Paul Allen and Bill Gates (respectively) on October 19, 1981 in a sea of PCs after signing a pivotal contract. IBM called Microsoft in July 1980 inquiring about
programming languages for its upcoming PC line;
[1] after failed negotiations with another company, IBM gave Microsoft a contract to develop the OS for the new line of PCs.
[2] Paul Allen and
Bill Gates, childhood friends with a passion in
computer programming, were seeking to make a successful business utilizing their shared skills. The January 1975 issue of
Popular Electronics featured
Micro Instrumentation and Telemetry Systems's (MITS)
Altair 8800 microcomputer. Allen noticed that they could program a
BASIC interpreter for the device; after a call from Gates claiming to have a working interpreter, MITS requested a demonstration. Since they didn't actually have one, Allen worked on a
simulator for the Altair while Gates developed the interpreter. Although they developed the interpreter on a simulator and not the actual device, the interpreter worked flawlessly when they demonstrated the interpreter to MITS in
Albuquerque, New Mexico in March 1975; MITS agreed to distribute it, marketing it as
Altair BASIC.
[3] They officially established Microsoft on April 4, 1975, with Gates as the
CEO.
[4] In August 1977 the company formed an agreement with ASCII Magazine in Japan, resulting in its first international office, "
ASCII Microsoft".
[5] The company moved to a new home in
Bellevue, Washington in January 1979.
[4]
Microsoft entered the OS business in 1980 with its own version of
Unix, called
Xenix.
[6] However, it was
DOS (Disk Operating System) that solidified the company's dominance. After negotiations with
Digital Research failed,
IBM awarded a contract to Microsoft to provide a version of the
CP/M OS, which was set to be used in the upcoming
IBM Personal Computer (IBM PC). For this deal, Microsoft purchased a CP/M clone called
86-DOS from
Seattle Computer Products, branding it as MS-DOS, which IBM rebranded to
PC-DOS. Following the release of the IBM PC in August 1981, Microsoft retained ownership of MS-DOS. Since IBM
copyrighted the IBM PC
BIOS, other companies had to
reverse engineer it in order for non-IBM hardware to run as
IBM PC compatibles, but no such restriction applied to the operating systems. Due to various factors, such as MS-DOS's available software selection, Microsoft eventually became the leading PC OS vendor.
[2][7] The company expanded into new markets with the release of the
Microsoft Mouse in 1983, as well as a publishing division named
Microsoft Press.
[8] Paul Allen resigned from Microsoft in February after developing
Hodgkin's disease.
[9]
1985–1994: Windows and Office
The sign at a main entrance to the Microsoft corporate campus in Redmond. In May 2005 the campus stretched more than 750,000
m² (approx. 8 million square feet) and contained over 30,000 employees.
[10] While jointly developing a new OS with IBM in 1985,
OS/2, Microsoft released
Microsoft Windows, a graphical extension for MS-DOS, on November 20.
[11] Microsoft moved its headquarters to Redmond on February 26, 1986, and on March 13 the company went
public;
[12] the ensuing rise in the stock would make an estimated four billionaires and 12,000 millionaires from Microsoft employees.
[13] Due to the partnership with IBM, in 1990 the
Federal Trade Commission set its eye on Microsoft for possible
collusion; it marked the beginning of over a decade of legal clashes with the U.S. Government.
[14] Microsoft announced the release of its version of OS/2 to
original equipment manufacturers (OEMs) on April 2, 1987;
[15] meanwhile, the company was at work on a
32-bit OS,
Microsoft Windows NT, using ideas from OS/2; it shipped on July 21, 1993 with a new
modular kernel and the
Win32 application programming interface (API), making
porting from
16-bit (MS-DOS-based) Windows easier. Once Microsoft informed IBM of NT, the OS/2 partnership deteriorated.
[16]
Microsoft introduced its office suite, Microsoft Office, in 1990. The software bundled separate office productivity applications, such as
Microsoft Word and
Microsoft Excel.
[17] On May 22 Microsoft launched
Windows 3.0 with a streamlined
user interface graphics and improved
protected mode capability for the
Intel 386 processor.
[18] Both Office and Windows became dominant in their respective areas.
[19][20] Novell, a Word competitor from 1984–1986, filed a lawsuit years later claiming that Microsoft left part of its APIs undocumented in order to gain a competitive advantage.
[21]
1995–2005: Internet and the 32-bit era
Bill Gates giving his deposition in 1998 for the
United States v. Microsoft trial. Once the
U.S. Department of Justice 1993 took over from the Federal Trade Commission, a protracted legal wrangling between Microsoft and the department ensued, resulting in various settlements and possible blocked mergers. Microsoft would point to companies such as
AOL-Time Warner in its defense.
[14] 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.
[22] 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.
[23][24] Windows 95 came bundled with the
online service MSN, and for OEMs
Internet Explorer, a
web browser. Internet Explorer was not bundled with the retail Windows 95 boxes because the boxes were printed before the team finished the web browser, and instead was included in the Windows 95 Plus! pack.
[25] Branching out into new markets in 1996, Microsoft and
NBC Universal created a new
24/7 cable news station,
MSNBC.
[26] Microsoft created
Windows CE 1.0, a new OS designed for devices with low memory and other constraints, such as
personal digital assistants.
[27] 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.
[28]
Bill Gates handed over the CEO position on January 13, 2000 to
Steve Ballmer, an old college friend of Gates and employee of the company since 1980, creating a new position for himself as Chief
Software Architect.
[4][29] Various companies including Microsoft formed the
Trusted Computing Platform Alliance in October 1999 to, among other things, increase security and protect
intellectual property through identifying changes in hardware and software. Critics decry the alliance as a way enforce indiscriminate restrictions over how consumers use software, and over how computers behave, a form of
digital rights management; for example the scenario where a computer is not only secured for its owner, but also secured against its owner as well.
[30][31] On April 3, 2000, a judgment was handed down in the case of
United States v. Microsoft,
[32] calling the company an "abusive monopoly";
[33] it settled with the U.S. Department of Justice in 2004.
[12] On October 25, 2001 Microsoft released
Windows XP, unifying the mainstream and NT lines under the NT codebase.
[34] The company released the
Xbox later that year, entering the
game console market dominated by
Sony and
Nintendo.
[35] 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 to produce new versions of Windows XP without
Windows Media Player, Windows XP Home Edition N and Windows XP
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