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 (IPO) and 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 provides a range of consumer Internet 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.
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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 campaign and what The New York Times called "the splashiest, most frenzied, most expensive introduction of a computer product in the industry's history," Windows 95 quickly became a success. 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 resolved". 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.
As the smartphone industry boomed in the late 2000s, Microsoft had struggled to keep up with its rivals in providing a modern smartphone operating system, falling behind Apple and Google-sponsored Android in the United States. As a result, in 2010 Microsoft revamped its aging flagship mobile operating system, Windows Mobile, replacing it with the new Windows Phone OS that was released in October that year. It used a new user interface design language, codenamed "Metro", which prominently used simple shapes, typography, and iconography, utilizing the concept of minimalism. Microsoft implemented a new strategy for the software industry, providing a consistent user experience across all smartphones using the Windows Phone OS. It launched an alliance with Nokia in 2011 and Microsoft worked closely with the company to co-develop Windows Phone, but remained partners with long-time Windows Mobile OEM HTC. Microsoft is a founding member of the Open Networking Foundation started on March 23, 2011. This nonprofit organization is focused on providing support for a cloud computing initiative called Software-Defined Networking. The initiative is meant to speed innovation through simple software changes in telecommunications networks, wireless networks, data centers, and other networking areas.
2011–2014: Windows 8/8.1, Xbox One, Outlook.com, and Surface devices
Following the release of Windows Phone, Microsoft undertook a gradual rebranding of its product range throughout 2011 and 2012, with the corporation's logos, products, services, and websites adopting the principles and concepts of the Metro design language. Microsoft unveiled Windows 8, an operating system designed to power both personal computers and tablet computers, in Taipei in June 2011. Also in 2011, Microsoft saw its largest acquisition by taking over Skype.
The Surface was unveiled in June 2012, becoming the first computer in the company's history to have its hardware made by Microsoft. On June 25, Microsoft paid US$1.2 billion to buy the social network Yammer. On July 31, it launched the Outlook.com webmail service to compete with Gmail. On September 4, 2012, Microsoft released Windows Server 2012.
In July 2012, Microsoft sold its 50% stake in MSNBC, which it had run as a joint venture with NBC since 1996. In October 2012, Microsoft launched Windows 8, Microsoft Surface, and Windows Phone 8. To cope with the potential for an increase in demand for products and services, Microsoft opened a number of "holiday stores" across the U.S. to complement the increasing number of "bricks-and-mortar" Microsoft Stores that opened in 2012. On March 29, 2013, Microsoft launched a Patent Tracker.
In August 2012, the New York City Police Department announced a partnership with Microsoft for the development of the Domain Awareness System which is used for police surveillance in New York City.
The Kinect, a motion-sensing input device made by Microsoft and designed as a video game controller, first introduced in November 2010, was upgraded for the 2013 release of the Xbox One video game console. On July 19, 2013, Microsoft stocks suffered its biggest one-day percentage sell-off since the year 2000, after its fourth-quarter report raised concerns among investors on the poor showings of both Windows 8 and the Surface tablet. Microsoft suffered a loss of more than US$32 billion.
In line with the maturing PC business, in July 2013, Microsoft announced that it would reorganize into four new business divisions: Operating Systems, Apps, Cloud, and Devices. All previous divisions were dissolved into new divisions without any workforce cuts. On September 3, 2013, Microsoft agreed to buy Nokia's mobile unit for $7 billion, following Amy Hood taking the role of CFO.
2014–2020: Windows 10, Microsoft Edge, and HoloLens
On February 4, 2014, Steve Ballmer stepped down as CEO of Microsoft and was succeeded by Satya Nadella, who previously led Microsoft's Cloud and Enterprise division. On the same day, John W. Thompson took on the role of chairman, in place of Bill Gates, who continued to participate as a technology advisor. Thompson became the second chairman in Microsoft's history. On April 25, 2014, Microsoft acquired Nokia Devices and Services for $7.2 billion. This new subsidiary was renamed Microsoft Mobile Oy. On September 15, 2014, Microsoft acquired the video game development company Mojang, best known for Minecraft, for $2.5 billion. Since Nadella became CEO, the company has changed focus towards cloud computing.
On January 21, 2015, Microsoft announced the release of its first interactive whiteboard, named Surface Hub. On July 29, 2015, Windows 10 was released, with its server sibling, Windows Server 2016, released in September 2016. Microsoft's share of the U.S. smartphone market in January 2016 was 2.7%. During the summer of 2015 the company lost $7.6 billion related to its mobile-phone business, firing 7,800 employees.
In 2015, the construction of a data center in Mecklenburg County, Virginia, led to the destruction of a historic African American cemetery despite archeological recommendations for preservation.
On March 1, 2016, Microsoft announced the merger of its PC and Xbox divisions, with Phil Spencer announcing that Universal Windows Platform (UWP) apps would be the focus for Microsoft's gaming in the future. Microsoft also aqcuired LinkedIn in 2016. On January 24, 2017, Microsoft showcased Intune for Education at the BETT 2017 education technology conference in London. Intune for Education is a new cloud-based application and device management service for the education sector. In May 2016, the company announced it was laying off 1,850 workers, and taking an impairment and restructuring charge of $950 million.
In June 2016, Microsoft announced a project named Microsoft Azure Information Protection. It aims to help enterprises protect their data as it moves between servers and devices. In November 2016, Microsoft joined the Linux Foundation as a Platinum member during Microsoft's Connect(); developer event in New York. The cost of each Platinum membership is US$500,000 per year. Some analysts had deemed this unthinkable ten years prior, however, as in 2001 then-CEO Steve Ballmer called Linux "cancer".
In January 2018, Microsoft patched Windows 10 to account for CPU problems related to Intel's Meltdown security breach. The patch led to issues with the Microsoft Azure virtual machines reliant on Intel's CPU architecture. On January 12, Microsoft released PowerShell Core 6.0 for the macOS and Linux operating systems. In February 2018, Microsoft ceased notification support for its Windows Phone devices which effectively ended firmware updates for the discontinued devices. In March 2018, Microsoft recalled Windows 10 S to change it to a mode for the Windows operating system rather than a separate and unique operating system. In March the company also established guidelines that censor users of Office 365 from using profanity in private documents.
In April 2018, Microsoft released the source code for Windows File Manager under the MIT License to celebrate the program's 20th anniversary. In April the company further expressed willingness to embrace open source initiatives by announcing Azure Sphere as its own derivative of the Linux operating system. In May 2018, Microsoft partnered with 17 American intelligence agencies to develop cloud computing products. The project is dubbed "Azure Government" and has ties to the Joint Enterprise Defense Infrastructure (JEDI) surveillance program. On June 4, 2018, Microsoft officially announced the acquisition of GitHub for $7.5 billion, a deal that closed on October 26, 2018. On July 10, 2018, Microsoft revealed the Surface Go platform to the public. Later in the month, it converted Microsoft Teams to gratis. In August 2018, Microsoft released two projects called Microsoft AccountGuard and Defending Democracy. It also unveiled Snapdragon 850 compatibility for Windows 10 on the ARM architecture.
In August 2018, Toyota Tsusho began a partnership with Microsoft to create fish farming tools using the Microsoft Azure application suite for Internet of things (IoT) technologies related to water management. Developed in part by researchers from Kindai University, the water pump mechanisms use artificial intelligence to count the number of fish on a conveyor belt, analyze the number of fish, and deduce the effectiveness of water flow from the data the fish provide.
In September 2018, Microsoft discontinued Skype Classic. On October 10, 2018, Microsoft joined the Open Invention Network community despite holding more than 60,000 patents. In November 2018, Microsoft agreed to supply 100,000 Microsoft HoloLens headsets to the United States military in order to "increase lethality by enhancing the ability to detect, decide and engage before the enemy." In November 2018, Microsoft introduced Azure Multi-Factor Authentication for Microsoft Azure.
In December 2018, Microsoft announced Project Mu, an open source release of the Unified Extensible Firmware Interface (UEFI) core used in Microsoft Surface and Hyper-V products. The project promotes the idea of Firmware as a Service. In the same month, Microsoft announced the open source implementation of Windows Forms and the Windows Presentation Foundation (WPF) which will allow for further movement of the company toward the transparent release of key frameworks used in developing Windows desktop applications and software. December also saw the company discontinue the Microsoft Edge [Legacy] browser project in favor of the "New Edge" browser project, featuring a Chromium based backend.
In February 2019, hundreds of Microsoft employees protested the company's war profiteering from a $480 million contract to develop virtual reality headsets for the United States Army.
2020–present: Acquisitions, Xbox Series X/S, and Windows 11
On August 5, 2020, Microsoft stopped its xCloud game streaming test for iOS devices. Apple imposed a strict limit on "remote desktop clients" which means applications are only allowed to connect to a user-owned host device or gaming console owned by the user. On September 21, 2020, Microsoft announced its intent to acquire video game company ZeniMax Media, the parent company of Bethesda Softworks. On March 9, 2021, the acquisition was finalized at $8.1 billion and ZeniMax Media became part of Microsoft's Xbox Game Studios division.
On November 10, 2020, Microsoft released the Xbox Series X and Xbox Series S video game consoles.
In February 2021, Microsoft released Azure Quantum for public preview. The public cloud computing platform provides access to quantum software and quantum hardware including trapped ion, neutral atom, and superconducting systems.
In April 2021, Microsoft announced it would buy Nuance Communications for approximately $16 billion, completing the acquisition in March 2022. In 2021, in part due to the strong quarterly earnings spurred by the COVID-19 pandemic, Microsoft's valuation came to nearly $2 trillion. The increased necessity for remote work and distance education drove demand for cloud computing and grew the company's gaming sales.
On June 24, 2021, Microsoft announced Windows 11 during a livestreamed event. The announcement came with confusion after Microsoft announced Windows 10 would be the last version of the operating system. It was released to the general public on October 5, 2021.
In September 2021, it was announced that the company had acquired TakeLessons, an online platform that connects students and tutors in numerous subjects. The acquisition positioned Microsoft to grow its presence in the market of providing online education to large numbers of people. In the same month, Microsoft acquired Australia-based video editing software company Clipchamp.
In October 2021, Microsoft announced that it began rolling out end-to-end encryption (E2EE) support for Microsoft Teams calls in order to secure business communication while using video conferencing software. On October 7, Microsoft acquired Ally.io, a software service that measures companies' progress against OKRs, planning to incorporate it into its Viva family of employee experience products.
On January 18, 2022, Microsoft announced the acquisition of American video game developer and holding company Activision Blizzard in an all-cash deal worth $68.7 billion, which was completed in 2023. Microsoft also named Phil Spencer, head of the Xbox brand since 2014, the inaugural CEO of the newly established Microsoft Gaming division, which now houses the Xbox operations team and the three publishers in the company's portfolio (Xbox Game Studios, ZeniMax Media, Activision Blizzard). Microsoft had not released statements regarding Activision's recent legal controversies regarding employee abuse, but reports have alleged that Activision CEO Bobby Kotick, a major target of the controversy, would leave the company after the acquisition is finalized. The deal was closed on October 13, 2023.
In January 2023, CEO Satya Nadella announced Microsoft would lay off 10,000 employees. The announcement came a day after hosting a Sting concert for 50 people, including Microsoft executives, in Davos, Switzerland.
On January 23, 2023, Microsoft announced a new multi-year, multi-billion dollar investment deal with ChatGPT developer OpenAI.
In June 2023, Microsoft released Azure Quantum Elements to run molecular simulations and calculations in computational chemistry and materials science using a combination of AI, high-performance computing and quantum computing. The service includes Copilot, a GPT-4 based large language model tool to query and visualize data, write code, initiate simulations, and educate researchers.
At a November 2023 developer conference, Microsoft announced two new custom-designed computing chips: The Maia chip, designed to run large language models, and Cobalt CPU, designed to power general cloud services on Azure.
On November 20, 2023, Satya Nadella announced that Sam Altman, who had been ousted as CEO of OpenAI just days earlier, and Greg Brockman, who had resigned as president, would join Microsoft to lead a new advanced AI research team. However, the plan was short-lived, as Altman was subsequently reinstated as OpenAI's CEO and Brockman rejoined the company amid pressure from OpenAI's employees and investors on its board. In March 2024, Inflection AI's cofounders Mustafa Suleyman and Karen Simonyan announced their departure from the company in order to start Microsoft AI, with Microsoft acqui-hiring nearly the entirety of its 70-person workforce. As part of the deal, Microsoft paid Inflection $650 million to license its technology.
In January 2024, Microsoft became the most valued publicly traded company. Meanwhile, that month, the company announced a subscription offering of artificial intelligence for small businesses via Copilot Pro.
In June 2024, Microsoft announced it would be laying off 1,000 employees from the company's mixed reality and Azure cloud computing divisions. The same month, Microsoft announced that it was building a "hyperscale data centre" in South East Leeds.
In July 2024, it was reported that the company was laying off its diversity, equity, and inclusion (DEI) team. On July 19, a global IT outage impacted Microsoft services, affecting businesses, airlines, and financial institutions worldwide. The outage was traced back to a flawed update of CrowdStrike's cybersecurity software, which resulted in Microsoft systems crashing and causing disruptions across various sectors. Despite CrowdStrike's CEO George Kurtz clarifying that the issue was not a cyberattack, the incident had widespread consequences, leading to delays in air travel, financial transactions, and medical services globally. Microsoft stated that the underlying cause had been fixed but acknowledged ongoing residual impacts on some Microsoft 365 apps and services.
