Microsoft Corporation is an American multinational technology company headquartered in Redmond, Washington. The company became influential in the rise of personal computers through software like Windows and has since expanded into areas such as Internet services, cloud computing, artificial intelligence, video gaming, and more. A Big Tech company, Microsoft is the largest software company by revenue, one of the most valuable public companies, and one of the most valuable brands globally.
Founded in 1975 by Bill Gates and Paul Allen to market BASIC interpreters for the Altair 8800, Microsoft rose to dominate the PC operating system market with MS-DOS in the mid-1980s, followed by Windows. The company's 1986 initial public offering and the subsequent rise in its share price created three billionaires and an estimated 12,000 millionaires among Microsoft employees. Since the 1990s, it has increasingly diversified its business. Steve Ballmer replaced Gates as CEO in 2000. He oversaw the then-largest of Microsoft's corporate acquisitions in Skype Technologies in 2011, an increased focus on hardware that led to its first in-house PC line—the Surface—in 2012, and the formation of Microsoft Mobile through Nokia. Since Satya Nadella became CEO in 2014, the company has changed focus towards cloud computing and acquired LinkedIn in 2016. Under his direction, the company has expanded its video gaming business to support the Xbox brand, establishing the Microsoft Gaming division in 2022 and acquiring Activision Blizzard in 2023.
Microsoft has been dominant in the IBM PC–compatible operating system and office software suite markets since the 1990s. Its best-known software products are the Windows line of operating systems and the Microsoft Office and Microsoft 365 suite of productivity applications, which most notably include the Word word processor, Excel spreadsheet editor, and PowerPoint presentation program. Its flagship hardware products are the Surface lineup of PCs and the Xbox brand of video game consoles, the latter including the Xbox network. The company also offers online services such as Bing web search, the MSN web portal, the Outlook.com (Hotmail) email service, and the Microsoft Store. In the enterprise and development fields, Microsoft most notably provides the Azure cloud computing platform, Microsoft SQL Server database software, and Visual Studio.
Microsoft became the third publicly traded U.S. company to be valued at over $1 trillion in April 2019. It has been criticized for monopolistic practices, and the company's software received criticism for problems with ease of use, robustness, and security. Microsoft has also been criticized for its role in providing services to Israel during the Gaza war.
History
1972–1985: Founding
Childhood friends Bill Gates and Paul Allen sought to make a business using their skills in computer programming. In 1972, they founded Traf-O-Data, which sold a rudimentary computer to track and analyze automobile traffic data.
The January 1975 issue of Popular Electronics featured Micro Instrumentation and Telemetry Systems's (MITS) Altair 8800 microcomputer, which inspired Allen to suggest that they could program a BASIC interpreter for the device. Gates called MITS and claimed that he had a working interpreter, and MITS requested a demonstration. Allen worked on a simulator for the Altair while Gates developed the interpreter, and it worked flawlessly when they demonstrated it to MITS in March 1975 in Albuquerque, New Mexico. MITS agreed to distribute it, marketing it as Altair BASIC. Gates and Allen established Microsoft on April 4, 1975, with Gates as CEO, and Allen suggested the name "Micro-Soft", short for micro-computer software. In August 1977, the company formed an agreement with ASCII Magazine in Japan, resulting in its first international office of ASCII Microsoft. Microsoft moved its headquarters to Bellevue, Washington, in January 1979.
Microsoft entered the operating system (OS) business in 1980 with its own version of Unix, licensed from AT&T Corporation a year before, called Xenix, but it was MS-DOS that solidified the company's dominance. IBM awarded a contract to Microsoft in November 1980 to provide a version of the CP/M OS to be used in the IBM Personal Computer (IBM PC). For this deal, Microsoft purchased a CP/M clone called 86-DOS from Seattle Computer Products which it branded as MS-DOS, although IBM rebranded it to IBM PC DOS. Microsoft retained ownership of MS-DOS following the release of the IBM PC in August 1981. IBM had copyrighted the IBM PC BIOS, so other companies had to reverse engineer it for non-IBM hardware to run as IBM PC compatibles, but no such restriction applied to the operating systems. The company expanded into new markets with the release of the Microsoft Mouse in 1983, as well as with a publishing division named Microsoft Press. Paul Allen resigned from Microsoft in 1983 after developing Hodgkin's lymphoma.
1985–1994: Windows and Office
Microsoft released Windows 1.0 on November 20, 1985, as a graphical extension for MS-DOS, despite having begun jointly developing OS/2 with IBM that August. Microsoft moved its headquarters from Bellevue to Redmond, Washington, on February 26, 1986, and went public with an initial public offering (IPO) at the NASDAQ exchange on March 13, with the resulting rise in stock making an estimated four billionaires and 12,000 millionaires from Microsoft employees. Microsoft released its version of OS/2 to original equipment manufacturers (OEMs) on April 2, 1987. In 1990, the Federal Trade Commission examined Microsoft for possible collusion due to the partnership with IBM, marking the beginning of more than a decade of legal clashes with the government. Meanwhile, the company was at work on Microsoft Windows NT, which was heavily based on its copy of the OS/2 code. It shipped on July 21, 1993, with a new modular kernel and the 32-bit Win32 application programming interface (API), making it easier to port from 16-bit (MS-DOS-based) Windows. Microsoft informed IBM of Windows NT, and the OS/2 partnership deteriorated.
In 1990, Microsoft introduced the Microsoft Office suite which bundled separate applications such as Microsoft Word and Microsoft Excel. On May 22, Microsoft launched Windows 3.0, featuring streamlined user interface graphics and improved protected mode capability for the Intel 386 processor, and both Office and Windows became dominant in their respective areas.
On July 27, 1994, the Department of Justice's Antitrust Division filed a competitive impact statement stating that since 1988, Microsoft had increasingly induced OEMs to pay royalties under a per-processor license for microprocessors in their computers regardless of whether a Microsoft product was used.
1995–2007: Foray into the Web, Windows 95, Windows XP, and Xbox
Following Bill Gates's internal "Internet Tidal Wave memo" on May 26, 1995, Microsoft began to redefine its offerings and expand its product line into computer networking and the World Wide Web. With a few exceptions of new companies, like Netscape, Microsoft was the only major and established company that acted fast enough to be a part of the World Wide Web practically from the start. Other companies like Borland, WordPerfect, Novell, IBM and Lotus, being much slower to adapt to the new situation, would give Microsoft market dominance.
The company released Windows 95 on August 24, 1995, featuring pre-emptive multitasking, a completely new user interface with a novel start button, and 32-bit compatibility; similar to NT, it provided the Win32 API. Windows 95 came bundled with the online service MSN, which was intended to be a competitor to services such as CompuServe and AOL. The web browser Internet Explorer was not bundled with the retail release of Windows 95, and was instead included in the later Microsoft Plus! pack, as well as with OEM releases of Windows 95.
Backed by a high-profile marketing campaignEdwards, Benj (August 24, 2020)."Windows 95 Turns 25: When Windows Went Mainstream." How To Geek. Retrieved November 29, 2020. and what The New York Times called "the splashiest, most frenzied, most expensive introduction of a computer product in the industry's history,"Chew, Jonathan (August 24, 2015). "Microsoft Launched This Product 20 Years Ago and Changed the World". Fortune. Retrieved November 29, 2020. Windows 95 quickly became a success.Wild, Chris (August 24, 2015)."Aug. 24, 1995: Launching Windows 95." Mashable. Retrieved November 29, 2020. Branching out into new markets in 1996, Microsoft and General Electric's NBC unit created a new 24/7 cable news channel, MSNBC. Microsoft created Windows CE 1.0, a new OS designed for devices with low memory and other constraints, such as personal digital assistants. In October 1997, the Justice Department filed a motion in the Federal District Court, stating that Microsoft violated an agreement signed in 1994 and asked the court to stop the bundling of Internet Explorer with Windows.
On January 13, 2000, Bill Gates handed over the CEO position to Steve Ballmer, an old college friend of Gates and employee of the company since 1980, while creating a new position for himself as Chief Software Architect. Under Ballmer's leadership, the company saw an increased focus on hardware products.
On October 25, 2001, Microsoft released Windows XP, unifying the mainstream and NT lines of OS under the NT codebase. The company released the Xbox later that year, entering the video game console market dominated by Sony and Nintendo. In March 2004 the European Union brought antitrust legal action against the company, citing it abused its dominance with the Windows OS, resulting in a judgment of €497 million ($613 million) and requiring Microsoft to produce new versions of Windows XP without Windows Media Player: Windows XP Home Edition N and Windows XP Professional N. In November 2005, the company's second and most successful video game console, the Xbox 360, was released.
Increasingly present in the hardware business following Xbox, Microsoft 2006 released the Zune series of digital media players, a successor of its previous software platform Portable Media Center.
2007–2011: Microsoft Azure, Windows Vista, Windows 7, and Microsoft Stores
Released in January 2007, the next version of Windows, Vista, focused on features, security and a redesigned user interface dubbed Aero. Microsoft Office 2007, released at the same time, featured a "Ribbon" user interface which was a significant departure from its predecessors. Relatively strong sales of both products helped to produce a record profit in 2007. The European Union imposed another fine of €899 million ($1.4 billion) for Microsoft's lack of compliance with the March 2004 judgment on February 27, 2008, saying that the company charged rivals unreasonable prices for key information about its workgroup and backoffice servers. Microsoft stated that it was in compliance and that "these fines are about the past issues that have been ". Gates retired from his role as Chief Software Architect on June 27, 2008, a decision announced in June 2006, while retaining other positions related to the company in addition to being an advisor for the company on key projects. Azure Services Platform, the company's entry into the cloud computing market for Windows, launched on October 27, 2008. On February 12, 2009, Microsoft announced its intent to open a chain of Microsoft-branded retail stores, and on October 22, 2009, the first retail Microsoft Store opened in Scottsdale, Arizona; the same day Windows 7 was officially released to the public.