Microsoft

Microsoft Corporation (NASDAQ: MSFT) is the world's largest software company, with over 50,000 employees in various countries as of May 2004. It was founded in 1975 by Bill Gates and Paul Allen, and is headquartered in Redmond, Washington, USA. Microsoft develops, manufactures, licenses, and supports a wide range of software products for various computing devices. Its most popular products are the Microsoft Windows operating system and Microsoft Office families of products, each of which has achieved near ubiquity in the desktop computer market.

Current business activities

Main article: Windows Vista

The next version of Microsoft's flagship product, Windows Vista, is planned to ship in 2006. Planned features include better user interaction with devices (such as media players) and an enhanced user interface called "Aero", a PDF-like format code-named Metro, a new search system called Search, and several others. Microsoft also intends to release a successor to the Xbox, the Xbox 360, which it plans on integrating with Windows Vista and Windows XP Media Center to make it an entertainment hub rather than just a videogame console.

Recent managerial comments from Microsoft suggest that the company is attempting to move upmarket by positioning its products as "high value" rather than "low cost". Steve Ballmer said in 2002, "We are actually having to learn how to say, 'We may have a high price on this one, but look at the additional value and how that value actually leads to a lower cost of ownership despite the fact that our price may be higher.'" ^[1]

History

Main article: History of Microsoft Windows

"Micro-soft" (short for microcomputer software) was originally founded as a software company in Albuquerque, New Mexico, in 1975 by Bill Gates and Paul Allen to develop and sell BASIC interpreters for the Altair 8800. The company eventually became the dominant provider of Operating Systems.

Early history

Microsoft co-founder Paul Allen was on his way to visit Bill Gates in his dorm room when he came across a magazine containing information about the Altair 8800. It was praised as the world's first microcomputer to rival commercial models. Days afterwards, Bill Gates called MITS (Micro Instrumentation and Telemetry Systems), creators of the Altair 8800, and informed them that he and others developed a version of the programming language BASIC which ran on the Altair 8800 platform— neither Bill Gates or Paul Allen had touched an Altair 8800 computer, but MITS was very interested in possessing this new build, however.

After about eight weeks, when Gates and Allen finally believed that their product was ready for demonstration, Allen flew to MITS to unveil the new BASIC system. Allen had never handled an Altair, since Gates had done all of the actual product development, but the demonstration was successful, and resulted in a deal with MITS to buy the rights to Allen's and Gates' BASIC for the Altair platform. Noticing an opportunity, Gates left Harvard University to pursue the market and eventually founded Microsoft.

MS-DOS

In August 12, 1981, after negotiations with Digital Research failed, IBM awarded a contract to Microsoft for a version of CP/M set to be used as the operating system for the upcoming IBM Personal Computer (PC). However, Microsoft had no OS at the time, so they purchased a CP/M clone called QDOS ("Quick and Dirty Operating System") from Tim Paterson of Seattle Computer Products for $50,000, which Microsoft renamed to PC-DOS. Due to potential copyright infringement problems with CP/M, IBM sold both CP/M for $250 and PC-DOS for $40, with PC-DOS eventually becoming the standard due to its lower price.

The early 1980s saw a flood of IBM PC clones, kicked off by Compaq after it successfully cloned the IBM BIOS. Microsoft was quick to use its position to dominate the home computer operating system market. Microsoft began licensing its OS for use on non-IBM PC clones, and called that version MS-DOS (for Microsoft Disk Operating System). By marketing MS-DOS aggressively to manufacturers of IBM-PC clones, Microsoft went from a small player to one of the major software vendors in the home computer industry.

OS/2 to Windows

In 1985 Microsoft and IBM partnered in the development of a more advanced operating system called OS/2. OS/2 was marketed in connection with a new hardware design proprietary to IBM, the PS/2^[2]. Shortly afterwards, in February 1986, Microsoft relocated to Redmond, Washington. One month later the company went public, raising $61 million at $21.00 per share. By the end of the trading day, the price had risen to $28. Eventually in 1987 Microsoft released their first version of OS/2 to OEMs^[3].

In 1989, Microsoft announced at Comdex that the 1991 release of Windows 3.0 would be the last version of Windows. Over the next few years, Microsoft continued to issue statements indicating that OS/2 was the future of computing.

On May 16, 1991, Bill Gates announced to Microsoft employees that the OS/2 partnership was over, and that Microsoft would henceforth focus its platform efforts on Windows and the Windows NT kernel. Some, especially developers who had ignored Windows and committed most of their resources to OS/2, were taken by surprise. They alleged that Microsoft had engaged in deliberate misdirection. The Windows changeover was frequently referred to within the industry as "the head-fake." In the ensuing years, the popularity of OS/2 declined, and Windows quickly became the favored PC platform.

During the transition from MS-DOS to Windows, Microsoft gained ground on application-software competitors such as WordPerfect and Lotus 1-2-3 with its product Microsoft Office. Some allege that Microsoft used its inside knowledge of the Windows kernel and undocumented API features to make Office perform better than its competitors. Eventually Microsoft Office became the dominant business suite, with market share far exceeding that of any of its competitors.

Antitrust problems

On May 18, 1998, the United States Department of Justice and nineteen U.S. states filed charges against Microsoft, alleging that Microsoft illegally abused its monopoly power in sales of Windows, in United States v. Microsoft^[4]. On April 3, 2000, U.S. District Judge Thomas Penfield Jackson ruled that Microsoft "maintained its monopoly power by anticompetitive means." Jackson ordered Microsoft to be split into two companies, one to produce the operating system, and the second to produce their other software products. The antitrust suit spurred many companies to file their own suits against Microsoft for alleged illegal practices, and Microsoft settled with many of these companies out of court for large sums.

In June 2001, a federal appeals court overturned part of the order to split Microsoft into two companies. Later, in September 2001, the Justice Department under the direction of a new President's administration (George W. Bush) announced it no longer sought to split Microsoft up, and instead sought a settlement with Microsoft.

The European Union brought its own antitrust action against Microsoft in March 2004. Eventually Microsoft lost and was fined $613 million, ordered to divulge certain protocols to competitors, and ordered to produce a version of Windows that did not include the Windows Media Player. ^[5]

Product groups

Microsoft sells a wide range of software products—many of these products were developed internally, such as Microsoft BASIC and Microsoft Word. Others were acquired and rebranded by Microsoft for distribution, including Microsoft Project, a project management package; Visio, a charting package; FoxPro, a database; Links, a golf game; Visual Source Safe, a developer's tool; DoubleSpace; Virtual PC, acquired from Connectix; and MS-DOS itself, the basis for the company's success. Many of these have seen continued development by Microsoft. Internet Explorer is based on code licensed from Spyglass, Inc., and main development was initially performed outside Redmond in Spyglass headquarters.

In April 2002, Microsoft reorganized into seven core business units, each with its own financial reporting to delegate all responsibility and more closely track the performance of each unit. ^[6]

Windows Client group

Main article: History of Microsoft Windows

Microsoft's flagship product is the Windows operating system. It has been produced in many versions including Windows 98, Windows XP and Windows Server 2003. Almost all IBM compatible personal computers come with Windows preinstalled.

Information Worker group

Groups which produces Microsoft Office, which is the company's line of office software. It includes Word (a word processor), Access (a personal relational database application), Excel (a spreadsheet program), Outlook (Windows-only groupware, frequently used with the Exchange server), PowerPoint (presentation software) and Microsoft FrontPage, a WYSIWYG HTML editor.

With the release of Office 2003, a number of other products were brought under the Office banner, including Microsoft Visio, Microsoft Project, Microsoft MapPoint, Microsoft InfoPath, Microsoft Publisher and Microsoft OneNote.

Microsoft also produces Microsoft Office for Apple Macintosh computers, which includes Entourage, a Macintosh-specific application not available in the Windows version of Microsoft Office, instead of Outlook.

Microsoft Business Solutions group

The Business Solutions Group was created in April 2001 with the acquisition of Great Plains. Subsequently, Navision was acquired to provide a similar entry into the European market. (The acquisition resulted in the planned release during the week of 18 October 2004, of Microsoft Navision 4.0.) The Business Solutions group focuses on developing financial and business management software for companies.

Server and Tools group

Microsoft Visual Studio is the company's set of programming tools and compilers. It is GUI oriented and links easily with the Windows APIs, but must be specially configured if used with non-Microsoft libraries. The current version is Visual Studio .NET 2003, named after the .NET initiative, which is a Microsoft marketing initiative covering a number of different technologies. Microsoft's definition of .NET continues to emerge over time. As of 2004, .NET aims to ease the development of Microsoft Windows-based applications that use the Internet by using a new Microsoft communications system called Indigo, correct some problems previously introduced by Microsoft's DLL design which made it difficult to manage and install multiple versions of complex software packages on the same system (see DLL-hell), and provide a more consistent development platform for all Windows applications (see Common Language Infrastructure, also known as CLI).

Microsoft also offers a suite of server software, called Windows Server System. Windows Server 2003, an operating system for network servers, is the core of the Windows Server System line. Another server product, Systems Management Server, is a collections of tools that provide remote control, patch management, software distribution, and hardware/software inventory.

Mobile and Embedded Devices group

Microsoft has attempted to expand the Windows brand into many other markets, with products such as Windows CE for PDAs and its "Windows powered" Smartphone products. Microsoft initially entered the Mobile market through Windows CE for handheld devices, which today has developed into Windows Mobile 2003.

Microsoft recently moved the embedded group and the mobile group under one team. The embedded group's focus is on devices where the OS may not directly be visible to the end user, e.g., appliances and cars. The company also bought WebTV (subsequently renamed MSN TV), a television-based internet appliance.

MSN group

In the mid-1990s, Microsoft began to expand its product line into the networked computer world. It launched its online service MSN (Microsoft Network) on August 24, 1995, as a direct competitor to AOL. MSN became an umbrella service for all of Microsoft's online services, using Microsoft Passport as a universal login system for all of its websites.

In 1996, Microsoft and NBC, an American broadcasting network, created MSNBC, a combined 24-hour-news television channel and online news service. Microsoft owned the online magazine Slate until December 21, 2004, when it was then acquired by The Washington Post.

At the end of 1997, Microsoft acquired Hotmail, the first and most popular webmail service, which it rebranded as "MSN Hotmail". Later in 1999 Microsoft introduced MSN Messenger, an instant messaging client, to compete with the popular AOL Instant Messenger (AIM).

Home and Entertainment group

Microsoft sells computer games that run on Windows PCs, including titles such as Age of Empires and the Microsoft Flight Simulator series. It also produces a line of reference works which include encyclopedias and atlases, under the name Encarta. Microsoft Zone hosts free premium and retail games where players can compete against each other and in tournaments.

Microsoft entered the multibillion-dollar game console market dominated by Sony and Nintendo in late 2001, with the release of the Xbox. Currently the console ranks second to Sony's PlayStation 2 and ahead of Nintendo's GameCube in market share in the United States (although behind the two worldwide). Microsoft develops and publishes its own video games for this console, and in addition, "third party" Xbox video game publishers such as Electronic Arts and Activision can pay a license fee to publish games for the system.

Microsoft also sold a set-top Digital Video Recorder (DVR) called the UltimateTV, which allowed users to record up to 35 hours of television programming from direct-to-home satellite television provider DirecTV. This was the main competition in the UK for bSKYb's SKY + service, owned by Rupert Murdoch. UltimateTV has since been discontinued, with DirecTV instead opting to market DVRs from TiVo Inc.

Miscellaneous ventures

Microsoft has launched the Next-Generation Secure Computing Base (formerly known as the Palladium operating system, also known as Trusted Computing) as its solution to computer insecurity. Some have characterized it as an attempt to extend Microsoft's dominance, effectively allowing the company to control all uses of PC technology.

Microsoft has a set of certification programs to recognize individuals who have expertise in their products and solutions. Similar to offerings from Cisco, Sun, Novell, IBM, and Oracle, these tests are designed to identify a minimal set of proficiencies in a specific role which can include developers ("Microsoft Certified Solution Developer" MCSD), system/network analysts ("Microsoft Certified Systems Engineer" MCSE), trainers ("Microsoft Certified Trainers" MCT) and administrators ("Microsoft Certified Systems Administrator" MCSA).

Microsoft also produces a number of computing-related hardware products including mice, keyboards, joysticks, and, until mid-2003, gamepads and other game controllers. As of September 2005, Microsoft has announced it intends to re-enter the game controllers market.

Business culture

• The software developer

Microsoft has often been described as having a developer-centric business culture. A great deal of time and money is spent each year on recruiting young university-trained software developers who meet very exacting criteria, and on keeping them in the company. For example, while many software companies often place an entry-level software developer in a cubicle desk within a large office space filled with other cubicles, Microsoft assigns a private or semiprivate closed office to every developer or pair of developers. In addition, key decision makers at every level are either developers or former developers.

In a sense, the software developers at Microsoft are considered the "stars" of the company in the same way that the sales staff at IBM are considered the "stars" of their company. This culture is reflected in their hiring process—the "Microsoft Interview" is notorious for off-the-wall questions such as "Why is a manhole cover round?" and is a process often mimicked in other organizations. Note that, although they were once ubiquitous, recently fewer interviewers have been using this type of question.

• "Comfortable with Ambiguity"

In an ever changing world, Microsoft expects its employees to be comfortable with ambiguity. They may not, for example, know with any degree of certainty when a product will ship, what it will be called or what features will be included. The business culture expects agile thinkers to rapidly adjust to dramatic changes.

• "Eating our own dog food"

Within Microsoft the expression "eating our own dog food" is used to describe the policy of using the latest Microsoft products inside the company. Only prerelease and beta versions of products are considered dog food. This is usually shortened to just "dog food" and used as noun, verb, and adjective.

• Long-term wariness

Microsoft fosters a general attitude of long-term strategic wariness in its managers, who are expected to be ready for any challenge from the competition or the market. In this frame of mind, being the largest software company in the world is not seen as a form of safety or a guarantee of future success; for instance, future competitors could rise from other industries, or computer hardware companies could try to become less dependent on Microsoft, or consumers could decide not to upgrade their software as often. Microsoft requires its managers to maintain vigilance and sustain a dynamic expansion in new markets.

Microsoft takes internal security as a very serious issue. If it did not secure its software and hardware secrets successfully (such as the source code to software) then it could stand to lose its market position.

Corporate affairs

Logo

In 1987, Microsoft adopted its current logo, the so-called "Pacman Logo" designed by Scott Baker. According to the March 1987 Computer Reseller News Magazine, "The new logo, in Helvetica italic typeface, has a slash between the o and s to emphasize the "soft" part of the name and convey motion and speed." Employees ran a campaign to save the old logo, which was green, in all uppercase, and featured a fanciful letter O nicknamed the blibbet, but it was nevertheless discarded.

Diversity

Even though it hires many American workers, Microsoft generally goes up to the annual limit in hiring foreign workers with H1B visas. In addition, Microsoft was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine.

Microsoft received a 86% rating in the 2004 Corporate Equality Index from the Human Rights Campaign related to its policies concerning LGBT employees. According to the Human Rights Campaign, this is in line with the industry standard ^[7]. Microsoft also received criticism from the Human Rights Campaign and many others in April 2005 for withdrawing support for Washington's H.B. 1515 bill that would extend the state's current anti-discrimination laws to people with alternate sexual orientations^[8]. However, under harsh criticism Microsoft eventually supported the bill again in May 2005 ^[9].

Criticism

Main article: Common criticisms of Microsoft

Microsoft has been the focus of much controversy in the computer industry, especially since the 1980s, most critically for its business tactics, which some perceive as unfair and anticompetitive. Some also accuse Microsoft of allowing the user interface of its products to become inconsistent and overly complicated, requiring interactive "wizards" to function as an extra layer between the user and the interface. In addition, the security of Microsoft products (such as Internet Explorer) are seen as overly vulnerable to computer viruses and malicious attacks.

Free software and critics are engaged with Microsoft in a debate over the Total cost of ownership (TCO) of its products, as some perceive Microsoft software as more expensive to purchase, use and maintain than competitors' software. Many Free software advocates also criticize Microsoft for their EULAs which they say are too restrictive, as well as Microsoft's usage of Digital Rights Management.

Facts and trivia

• The name Microsoft was first used in a letter from Gates to Allen on November 29, 1975.
• Microsoft, without a hyphen, became a registered trademark on November 26, 1976.
• In the early 1980s, in cooperation with a large number of companies, Microsoft created a home computer system named MSX. It became fairly popular in Japan and Europe, but the IBM PC became increasingly dominant through the late 1980s and the early 1990s, bringing an end to the MSX and many other systems like it.
• Microsoft's Macintosh Business Unit is the largest developer of Macintosh software outside of Apple itself.
• Microsoft Bob, a Windows 3.1 program manager replacement released by Microsoft in March 1995, is what many consider Microsoft's most unsuccessful product, becoming the source of many jokes as a result of its unpopularity.
• The Microsoft Puzzle Hunt is an annual puzzlehunt held at the Redmond campus. It is a spinoff of the MIT Mystery Hunt.
• Microsoft's first operating system was Xenix, released in 1981 and later sold to SCO.