the terms of the agreement, as Microsoft was to pay a royalty for every copy sold. However, Microsoft sold no copies of Internet Explorer, choosing instead to bundle it for free with the operating system.
Internet Explorer was first included in the Windows 95 Plus! Pack that was released in August 1995.
[49] In September, the Chinese government chose Windows to be the operating system of choice in that country, and entered into an agreement with the Company to standardize a Chinese version of the operating system.
[10] Microsoft also released the
Microsoft Sidewinder 3D Pro joystick in an attempt to further expand its profile in the computer hardware market.
[10]
1995–1999: Foray into the Web and other ventures[edit]
On, May 26, 1995, Bill Gates sent the "Internet Tidal Wave" memorandum to Microsoft executives. The memo described
Netscape with their
Netscape Navigator as a "new competitor 'born' on the Internet." The memo outlines Microsoft's failure to grasp the Internet's importance, and in it Gates assigns "the Internet the highest level of importance" from then on.
[50] Microsoft began to expand its product line into
computer networking and the
World Wide Web. On August 24, 1995, it launched a major
online service,
MSN(Microsoft Network), as a direct competitor to
AOL. MSN became an umbrella service for Microsoft's online services, using Microsoft Passport (now called a
Microsoft account) as a universal login system for all of its web sites.
[8][10][51] The company continued to branch out into new markets in 1996, starting with a joint venture with
NBC to create a new
24-hour cable news television station,
MSNBC. The station was launched on July 15, 1996 to compete with similar news outlets such as
CNN.
[10][52] Microsoft also launched
Slate, an
online magazine edited by
Michael Kinsley, which offered political and social commentary along with the cartoon
Doonesbury.
[8] In an attempt to extend its reach in the consumer market, the company acquired
WebTV, which enabled consumers to access the Web from their televisions.
[8] Microsoft entered the personal digital assistant (PDA) market in November with
Windows CE 1.0, a new built-from-scratch version of their flagship operating system, designed to run on low-memory, low-performance machines, such as handhelds and other small computers.
[53] 1996 saw the release of
Windows NT 4.0, which brought the Windows 95 GUI and Windows NT kernel together.
[54]
While Microsoft largely failed to participate in the rise of the Internet in the early 1990s, some of the key technologies in which the company had invested to enter the Internet market started to pay off by the mid-90s. One of the most prominent of these was
ActiveX, an application programming interface built on the
Microsoft Component Object Model(
COM); this enabled Microsoft and others to embed controls in many
programming languages, including the company's own
scripting languages, such as
JScript and
VBScript. ActiveX included frameworks for documents and server solutions.
[10] The company also released the Microsoft SQL Server 6.5, which had built-in support for internet applications.
[10] Later in 1997,
Microsoft Office 97 as well as
Internet Explorer 4.0 were released, marking the beginning of the takeover of the browser market from rival
Netscape, and by agreement with
Apple Computer, Internet Explorer was bundled with the
Apple Macintosh operating system as well as with Windows.
[10] Windows CE 2.0, the handheld version of Windows, was released this year, including a host of bug fixes and new features designed to make it more appealing to corporate customers.
[53] In October, the Justice Department filed a motion in the
federal district court in which they stated that Microsoft had violated an agreement signed in 1994, and asked the court to stop the bundling of Internet Explorer with Windows.
[8]
The year 1998 was significant in Microsoft's history, with Bill Gates appointing
Steve Ballmer as president of Microsoft but remaining as Chair and CEO himself.
[8] The company released an update to the consumer version of Windows,
Windows 98.
[8] Windows 98 came with Internet Explorer 4.0 SP1 (which had
Windows Desktop Update bundled), and included new features from Windows 95 OSR 2.x including the
FAT32 file system, and new features designed for Windows 98, such as support for multiple displays.
[55] Microsoft launched its Indian headquarters as well, which would eventually become the company's second largest after its U.S. headquarters.
[10] Finally, a great deal of controversy took place when a set of internal memos from the company were leaked on the Internet. These documents, colloquially referred to as "
The Halloween Documents", were widely reported by the media and go into detail of the threats that
free software /
open source software poses to Microsoft's own software, previously voiced mainly by analysts and advocates of open source software. The documents also allude to legal and other actions against
Linux as well as other open source software.
[56][57] While Microsoft acknowledges the documents, it claims that they are merely engineering studies. Despite this, some believe that these studies were used in the real strategies of the company.
[58]
2000–2005: Legal issues, XP, and .NET[edit]
Bill Gates gives a presentation at
IT-Forum in Copenhagen in 2004
Microsoft, in 2000, released new products for all three lines of the company's flagship operating system, and saw the beginning of the end of one of its most prominent legal cases. On February 17, 2000, Microsoft released an update to its business line of software in
Windows 2000. It provided a high level of stability similar to that of its
Unix counterparts due to its usage of the
Windows NT kernel, and matching features found in the consumer line of the Windows operating system including a DOS
emulator that could run many
legacy DOS applications.
[10]
On April 3, 2000, a judgment was handed down in the case of
United States v. Microsoft,
[59] calling the company an "abusive monopoly"
[60]and forcing the company to split into two separate units. Part of this ruling was later overturned by a federal
appeals court, and eventually settled with the U.S. Department of Justice in 2001. On June 15, 2000, the company released a new version of its hand-held operating system,
Windows CE 3.0.
[53] The main change was the new programming APIs of the software. Previous versions of Windows CE supported only a small subset of the
WinAPI, the main development library for Windows, and with Version 3 of Windows CE, the operating system now supported nearly all of the core functionality of the WinAPI. The next update to the consumer line,
Windows Me (or Windows Millennium Edition), was released on September 14, 2000.
[8] It sported several new features such as enhanced multimedia abilities and consumer-oriented PC maintenance options, but is often regarded as one of the worst versions of Windows due to installation problems and other issues.
[48][61]
Microsoft released
Windows XP and
Office XP in 2001, a version that aimed to encompass the features of both its business and home product lines. The release included an updated version of the Windows 2000 kernel, enhanced DOS emulation abilities, and many of the home-user features found in previous consumer versions. XP introduced a new
graphical user interface, the first such change since Windows 95.
[8][62] The operating system was the first to require
Microsoft Product Activation, an
anti-piracy mechanism that requires users to activate the software with Microsoft within 30 days. Later, Microsoft would enter the multibillion-dollar
game console market dominated by
Sony and
Nintendo, with the release of the
Xbox.
[8] The Xbox finished behind the dominant
PlayStation 2 selling 24 million units compared to the
PlayStation 2's 136 million however they managed to outsell the
Nintendo Gamecube which sold 21 million units. Microsoft launched their second console, the
Xbox 360, in 2005 – which has turned out to be a lot more successful than their first console. It has sold 40 million units as of 2010 and it has outsold Sony's
PlayStation 3 which has so far sold 35 million units. However, despite beating Sony with their last Xbox console, Microsoft so far has been outsold by the
Nintendo Wii which introduced
gesture control and opened up a new market for video games. Microsoft later used their popular controller-free
Kinect peripheral to increase the popularity of the Xbox. This was very successful. As of 2011 Kinect was the fastest selling consumer electronics product in history.
[63] It sold 8 million units from November 4, 2010 to January 3, 2011 (its first 60 days). It averaged 133,333 units per day, outselling the iPhone and iPad over equivalent post-launch periods.
[63]
In 2002, Microsoft launched the
.NET initiative, along with new versions of some of its development products, such as
Microsoft Visual Studio.
[8] The initiative has been an entirely new development API for Windows programming, and includes a new programming language,
C#.
Windows Server 2003 was launched, featuring enhanced administration abilities, such as new user interfaces to server tools.
[10] In 2004, the company released
Windows XP Media Center Edition 2005, a version of Windows XP designed for multimedia abilities, and
Windows XP Starter Edition, a version of Windows XP with a smaller feature set designed for entry-level consumers.
[8] However, Microsoft would encounter more turmoil in March 2004 when antitrust legal action would be brought against it by the
European Union for allegedly abusing its market dominance (see
European Union Microsoft antitrust case). Eventually Microsoft was fined €497 million (US$613 million), ordered to divulge certain protocols to competitors, and to produce a new version of its Windows XP platform—called Windows XP Home Edition N—that did not include its
Windows Media Player.
[64][65] Microsoft was also ordered to produce separate packages of Windows after South Korea also landed a settlement against the company in 2005. It had to pay out US$32 million and produce more than one version of Windows for the country in the same vein as the European Union-one with Windows Media Player and
Windows Messenger and one without the two programs.
[66]
2005–present: Vista, Windows 7, Windows 8 and Windows 10[edit]
In guise of competing with other Internet Companies such as the search service
Google, in 2005 Microsoft announced a new version of its
MSN search service.
[67] Later, in 2006, the company launched
Microsoft adCenter, a service that offers
pay per click advertisements, in an effort to further develop their search marketing revenue.
[68] Soon afterward, Microsoft created the
CodePlex collaborative development site for hosting
open source projects. Activity grew quickly as developers from around the world began to participate, and by early 2007 commercial open source companies, such as
Aras Corp,.
[69] began to offer enterprise open source software exclusively on the Microsoft platform.
On June 15, 2006, Bill Gates announced his plans for a two-year transition period out of a day-to-day role with Microsoft until July 31, 2008. After that date, Gates will continue in his role as the company's chairman, head of the board of directors and act as an adviser on key projects. His role as Chief
Software Architect will be filled immediately by
Ray Ozzie, the
Chief Technical Officer of the company as of June 15, 2006.
[70] Bill Gates stated "My announcement is not a retirement – it’s a reordering of my priorities."
[71]
Formerly codenamed "Longhorn" in the early development stages,
Windows Vista was released to consumers on January 30, 2007.
[72][73] Microsoft also released a new version of its Office suite, called
Microsoft Office 2007, alongside Windows Vista.
Windows Server 2008 and
Visual Studio 2008, the next versions of the company's
server operating system and development suite, respectively, were released on February 27, 2008.
[74] Windows Vista was criticized for being heavy and needing large amounts of power to run the desktop widgets and the Aero theme. Many people continued to use Windows XP for many years after, due to its stability and low processing needs.
On December 19, 2007, Microsoft signed a five-year, $500 million contract with
Viacom that included content sharing and advertisements. The deal allowed Microsoft to license many shows from Viacom owned cable television and film studios for use on
Xbox Live and
MSN. The deal also made Viacom a preferred publisher partner for casual game development and distribution through MSN and
Windows. On the advertisement side of the deal, Microsoft's Atlas ad-serving division became the exclusive provider of previously unsold advertising inventory on Viacom owned web sites. Microsoft also purchased a large amount of advertising on Viacom owned broadcasts and online networks, and collaborated on promotions and sponsorships for MTV and
BET award shows, two Viacom owned cable networks.
[75]
In 2008, Microsoft wanted to purchase
Yahoo (first completely, later partially) in order to strengthen its position on the search engine market vis-à-vis
Google.
[76][77] The company rejected the offer, saying that it undervalued the company. In response, Microsoft withdrew its offer.
