Microsoft Corporation
Type Public (NASDAQ: MSFT)
Founded Albuquerque (April 4 1975)[1]
Headquarters {{{location}}}
Key people Bill Gates, Co-founder and Executive Chairman
Paul Allen, Co-founder
Steve Ballmer, CEO
Ray Ozzie, Chief Software Architect
Industry Computer software
Research and development
Computer hardware
Video games
Products Microsoft Windows
Microsoft Office
Server System
Developer Tools
Business Solutions
Games and Xbox
Windows Live
Windows Mobile
Revenue US$44.2 billion (2006)[2]
Operating income US$16.4 billion (2006)[2]
(36.3% operating margin)[3]
Net income US$12.6 billion (2006)[2]
(31.6% net margin)[3]
Employees 71,172 (2006)[4]

Microsoft Corporation, (NASDAQ: MSFT, HKSE: 4338) is a multinational computer technology corporation with global annual revenue of US$44.28 billion and 71,553 employees in 102 countries as of July 2006. It develops, manufactures, licenses, and supports a wide range of software products for computing devices. [5][4][2] Headquartered in Redmond, Washington, USA, its best selling products are the Microsoft Windows operating system and the Microsoft Office suite of productivity software, each of which has achieved near-ubiquity in the desktop computer market. Microsoft possesses footholds in other markets, with assets such as the MSNBC cable television network, the MSN Internet portal, and the Microsoft Encarta multimedia encyclopedia. The company also markets both computer hardware products such as the Microsoft mouse as well as home entertainment products such as the Xbox, Xbox 360 and MSN TV.[5]

Microsoft's name, originally bi-capitalised as MicroSoft or with hyphenation as Micro-Soft, is a portmanteau of "microcomputer software"[6] and is often abbreviated as MS. The company was founded in Albuquerque, New Mexico on April 4 1975 by Bill Gates and Paul Allen to develop and sell BASIC interpreters for the Altair 8800.[1] After the market saw a flood of IBM PC clones in the mid-1980s, Microsoft used its new position, which it gained in part due to a contract from IBM, to dominate the home computer operating system market with MS-DOS, which stood for Microsoft Disk Operating System.[7] The company later released an initial public offering (IPO) in the stock market, which netted several of its employees millions of dollars due to the ensuing rise of the stock price.[8][9] The price of the stock continued its rise steadily into the early 2000s. In Microsoft Windows, originally an add-on for MS-DOS, the company was selling what would become the most widely used operating system in the world;[10][11][12][13] Microsoft continued to push into multiple markets, such as computer hardware and television.[14] In addition, Microsoft has historically given customer support over Usenet newsgroups and the World Wide Web, and awards Microsoft MVP status to volunteers who are deemed helpful in assisting the company's customers.[15]

With what is generally described as a developer-centric business culture, Microsoft has become widely known for some of its internal codes of conduct for its employees.[16] One example is the principle "eat your own dog food", which describes the practice of using pre-release products inside the company to test them in an environment geared towards the real world.[17] Microsoft has been convicted of monopolistic business practices — the U.S. Justice Department, among others, has sued Microsoft for antitrust violations and software bundling.[18] The slogan "embrace, extend, and extinguish" is often used to describe Microsoft's strategy for entering product categories involving widely-used standards, extending those standards with proprietary capabilities, and then using those differences to disadvantage its competitors.[19] In addition, Microsoft has been criticised for the insecurity of its software.[20] However, Microsoft has won several awards, such as the "1993 Most Innovative Company Operating in the U.S." by Fortune magazine, as well as maintaining a place on the Fortune 500 list of companies as of 2006.[21]





1975–1985: The founding of Microsoft

After reading the January 1 1975 issue of Popular Electronics that demonstrated the Altair 8800, Bill Gates called the creators of the new microcomputer, MITS (Micro Instrumentation and Telemetry Systems), offering to demonstrate an implementation of the BASIC programming language for the system.[22] Gates had neither an interpreter nor an Altair system, yet in the eight weeks before the demo he and Allen developed the interpreter. The interpreter worked at the demo and MITS agreed to distribute Altair BASIC.[7] Gates left Harvard University, moved to Albuquerque, New Mexico where MITS was located, and founded Microsoft there. The name Microsoft, without the hyphen, was first used in a letter from Gates to Allen on November 29, 1975,[7] and on November 26, 1976 the name became a registered trademark.[22] The company's first international office was founded on November 1, 1978, in Japan, entitled "ASCII Microsoft" (now called "Microsoft Japan").[22] On January 1, 1979, the company moved from Albuquerque to a new home in Bellevue, Washington. [22] Steve Ballmer joined the company on June 11, 1980, and would later succeed Bill Gates as CEO.[22] 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, 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.[22]

The first operating system the company publicly released was a variant of Unix in 1980. Acquired from AT&T through a distribution license, Microsoft dubbed it Xenix, and hired Santa Cruz Operation in order to port/adapt the operating system to several platforms.[23][24] This Unix variant would become home to the first version of Microsoft's word processor, Microsoft Word. Originally titled "Multi-Tool Word", Microsoft Word became notable for its concept of "What You See Is What You Get", or WYSIWYG. Word was also the first application with such features as the ability to display bold text. It 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.[25] However, Xenix was never sold to end users directly although it was licensed to many software OEMs for resale. By the mid-1980s Microsoft had gotten out of the Unix business entirely.[23]

DOS (Disk Operating System) was the operating system that brought the company its real success. 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 upcoming IBM Personal Computer (PC). For this deal, Microsoft purchased a CP/M clone called QDOS (Quick and Dirty Operating System) from Tim Paterson of Seattle Computer Products for less than US$50,000, which IBM renamed to PC-DOS. 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.[26][27] Around 1983, in collaboration with numerous companies, Microsoft created a home computer system, MSX, which contained its own version of the DOS operating system, entitled MSX-DOS; this became relatively popular in Japan, Europe and South America [7][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.[22]


1985–1991: The rise and fall of OS/2

The sign at a main entrance to the Microsoft corporate campus. The Redmond Microsoft campus today includes more than 8 million square feet (approx. 750,000 m²) and 28,000 employees.
The sign at a main entrance to the Microsoft corporate campus. The Redmond Microsoft campus today includes more than 8 million square feet (approx. 750,000 m²) and 28,000 employees.[35]

The Republic of Ireland became home to Microsoft's first international production facility in 1985, and on November 20 Microsoft released its first retail version of Microsoft Windows, originally a graphical extension for its MS-DOS operating system.[22] 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 to 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.[7] 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.[22][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 SQL Server on January 13 1988, a relational database management system for companies that was based on technology licensed from Sybase.[22]

On May 22, 1990 Microsoft launched Windows 3.0.[7] The new version of Microsoft's operating system boasted such new features as streamlined user interface graphics and improved protected mode capability for the Intel 386 processor; it sold over 100,000 copies in two weeks.[7][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.[41] 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".[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.[22]


1992–1995: Domination of the corporate market

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.
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.[14][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.[14][22] In October, Windows for Workgroups 3.1 was released with integrated networking capabilities such as peer-to-peer file and printing sharing.[14] In November, Microsoft released the first version of their popular database software Microsoft Access.[14]

The Microsoft sign at the entrance of the Dubai Microsoft campus, Dubai Internet City. Microsoft has developed Arabic versions for most of its products.
The Microsoft sign at the entrance of the Dubai Microsoft campus, Dubai Internet City. Microsoft has developed Arabic versions for most of its products.[46]

By 1993, Windows had become the most widely used GUI operating system in the world.[14] Fortune Magazine named Microsoft as the "1993 Most Innovative Company Operating in the U.S."[21] 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.[14] As part of its strategy to broaden its business, Microsoft released Microsoft Encarta on March 22, the first encyclopedia designed to run on a computer.[22] 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.[14]

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. 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] 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.[22] In August 24, 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.[14]

Windows 95 was released without a browser as Microsoft had not yet developed one. The success of the Internet 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 standardise a Chinese version of the operating system.[14] Microsoft also released the Microsoft Sidewinder 3D Pro joystick in an attempt to further expand its profile in the computer hardware market.[14]


1995–1999: Foray into the Web and other ventures

In the mid-90s, 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 Windows Live ID) as a universal login system for all of its web sites.[22][14][51] The company continued to branch out into new markets in 1996, starting with a joint venture with NBC to create a new 24/7 cable news station, MSNBC. The station was launched on July 15 to compete with similar news outlets such as CNN.[14][52] Microsoft also launched Slate, an online magazine edited by Michael Kinsley, which offered political and social commentary along with the cartoon Doonesbury.[22] 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.[22] Microsoft entered the palm computing market in November with Windows CE 1.0, a new built-from-scratch version of their flagship operating system, specifically designed to run on low-memory, low-performance machines, such as handhelds and other palm-sized 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.[14] The company also released the Microsoft SQL Server 6.5, which had built-in support for internet applications.[14] 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.[14] 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.[22]

The year 1998 was significant in Microsoft's history, with Bill Gates appointing Steve Ballmer president of Microsoft but remaining as Chair and CEO himself.[22] The company released an update to the consumer version of Windows, Windows 98.[22] 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 specifically 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.[14] 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, however, some believe that these studies were used in the real strategies of the company.[58]


2000–2005: Legal issues, XP, and .NET

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 its most prominent legal cases. On February 17, 2000 Microsoft released an update to its business line of software in Windows 2000, which some considered to be a significant improvement over previous versions. It provided an OS stability similar to that of its Unix counterparts due to its usage of the Windows NT kernel, and provided matching features for several of those found in the home line of the operating system including a DOS emulator that could run many legacy DOS applications.[14] On April 3 2000, a judgment was handed down in the case of United States v. Microsoft,[18] calling the company an "abusive monopoly"[59] 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 also 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 update to the consumer line, Windows Me (or Windows Millennium Edition), was released on September 14, 2000.[22] It sported several new features such as enhanced multimedia capabilities and consumer-oriented PC maintenance options,[60] but is often regarded as one of the worst versions of Windows due to installation problems and other issues. [61][48]

Bill Gates gives a presentation at IT-Forum in Copenhagen in 2004.
Bill Gates gives a presentation at IT-Forum in Copenhagen in 2004.

Microsoft released Windows 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 capabilities, 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.[22][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 multi-billion-dollar game console market dominated by Sony and Nintendo, with the release of the Xbox.[22] As of 2005, the console ranked distant second to Sony's PlayStation 2 and slightly ahead of Nintendo's GameCube in market share in the United States. The console sold 24 million units,[63] compared with PlayStation 2 at greater than 100 million units, and the company took a US$4 billion loss on the console.[64][65]

In 2002, Microsoft launched the .NET initiative, along with new versions of some of its development products, such as Microsoft Visual Studio.[22] 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 capabilities, such as new user interfaces to server tools.[14] In 2004, the company released Windows XP Media Center Edition 2005, a version of Windows XP specifically designed for multimedia capabilities, and Windows XP Starter Edition, a version of Windows XP with a smaller feature set designed for entry-level consumers.[22] 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.[66][67] 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.[68]


2005–2007: The road to Vista

Formerly codenamed "Longhorn" in the early development stages, the next planned version of Windows, Windows Vista is scheduled for release to consumers on January 30, 2007 as of November 2006.[69][70] Microsoft announced the new name of the operating system at the Microsoft Global Business Conference (MGB) in Atlanta, Georgia on July 21, 2005.[71] Microsoft plans to release a new version of Microsoft Office as well, called Microsoft Office 2007, and is set to be released along side Vista in January 2007 as of May 2006.[72] In addition to Office, the next version of Visual Studio, the company's development suite, code named Orcas, is currently available as a Community Technology Preview (CTP).[73] As of May 2006, an official release date is yet to be set for the development suite.[74]

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.[75] 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.[76] Shortly 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,.[77] began to offer enterprise open source software exclusively on the Microsoft platform.

On June 15, 2006 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.[78] Bill Gates stated "My announcement is not a retirement — it’s a reordering of my priorities."[79]


Product divisions

To be more precise in tracking performance of each unit and delegating responsibility, Microsoft reorganised into seven core business groups — each an independent financial entity — in April 2002. Later, on September 20 2005, Microsoft announced a rationalization of its original seven business groups into the three core divisions that exist today: the Windows Client, MSN and Server and Tool groups were merged into the Microsoft Platform Products & Services Division; the Information Worker and Microsoft Business Solutions groups were merged into the Microsoft Business Division; and the Mobile and Embedded Devices and Home and Entertainment groups were merged into the Microsoft Entertainment and Devices Division.[80][81]


Microsoft Platform Products and Services Divisions

This division produces Microsoft's flagship product, the Windows operating system. It has been produced in many versions, including Windows 3.1, Windows 95, Windows 98, Windows 2000, Windows Me, Windows XP, and Windows Server 2003. Almost all IBM compatible personal computers designed for the consumer come with Windows preinstalled. The current desktop version of Windows is Windows Vista. The online service MSN, the cable television station MSNBC, and the Microsoft online magazine Slate are all part of this division. Slate was later acquired by The Washington Post on December 21, 2004. At the end of 1997, Microsoft acquired Hotmail, the 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. Along with Windows Vista, MSN is to become Windows Live.[5]

Microsoft Visual Studio is the company's set of programming tools and compilers. The software product 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 2005. The previous version, Visual Studio.Net 2003, was named after the .NET initiative, a Microsoft marketing initiative covering a number of technologies. Microsoft's definition of .NET continues to evolve. As of 2004, .NET aims to ease the development of Microsoft Windows-based applications that use the Internet, by deploying a new Microsoft communications system, Indigo (now renamed Windows Communication Foundation). This is intended to address some issues previously introduced by Microsoft's DLL design, which made it difficult, even impossible in some situations, to manage, 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). In addition, the Company established a set of certification programs to recognise individuals who have expertise in its software and solutions. Similar to offerings from Cisco, Sun Microsystems, Novell, IBM, and Oracle Corporation, these tests are designed to identify a minimal set of proficiencies in a specific role; this includes developers ("Microsoft Certified Solution Developer"), system/network analysts ("Microsoft Certified Systems Engineer"), trainers ("Microsoft Certified Trainers") and administrators ("Microsoft Certified Systems Administrator" and "Microsoft Certified Database Administrator").[5]

Microsoft offers a suite of server software, entitled 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 collection of tools providing remote-control abilities, patch management, software distribution, and a hardware/software inventory. Other server products include:


As of November 2006 Microsoft has extended itself to Linux and open source companies to allow Windows server to work harmoniously with servers running Linux.


Microsoft Business Division

Front entrance to building 17 on the main campus of the Company's Redmond campus.
Front entrance to building 17 on the main campus of the Company's Redmond campus.

The Microsoft Business Division produces Microsoft Office, which is the company's line of office software. The software product includes Word (a word processor), Access (a personal relational database application), Excel (a spreadsheet program), Outlook (Windows-only groupware, frequently used with Exchange Server), PowerPoint (presentation software), Microsoft FrontPage (a WYSIWYG HTML editor), and Publisher (desktop publishing software). A number of other products were added later with the release of Office 2003 including Visio, Project, MapPoint, InfoPath and OneNote.[5]

The division focuses on developing financial and business management software for companies. These products include products formerly produced by the Business Solutions Group, which was created in April 2001 with the acquisition of Great Plains. Subsequently, Navision was acquired to provide a similar entry into the European market, resulting in the planned release of Microsoft Dynamics NAV in 2006. The group markets Axapta and Solomon, catering to similar markets, which is scheduled to be combined with the Navision and Great Plains lines into a common platform called Microsoft Dynamics.[5]


Microsoft Entertainment and Devices Division

The Xbox 360, Microsoft's second console in the gaming console market.
The Xbox 360, Microsoft's second console in the gaming console market.

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 5. The focus of the operating system is on devices where the OS may not directly be visible to the end user, in particular, appliances and cars. The company produces MSN TV, formerly WebTV, a television-based Internet appliance. Microsoft used to sell a set-top Digital Video Recorder (DVR) called the UltimateTV, which allowed users to record up to 35 hours of television programming from a direct-to-home satellite television provider DirecTV. This was the main competition in the UK for British Sky Broadcasting's (BSkyB) SKY + service, owned by Rupert Murdoch. UltimateTV has since been discontinued, with DirecTV instead opting to market DVRs from TiVo Inc. before later switching to their own DVR brand.[5]

Microsoft sells computer games that run on Windows PCs, including titles such as Age of Empires, Halo and the Microsoft Flight Simulator series. It produces a line of reference works that 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 multi-billion-dollar game console market dominated by Sony and Nintendo in late 2001,[82] with the release of the Xbox. The company develops and publishes its own video games for this console, with the help of its Microsoft Game Studios subsidiary, in addition to third-party Xbox video game publishers such as Electronic Arts and Activision, who pay a license fee to publish games for the system. The Xbox also has a successor in the Xbox 360, released on 2005-11-22 in North America and other countries.[83][84] With the Xbox 360, Microsoft hopes to compensate for the losses incurred with the original Xbox. However, Microsoft made some decisions considered controversial in the video gaming community, such as selling two different versions of the system, as well as providing backward compatibility with only particular Xbox titles[85][86]. In addition to the Xbox line of products, Microsoft also markets a number of other computing-related hardware products as well, including mice, keyboards, joysticks, and gamepads, along with other game controllers, the production of which is outsourced in most cases.[5] However on July 7, 2006, a lawsuit against Microsoft was filed by Dallas-based law firm McKool Smith on behalf of Anascape for patent infringement regarding sensors and remote controllers.[87]


Business culture

Photo of Microsoft's RedWest campus.
Photo of Microsoft's RedWest campus.

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 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.[16]

Within Microsoft the expression "eating our own dog food" is used to describe the policy of using the latest Microsoft products inside the company in an effort to test them in "real-world" situations. Only prerelease and beta versions of products are considered dog food.[17] This is usually shortened to just "dog food" and is used as noun, verb, and adjective. The company is also known for their hiring process, dubbed the "Microsoft interview", which is notorious for off-the-wall questions such as "Why is a manhole cover round?" and is a process often mimicked in other organizations, although these types of questions are rarer now than they were in the past.[88] For fun, Microsoft also hosts the Microsoft Puzzle Hunt, an annual puzzle hunt (a live puzzle game where teams compete to solve a series of puzzles) held at the Redmond campus. It is a spin-off of the MIT Mystery Hunt.[89]

As of 2006, Microsoft employees, not including Bill Gates, have given over $2.5bn dollars to non-profit organizations worldwide, making Microsoft the worldwide top company in per-employee donations. [90]


User culture

Technical reference for developers and articles for various Microsoft magazines such as Microsoft Systems Journal (or MSJ) are available through the Microsoft Developer Network, often called MSDN. MSDN also offers subscriptions for companies and individuals, and the more expensive subscriptions usually offer access to pre-release beta versions of Microsoft software.[91][92] In recent years, Microsoft launched a community site for developers and users, entitled Channel9, which provides many modern features such as a wiki and an Internet forum.[93] Another community site that provides daily videocasts and other services,, launched on March 3, 2006.[94]

Most free technical support available through Microsoft is provided through online Usenet newsgroups (in the early days it was also provided on CompuServe). There are several of these newsgroups for nearly every product Microsoft provides, and often they are monitored by Microsoft employees. People who are helpful on the newsgroups can be elected by other peers or Microsoft employees for Microsoft Most Valuable Professional (MVP) status, which entitles people to a sort of special social status, in addition to possibilities for awards and other benefits.[15]


Corporate affairs


Corporate structure

The company is run by a Board of Directors consisting of ten people, made up of mostly company outsiders (as is customary for publicly traded companies). Current members of the board of directors of Microsoft are: Steve Ballmer, James Cash, Jr., Dina Dublon, Bill Gates, Raymond Gilmartin, Ann Korologos, David Marquardt, Charles Noski, Helmut Panke, and Jon Shirley. The ten board members are elected every year at the annual shareholders' meeting, and those who do not get a majority of votes must submit a resignation to the board, which will subsequently choose whether or not to accept the resignation. There are five committees within the board which oversee more specific matters. These committees include the Audit Committee, which handles accounting issues with the company including auditing and reporting; the Compensation Committee, which approves compensation for the CEO and other employees of the company; the Finance Committee, which handles financial matters such as proposing mergers and acquisitions; the Governance and Nominating Committee, which handles various corporate matters including nomination of the board; and the Antitrust Compliance Committee, which attempts to prevent company practices from violating antitrust laws.[95][96]

There are several other aspects to the corporate structure of Microsoft. For worldwide matters there is the Executive Team, made up of sixteen company officers across the globe, which is charged with various duties including making sure employees understand Microsoft's culture of business. The sixteen officers of the Executive Team include the Chairman and Chief Software Architect, the CEO, the General Counsel and Secretary, the CFO, senior and group vice presidents from the business units, the CEO of the Europe, the Middle East and Africa regions; and the heads of Worldwide Sales, Marketing and Services; Human Resources; and Corporate Marketing. In addition to the Executive Team there is also the Corporate Staff Council, which handles all major staff functions of the company, including approving corporate policies. The Corporate Staff Council is made up of employees from the Law and Corporate Affairs, Finance, Human Resources, Corporate Marketing, and Advanced Strategy and Policy groups at Microsoft. Other Executive Officers include the Presidents and Vice Presidents of the various product divisions, leaders of the marketing section, and the CTO, among others.[97][5]



When the company debuted its IPO in March 13, 1986, the stock price was US$21.[8][98][99] By the close of the first trading day, the stock had closed at twenty-eight dollars, equivalent to 9.7 cents when adjusted for the company's first nine splits.[99] The initial close and ensuing rise in subsequent years made several Microsoft employees millions.[9] The stock price peaked in 1999 at around US$119 (US$60.928 adjusting for splits).[99] While the company has had nine stock splits, the first of which was in September 18 1987, the company did not start offering a dividend until January 16 2003.[99][100] The dividend for the 2003 fiscal year was eight cents per share, followed by a dividend of sixteen cents per share the subsequent year.[100] The company switched from yearly to quarterly dividends in 2005, for eight cents a share per quarter with a special one-time payout of three dollars per share for the second quarter of the fiscal year.[100]

Around 2003 the stock price began a slow descent. Despite the company's ninth split on February 2 2003 and subsequent increases in dividend payouts, the price of Microsoft's stock continued to fall for the next several years.[101][102][100][103] However, starting around late 2006, Microsoft's stock began a slow but somewhat steady climb, helped in part by the release of two important projects, the Windows Vista operating system and the Office 2007 productivity suite.



In 2005, Microsoft received a 100% rating in the Corporate Equality Index from the Human Rights Campaign relating to its policies concerning LGBT (lesbian, gay, bisexual and transsexual) employees. Partly through the work of the Gay and Lesbian Employees at Microsoft (GLEAM) group, Microsoft added gender expression to its antidiscrimination policies in April 2005, and the Human Rights Campaign upgraded Microsoft's Corporate Equality Index from its 86% rating in 2004 to its current 100% rating, putting it among the most progressive companies in the world, according to the Human Rights Campaign.[104][105]

In April 2005, Microsoft received wide criticism for withdrawing support from Washington state's H.B. 1515 bill that would have extended the state's current antidiscrimination laws to people with alternate sexual orientations,[106] although some claim they never withdrew support and instead simply were neutral on the bill. However, under harsh criticism from both outside and inside the company's walls, Microsoft decided to support the bill again in May 2005.[107][108]

During his visit to Waterloo in October 2005, Microsoft co-founder Bill Gates stated, "Most years, we hire more students out of Waterloo than any university in the world, typically 50 or even more."[109]

Microsoft hires many foreign workers as well as domestic ones, and is an outspoken opponent of the cap on H1B visas, which allow companies in the United States to employ certain foreign workers. Bill Gates claims the cap on H1B visas make it difficult to hire employees for the company, stating "I'd certainly get rid of the H1B cap."

Working Mother magazine named Microsoft one of the 100 Best Companies for Working Mothers in 2004 and 2005.[21]


Logos and slogans

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 to emphasise the "soft" part of the name and convey motion and speed." Dave Norris, a Microsoft employee, ran an internal joke campaign to save the old logo, which was green, in all uppercase, and featured a fanciful letter O, nicknamed the blibbet, but it was discarded.[110]

Microsoft's logo depicted here, with the "Your potential. Our passion." tagline below the main corporate name, is based on the slogan Microsoft had as of 2006. In 2002, the company started using the logo in the United States and eventually started a TV campaign with the slogan, changed from the previous tagline of "Where do you want to go today?."[111][112][113] Like some of Microsoft's other actions, the slogan met its fair share of criticism. For example, in his ThirdWay Advertising Blog, David Vinjamuri states that while "This is gorgeous, touching advertising of the type that wins awards," he ends by noting that the slogan "Only reminds us what we don't like about the brand. Can it."[114]


Accounting Ratios

Microsoft Corporation Accounting Ratios
Fiscal Year [115] 2006 2005 2004 2003 2002
Fiscal Year End Date 6/30/06 6/30/05 6/30/04 6/30/03 6/30/02
Receivables Turnover 4.8 5.5 6.3 6.2 5.5
Receivables - Number of Days 67.1 59.1 54.2 57.7 55.8
Inventory Turnover 6.8 11.7 11.1 7.0 12.4
Inventory - Number of Days 53.2 30.9 32.4 51.4 29.0
Gross Property, Plant & Equipment Turnover 6.1 6.2 5.7 5.3 4.8
Net Property, Plant & Equipment Turnover 14.5 17.0 15.8 14.5 12.5
Depreciation, Depletion & Amortization -
% of Gross Property, Plant & Equipment 13.7% 13.9% 12.6% 17.9% 17.2%
Depreciation, Depletion & Amortization -
Year to Year Change (Millions $US) 10.6 6.7 -27.3 7.6 -25.2
Depreciation, Depletion & Amortization -
Year to Year % Change 12.0% 8.2% -25.0% 7.5% -19.9%


See also: Criticism of Microsoft


Since the 1980s, Microsoft has been the focus of much controversy in the computer industry. Most criticism has been for its business tactics, which some perceive as unfair and anticompetitive. Often, these tactics have been described with the motto "embrace, extend and extinguish". Microsoft initially embraces and extends a competing standard or product, only to later extinguish it through such actions as writing their own incompatible version of the software or standard.[19] These and other tactics have led to various companies and governments filing lawsuits against Microsoft.[116][117][118][68][67][18] Microsoft has been called a "velvet sweatshop" in reference to allegations of the company working its employees to the point where it might be bad for their health. The first instance of "velvet sweatshop" in reference to Microsoft originated from a Seattle Times article in 1989, and later became used to describe the company by some of Microsoft's own employees.[119][120]

Free software proponents point to the company's joining of the Trusted Computing Platform Alliance (TCPA) as a cause of concern. A group of companies that seek to implement an initiative called Trusted Computing (which sets out to increase security and privacy in a user's computer), the TCPA is decried by critics as a means to allow software developers to enforce any sort of restriction they wish over their software.

Large media corporations, together with computer companies such as Microsoft and Intel, are planning to make your computer obey them instead of you

Richard Stallman, founder of the Free Software Foundation[121]

Advocates of free software also take issue with Microsoft's promotion of Digital Rights Management (DRM), and the company's total cost of ownership (TCO) comparisons with its "Get the facts" campaign. Digital Rights Management is a technology that gives digital content and software providers the ability to put restrictions on how their products are used on their customers' machines; these restrictions are seen by the technology's detractors as an infringement on fair use and other rights.[122] DRM restricts even legal uses, for example, re-mixing or playing in a slideshow. Microsoft is not the only platform provider who supports DRM, however. For example, Apple Computer has been under fire from the French Government for "FairPlay," a DRM system used to control usage of content downloaded from its iTunes Music Store service.[123] The "Get the facts" campaign argues that Windows Server has a lower TCO than Linux and lists a variety of studies in order to prove its case.[124] Proponents of Linux unveiled their own study arguing that, contrary to one of Microsoft's claims, Linux has lower management costs than Windows Server.[125] Another study by the Yankee Group claims that Windows Server cost less than Linux for those with legacy systems and more for those without.[126]



Older versions of Microsoft products were often characterised as being unstable — versions of Windows based on MS-DOS, and later the Windows 95 kernel from the mid 1990s to early 2000s, were widely panned for their instability, displaying the "Blue Screen of Death", when Windows abruptly terminates an application — usually due to malfunctioning drivers or hardware. In Windows NT/2000/XP Professional, the blue screen is also known as the Windows Stop Message. [127][128] While less frequent, Windows 2000 and XP are still susceptible to Blue Screens of Death.[129] Computer users not familiar with the division of responsibilities among applications, the operating system, and third-party device drivers sometimes blame Microsoft for problems that are created by third-party software, particularly poorly written and unsigned drivers. Microsoft has consequently announced that it will disallow unsigned drivers in the 64-bit editions of Windows Vista.[130][131][132][133]

The user interface of Microsoft products is occasionally criticised for its inconsistency and complexity, requiring interactive wizards to function as an extra layer between the user and the interface.

It's almost like Microsoft is designing for geeks and Apple is designing for real people

Joe Wilcox, Jupiter Research Senior Analyst[134]

Numerous Microsoft products, most notably earlier versions of Internet Explorer, are seen as being insecure to malicious attacks such as computer viruses. Rob Pegoraro, writing for the Washington Post, says that due to Windows leaving five Internet ports open for various running services, malefactors have an easier time compromising the system.[20]. In an article for SecurityFocus, Scott Granneman said that as of 2004-06-17 there were 153 accumulated security holes since 2001-04-18 and that Internet Explorer "is a buggy, insecure, dangerous piece of software."[135]

Much more recently in 2006, a study conducted by Forrester Research refutes these claims, stating that it found that after a year of studying Windows and several Linux distributions, Windows had the fewest vulnerabilities and that "Microsoft was the only vendor to have corrected 100% of the publicly known flaws during the study's time period."[136] However, the Linux distributions involved with this study disagreed with the findings of the report, saying that it did not take into account how Linux security teams prioritise their work based upon threat level.[137]

Mike Nash, a Microsoft Corporate Vice President, responded to Internet Explorer security concerns in a 2005 interview by stating that the version of Internet Explorer shipped with Windows XP Service Pack 2 gives it security on the same level as its competition.[138] The current version, Internet Explorer 7, has a security overhaul with anti-phishing and malware prevention technology.[139] In a recent review, PC Magazine's Neil Rubenking commented that the phishing technologies in Internet Explorer 7 Beta 3 were superior to equivalents from McAfee and Symantec.[140]

[edit] is one of the most popular destinations on the internet. It receives more than 100 million hits per day from across the globe. According to, is currently ranked 16th amongst all websites for Traffic Rank.[141]


Microsoft in fiction


See also





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