From a humble beginning to a market leader

[imported_admin]

In the beginning, www.microsoft.com was just one computer tucked under a table at the end of a long hallway. It was designed to test Microsoft's first 32-bit Windows implementation of TCP/IP, the software plumbing in Windows that enables Internet communications.

Microsoft legend says that this machine once lived under the desk of the site's first official administrator, Mark Ingalls, but like most legends that's only half true. A staging server for microsoft.com was actually housed beneath his desk, and it was relocated because too often Ingalls reached down and turned off the wrong machine by mistake.

Today, microsoft.com is the fourth-largest Web site (per Media Metrix), powered by internal and external servers all over the world and visited by an average of 5 million customers a day. How the site got where it is now in just six high-velocity years is a story of smart decisions, some very public snafus, and all in all, a story we thought you might like to read.

Microsoft the historic beginning

Microsoft was founded in Albuquerque, New Mexico in 1975 by Bill Gates and Paul Allen, under the company name Micro-soft, to develop and sell BASIC interpreters (initially for the MITS Altair 8800, whose manufacturer was already in Albuquerque). The name "Micro-soft" (short for microcomputer software) was used by Bill Gates in a letter to Paul Allen for the first time on November 29, 1975. "Microsoft" became a registered trademark on November 26, 1976. Microsoft's second (programming language) product was its Fortran compiler for CP/M, released in August 1977. The third was the MS COBOL compiler (for MS-DOS), released in April 1978. Both Gates and Allen ran a company called Traf-O-Data prior to starting Microsoft.

As the popularity of Microsoft BASIC grew, other manufacturers adopted its syntax to maintain compatibility with existing Microsoft BASIC implementations. Because of this, Microsoft BASIC became a de facto standard and the product dominated its market.

Microsoft's key moment came when in the late 1970s, IBM was planning to enter the personal computer market with its IBM Personal Computer (PC), which was released in 1981. IBM first approached Microsoft about its BASIC and asked them for an operating system. Since Microsoft did not have an OS, they suggested CP/M from Digital Research. IBM then approached Digital Research for a version of CP/M and spoke to Gary Kildall's wife Dorothy. IBM representatives wanted Dorothy to sign their standard non-disclosure agreement, which Dorothy considered overly burdensome. IBM then returned to talk to Microsoft. Microsoft licensed a cloned design of CP/M called Quick and Dirty Operating System, from Tim Paterson's Seattle Computer Products in order to sell it to IBM as the standard operating system for the IBM PC. Microsoft subsequently purchased all rights to QDOS for $50,000, and renamed it MS-DOS (for Microsoft Disk Operating System). Later, IBM discovered that Gates' operating system could have infringement problems with CP/M, contacted Kildall, and in exchange for a promise not to sue, made an agreement that CP/M would be sold along with IBMDOS when the IBM PC was released. The price set by IBM for CP/M was $250 and for MSDOS/IBMDOS it was $40. Obviously, MSDOS/IBMDOS outsold CP/M many times over, eventually becoming the standard. In contracting with IBM, however, Microsoft had retained the rights to license the software to other computer vendors as MS-DOS. The early 1980s saw a flood of IBM PC clones, and Microsoft was quick to leverage its position to dominate the operating system market. By marketing MS-DOS aggressively to manufacturers of IBM-PC clones, Microsoft gained unprecedented visibility in the microcomputer industry, even rivalling IBM.

During the following years, Microsoft used its growing resources to displace competitors such as WordPerfect, and Lotus 1-2-3, among many others. It is alleged (although never explained in detail) that Gates instructed Microsoft programmers to include special code in one of the MS-DOS versions to make Lotus 1-2-3 produce errors, making it appear to the users as if Lotus's software was the problem.

In the late 1980s, Microsoft and IBM partnered in the development of a more advanced operating system, OS/2. The operating system was marketed in connection with a new hardware design, the PS/2, that was proprietary and secret to IBM. On May 16, 1991 Bill Gates announced to Microsoft employees that the OS/2 partnership was over and Microsoft would henceforth focus its platform efforts on Windows and the NT kernel. In the ensuing years OS/2 fell to the side and Windows became the favored PC platform.

Software running on PC hardware was not necessarily technically better than the mainframe software that it replaced, but it was much less expensive. Microsoft's success rode on the PC boom.

Microsoft, now highly profitable, diversified into a wide variety of software products including:

* The Microsoft Windows series of operating systems

* compilers and interpreters for programming languages

* word processors, spreadsheets and other office software

Microsoft's focus on software usability was a large factor in its early successes.

The future of Microsoft

The next version of Windows in development is code-named Longhorn, which will be an extension of and improvement on Windows XP and Windows Server 2003. Planned features include better interaction with both the user and other devices (such as media players) and an enhanced user interface (Aero). Longhorn was initially to ship during 2003, but has since slipped to 2006.

Microsoft is working to leverage its current success in desktop operating systems into new markets such as media players, server software, handheld devices, web services, and video games, and more recently search engines, with varying degrees of success. Microsoft is now trying to establish PCs running Windows XP Media Center Edition as home entertainment hubs.

It is also looking to move towards a "subscription model" for licensing. Microsoft's current revenue scheme depends on users buying upgrades on a periodical basis, but this is becoming increasingly difficult, as many users continue to use older packages of its software. On a subscription basis, users would pay an annual fee for the use of Microsoft software. Based on recent Microsoft management comments, it appears that Microsoft is attempting to move up-market, positioning its products and services as high-value rather than low-cost. Steve Ballmer was quoted as saying in 2002, "We are actually having to learn how to say, 'We may have a high price on this one, but look at the additional value and how that value actually leads to a lower cost of ownership despite the fact that our price may be higher.'"

Amidst concerns from investors that it will no longer be able to sustain the historical growth rates, Microsoft announced in July 2004 its intention to implement a $30 billion stock repurchase plan over the next 4 years. It also announced a special one-time dividend in December 2004 that would pay Microsoft stockholders $32 billion, by far the largest payout by any company in history.

-– Text courtesy Internet

[Payal]

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[zeeast]

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[Zaheer]

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[Endurer]

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[zebijns]

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