Microsoft

Lore & Background

Since the 1990s, it has increasingly diversified its business. Steve Ballmer replaced Gates as CEO in 2000.

Reader's Guide

Microsoft's significance lies in its central role in the personal computer revolution, first through MS-DOS and then Windows, which became the dominant operating system for IBM PC–compatible computers. Its Office suite similarly dominated productivity software. The company's expansion into cloud computing under Satya Nadella, particularly with Azure, and its video gaming business through Xbox and the acquisition of Activision Blizzard, have kept it a major force in technology. Microsoft has been criticized for monopolistic practices, and its software received criticism for problems with ease of use, robustness, and security. It has also been criticized for its role in providing services to Israel during the Gaza war. Despite controversies, Microsoft became the third publicly traded U.S. company to be valued at over $1 trillion in April 2019, reflecting its enduring market influence.

Did You Know?

• Microsoft was originally named 'Micro-Soft', short for micro-computer software, suggested by Paul Allen.
• Microsoft became the third publicly traded U.S. company to be valued at over $1 trillion in April 2019.
• The company acquired Activision Blizzard in 2023 under CEO Satya Nadella.

From Altair to Empire – The Founding Years

Bill Gates and Paul Allen, childhood friends who had already founded Traf-O-Data in 1972 to track automobile traffic, spotted an opportunity when the January 1975 issue of Popular Electronics featured the Altair 8800 microcomputer. Allen proposed they write a BASIC interpreter for the device. Gates phoned MITS and asserted a working interpreter already existed, buying the pair precious time. Allen built a simulator while Gates developed the actual interpreter, and the duo demonstrated it flawlessly in Albuquerque in March 1975. MITS agreed to distribute it under the name Altair BASIC. On April 4, 1975, Gates and Allen formally established Microsoft, with Allen suggesting the name as a contraction of micro-computer software. Gates assumed the CEO role. By August 1977, the company had signed an agreement with ASCII Magazine in Japan, opening its first international office. The headquarters relocated to Bellevue, Washington, in early 1979, positioning the young firm for its next transformative leap into operating systems.

The Windows Revolution and Office Dominance

Microsoft's foray into operating systems began in 1980 with Xenix, a Unix variant licensed from AT&T, but the November 1980 IBM contract truly reshaped the company's destiny. Microsoft acquired 86-DOS from Seattle Computer Products, rebranded it as MS-DOS, and retained ownership even after the IBM PC launched in August 1981. Because IBM copyrighted its BIOS but not the operating system, rival manufacturers could build compatible machines running MS-DOS, locking in Microsoft's market position. Windows 1.0 arrived on November 20, 1985, as a graphical layer atop MS-DOS, even though the company had begun co-developing OS/2 with IBM that same August. The 1986 NASDAQ IPO created an estimated four billionaires and 12,000 millionaires among employees. Windows NT shipped in July 1993 with a 32-bit Win32 API, and the OS/2 partnership with IBM fell apart. Microsoft Office, introduced in 1990 with Word and Excel bundled together, alongside Windows 3.0's refined interface, established the productivity-suite dominance that endures to this day.

Leadership Shifts and Strategic Reinvigoration

The company's trajectory has been profoundly shaped by its chief executives. Bill Gates steered Microsoft through its PC-dominance era before stepping aside, and Steve Ballmer took the CEO seat in 2000. Ballmer's tenure featured the 2011 acquisition of Skype Technologies, then the largest corporate purchase in Microsoft's history, alongside a hardware push that produced the Surface PC line in 2012 and the Microsoft Mobile division built around Nokia. In 2014, Satya Nadella assumed the CEO role and redirected the company toward cloud computing, acquiring LinkedIn in 2016. Under Nadella's direction, the gaming business expanded to bolster the Xbox brand, culminating in the formal establishment of the Microsoft Gaming division in 2022 and the landmark acquisition of Activision Blizzard in 2023. These successive leadership transitions illustrate how Microsoft has repeatedly reinvented its core strategy, evolving from a software-centric identity into a diversified enterprise spanning cloud infrastructure, gaming, social networking, and consumer hardware.

Market Power, Enterprise Reach, and Controversies

Microsoft's commercial footprint is immense. In April 2019, it became the third publicly traded U.S. company to surpass a one-trillion-dollar valuation. Its software portfolio—Windows, Microsoft Office, and Microsoft 365—has dominated the PC operating system and office productivity markets since the 1990s. In enterprise and development, the company delivers the Azure cloud platform, SQL Server database software, and Visual Studio. Consumer-facing services include Bing search, the MSN portal, Outlook.com email, and the Microsoft Store, while hardware spans the Surface PC lineup and Xbox consoles with their associated network. Yet this dominance has drawn sustained scrutiny. The company has faced criticism for monopolistic practices, and its software has been faulted for shortcomings in usability, robustness, and security. More recently, Microsoft has drawn criticism for its role in providing services to Israel during the Gaza war, adding a geopolitical dimension to an already complex public reputation.

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