Microsoft Corporation

I

Introduction

Microsoft Corporation, the largest company in the world dedicated to creating computer software. Microsoft develops and sells a wide variety of software products to businesses and consumers and has subsidiary offices in more than 60 countries. The company’s operating systems for personal computers are the most widely used in the world. Microsoft has its headquarters in Redmond, Washington.

(Microsoft is the publisher of Encarta Encyclopedia.)

Microsoft’s other well-known products include Word, a word processor; Excel, a spreadsheet program; Access, a database program; and PowerPoint, a program for making business presentations. These programs are sold separately and as part of Office, an integrated software suite. The company also makes software applications for a wide variety of server products for businesses. Microsoft’s Internet Explorer (IE) allows users to browse the World Wide Web. Microsoft produces the Xbox game console and software games that run on the console. Among the company’s other products have been reference applications; financial software; programming languages for software developers; input devices, such as pointing devices and keyboards; software for personal digital assistants (PDAs) and cellular telephones; handwriting-recognition software; software for creating Web pages; and computer-related books.

Microsoft operates the Microsoft Network (MSN), a collection of news, travel, financial, entertainment, and information Web sites. Microsoft and NBC Universal jointly operate the MSNBC Web site, one of the most popular all-news sites on the Internet.

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II

Founding

Microsoft was founded in 1975 by William H. Gates III and Paul Allen. The pair had teamed up in high school through their hobby of programming on the original PDP-10 computer from the Digital Equipment Corporation. In 1975 Popular Electronics magazine featured a cover story about the Altair 8800, the first personal computer (PC). The article inspired Gates and Allen to develop a version of the BASIC programming language for the Altair. They licensed the software to Micro Instrumentation and Telemetry Systems (MITS), the Altair’s manufacturer, and formed Microsoft (originally Micro-soft) in Albuquerque, New Mexico, to develop versions of BASIC for other computer companies.

Microsoft’s early customers included fledgling hardware firms such as Apple Inc., maker of the Apple II computer; Commodore, maker of the PET computer; and Tandy Corporation, maker of the Radio Shack TRS-80 computer. In 1977 Microsoft shipped its second language product, Microsoft Fortran, and it soon released versions of BASIC for the 8080 and 8086 microprocessors.

III

MS-DOS

In 1979 Gates and Allen moved the company to Bellevue, Washington, a suburb of their hometown of Seattle. (The company moved to its current headquarters in Redmond in 1986.) In 1980 International Business Machines Corporation (IBM) chose Microsoft to write the operating system for the IBM PC personal computer, to be introduced the following year. Under time pressure, Microsoft purchased 86-DOS (developed by programmer Tim Paterson and originally called QDOS for Quick and Dirty Operating System) from a small company called Seattle Computer Products for $50,000, modified it, and renamed it MS-DOS (Microsoft Disk Operating System).

As part of its contract with IBM, Microsoft was permitted to license the operating system to other companies. By 1984 Microsoft had licensed MS-DOS to 200 personal computer manufacturers, making MS-DOS the standard operating system for PCs and driving Microsoft’s enormous growth in the 1980s. Allen left the company in 1983 but remained on its board of directors until 2000. Allen continues to be a major shareholder in Microsoft.

IV

Application Software

As sales of MS-DOS took off, Microsoft began to develop business applications for personal computers. In 1982 it released Multiplan, a spreadsheet program, and the following year it released a word-processing program, Microsoft Word. In 1984 Microsoft was one of the few established software companies to develop application software for the Macintosh, a personal computer developed by Apple Computer, Inc. Microsoft’s early support for the Macintosh resulted in tremendous success for its Macintosh application software, including Word, Excel, and Works (an integrated software suite). Multiplan for MS-DOS, however, faltered against the popular Lotus 1-2-3 spreadsheet program made by Lotus Development Corporation.

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