The Facts
Consistently ranked by Fortune magazine as one the "World's Most Admired Companies" and among the top 50 largest companies in the United States, Microsoft's revenue reached $60.4 billion in 2008, leading to a net income of $17.68 billion. Operating globally, some 89,800 employees work in 105 countries. Microsoft conducted its initial public stock offering (IPO) in 1986. The name "Microsoft" is synonymous with computers in popular culture, however, this ubiquity came at a price. The company faces criticism in the United States and abroad for anti-trust tactics, accused of monopolistic business practices.
History
Microsoft capitalized on the need for an operating system for the blossoming personal computer industry. Gates developed the BASIC programming language in the late 1970s, but the DOS operating system created for the IBM personal computer in the early 1980s solidified Microsoft's position. Teaming with IBM on additional projects, Gates and his team also developed a series of languages for new IBM systems: BASIC, FORTRAN, COBOL, and Pascal. As IBM computers grew faster and more efficient in the late 1980s, Microsoft continued to upgrade the now renamed MS-DOS, while also marketing the system to other manufacturers.
After the company's IPO in 1986, it received the funds necessary to increase research and development, which led to the introduction of Microsoft Office, a software bundle created to improve business productivity, including Word and Excel. Microsoft Office soon became the market leader, far surpassing its closest competitors.
The explosion of the Internet in the 1990s initially caught Microsoft off guard. However, it soon recovered with Internet Explorer (released in 1995), a web portal that gave users a starting point for Internet activities. Internet Explorer became the de facto web homepage. Microsoft also launched other web ventures, including Microsoft Network (MSN). In 1996, the company teamed with NBC to create the MSNBC cable news network.
In 1998, Steve Ballmer replaced Gates as president, with Gates remaining CEO and Chairman of the Board. Microsoft then released the Windows 98 operating system, which included web-based upgrades. In 2001, Microsoft XP appeared, tying together features of its consumer and business programs. In 2007, the company released Windows Vista.
Not content with relying solely on its operating systems for revenue, Microsoft branched into other industries, including mp3 devices, mobile operating systems, computer peripherals, web products for the television, electronic publishing, computer games, and computer gaming consoles. In 2001, it released the Xbox console and the Xbox 360 in 2005.
Bill Gates
One of the most recognizable and richest men in the world, Bill Gates co-founded Microsoft and built it into one of the most important corporations in business history. While running day-to-day operations at Microsoft, Gates served as CEO and chief software architect. He turned daily management over to Steve Ballmer in 2000. In June 2006, he stepped down as a full-time employee, remaining Chairman of the Board of Directors. Gates transitioned to running the Bill & Melinda Gates Foundation, founded in 2000. Central to the organization's mission is alleviating disease and poverty globally and on education programs for children.
The World's Operating System
Microsoft Windows is the company's flagship product and accounts for most of its revenue. The Windows operating system is almost ubiquitous with computers. According to a Gartner Inc. report quoted in The Wall Street Journal, Microsoft holds a 96.6 percent market share. Open source and the Android operating system created by Google are expected to take away a small percentage of this lead in the future, but only 2 to 3 percentage points.
Potential
Similar to companies worldwide, Microsoft is adapting to the new economic times. The company announced a 6 percent drop in revenue ($13.65 billion) in its third quarter of 2009 from the year earlier. Also in 2009, Microsoft laid off employees (5,000) for the first time in company history.
Despite the gloomy economic picture, Microsoft is poised to capitalize on its history of significant investment in research and development (totaling $8.2 billion in 2008). Most important is the 2010 launch of the Windows 7 operating system.