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Page When the average person thinks of computers, they think of Microsoft. This company dominates the PC market with 92% of all personal computers running a Microsoft operating system. Most people, however, do not know where this software giant came from. In 1975, most of the activity in the PC industry was surrounding the Altair, a computer manufactured by MITS (Micro Instrumentation and Telemetry Systems), a small technology company based in Albuquerque, New Mexico. Although the Altair was a major step in the PC industry, it originally came with no software on it at all. The lack of software was a major downfall. People who had technical expertise about binary code could only program the Altair. The president of MITS and two programmers, Bill Gates and Paul Allen, realized this flaw. The two childhood friends had been using computers since they were in the eighth grade. They had made a class schedule for their high school in Seattle, Washington, and had started a small company Traf-O-Data, all before Gates was out of high school. In 1973, Gates graduated high school and started law school at Harvard University, while Allen took a job with Honeywell. The Altair was published on the cover of the January 1975 issue of Popular Electronics, and quickly became a must-have for computer hobbyists. Gates and Allen quickly started working on a programming language for the Altair. Gates choose to use BASIC, a language written by John G. Kennedy and Thomas E. Kurtz in 1964, a language he had become familiar with in high school. At the time, the Altair could only had 4K of RAM, or about 4,000 characters. Gates had to keep his version of BASIC less than that. The bigger challenge, though, was testing the language. Gates and Allen did not have enough money to purchase an Altair. To test their project, Allen wrote a simulator on a more powerful PC. The Altair, also, did not have a keyboard to enter data. Instead, data had to be entered via a series of switches on the front. This was not at all practical, and instead Gates and Allen put their 8,000 line program onto punched paper tape. When Allen traveled to New Mexico in February 1975, he had never seen an assembled Altair. Allen met with the owner of MITS, Ed Roberts, and went to their headquarters. Slowly, the paper tape was fed through a reader attached to the Altair. When everything had loaded, the word READY printed out on the connected teletype machine. It had worked. The first software used to test the version of BASIC was a simulation of a spaceship landing on the moon. Gates' version of BASIC had worked without a glitch. Now the Altair had software. Soon after, Allen was given a job at MITS as Director of Software Development. Later that year, Gates and Allen formed a business partnership called Micro-soft. All negotiations between MITS and Micro-soft were made by Allen, with the approval of Roberts. The first contract granted MITS a license to distribute Microsoft BASIC, but allowed Microsoft to keep its rights to its software. No other manufacturer, developer or user could ever own 100 percent of the software. This contract later became the basis for the relationship that currently exists between software companies and anyone who uses or markets their software. As the MITS-Microsoft relationship grew, so did the tension. MITS began to manufacture memory expansion cards for the Altair, so that larger programs could be stored. To test these cards, Gates wrote some very complex programs. He found that none of the cards worked properly. Gates and Allen urged Roberts to improve the quality of the Altair, and develop it more, but Roberts wanted them to start writing programs for the machine. Because of their differing opinions, Gates began to think about developing his version of BASIC for other types of computers. By December 1975, Altairs had sold in amazing numbers, but Gates was seeing little money in royalties from his software. The problem was soon discovered to be piracy. At a Homebrew Computer Club meeting, in Palo Alto, one of the largest groups of computer hobbyists, copies of Microsoft BASIC had been handed out freely. This was happening all over the country, and was being encouraged by the hobbyists. In February of 1976, Gates published “An Open Letter to Hobbyists” in the Altair newsletter. (See Appendix A) The letter was not taken kindly, and instead of receiving checks, like Gates had intended, he received 300+ letters, most of which argued with Gates' statements. In response to these arguments, Gates wrote a second letter, letting up on some issues and trying to put an end to the piracy debate. By 1976, Gates was devoting more time to Microsoft than his studies at Harvard. He updated BASIC and started selling it to major companies, such as General Electric, NCR Corp, and Citibank. With a small company growing at huge rates, Gates realized that he could not run Microsoft alone anymore. He began hiring more programmers and developing BASIC and other languages for different types of processors. Later that same year, Allen left his job at MITS to join Microsoft with Gates. They also rented their first offices in Albuquerque. Before, all the wok had been done in Gates' apartment. The first legal trouble for Microsoft came in 1977. Roberts had sold MITS to a large California based company, Pertec. After the purchase, Pertec thought that it now owned Microsoft BASIC. Microsoft knew this was not true, and threatened to take Pertec to court over it. Pertec thought there was no way they could be beaten by a few kids and gladly took Microsoft's offer. During the trial, Microsoft was not allowed to receive any income from BASIC, and instead had to rely entirely on its other products. This was the only time in Microsoft history that they had financial trouble. By the end of the year, Microsoft won the case. Gates' father, who was a lawyer and Gates’ own legal knowledge, had played a major factor in winning the case. Microsoft's sales revenue for 1977 totaled $500,000. Microsoft had a bright future and in 1978, it had licensed versions of BASIC to major manufacturers such as Tandy, which was sold at Radioshack stores, and Apple. Microsoft had also released final versions of FORTRAN, COBOL, and Pascal. These were programming languages like BASIC but much more powerful than their predecessor. Their broad base of products that were compatible with a wide range of hardware made Microsoft the industry leader in programming languages. Their work had also become well known overseas. Two Japanese men had taken notice of the rapidly growing PC industry in America and wanted to bring it to Japan. Kazuhiko Nishi took a strong interest in Microsoft and agreed with Gates to let him represent Microsoft in Japan. When he got back to Japan, he convinced Kazuya Watanabe of Microsoft's success, and in 1979 Wantanabe convinced an established Japanese company, NEC, to build the first Japanese personal computer. Gates' and Nishi's relationship, however, was quickly spoiled. Nishi became known for his unpredictable actions. He threw money into projects that Gates thought were too outrageous. Their partnership came to a complete end in 1986, when Microsoft hired another person to take Nishi's place. By 1979, Microsoft's sales totaled $2.5 million. Microsoft was faced with a big decision. The company had been started in Albuquerque so that it could be close to MITS. MITS was now gone and the only computer related company left in Albuquerque was Microsoft. Most of the hardware manufacturers were located in the Silicon Valley in California. It had become hard for Microsoft to convince customers to fly to the middle of the dessert, Albuquerque, to see them. Therefore, Gates and Allen decided to move the company back to their home state of Washington, to the Seattle suburb of Bellevue. Their families, who were still located in Washington, also influenced this decision. Microsoft got its biggest break in 1980. One of Gates’ Harvard friends, Steve Ballmer, decided to join Microsoft. Ballmer had graduated from Harvard, and tried for his MBA at Stanford, but left there to go work for Microsoft. This was minute compared to the business they did though. In the middle of the year, the largest computer manufacturer in the world, IBM, approached Microsoft. Until then, IBM had dealt only with large networks and servers. The success of Apple, Tandy, Commodore, and Atari interested them. They wanted to break into the personal computing market. On November 6, 1980, IBM and Microsoft signed a deal. The contract said the Microsoft was to provide the operating system, multiple programming languages and applications for the IBM machine. Since Microsoft did not have an operating system of their own, and did not have the time to write one from scratch, they purchased QDOS (Quick and Dirty Operating System) from Seattle Computer Products for $75,000. Microsoft renamed QDOS to MS-DOS and made it more professional and efficient. During the development of the OS and software, Microsoft often ran into small hardware defects, but the IBM team quickly addressed them. The IBM PC was available in stores in October 1981. MS-DOS did not catch on right away. In fact, it had hard competition from CP/M, the most popular OS of the time. To give MS-DOS a jump-start, Microsoft offered versions of its languages for the IBM machine, as well as application programs, such as, Wordstar, and dBASE. Microsoft also designed MS-DOS so that CP/M programs were easily adaptable to it. Luckily, for Microsoft, many large corporations and manufacturers including Intel, Sirius, Zenith, Panasonic, and NEC, supported MS-DOS. By 1984, 81 percent of 375 PC distributors were using MS-DOS. The rise of the ‘PC compatible’ also boosted the popularity of MS-DOS. Throughout the early 1980s, Microsoft released applications for its OS including Multiplan, a spreadsheet program, and Word, a word processing program. They also released Windows 1.0, the first graphical user interface for the DOS environment. To compliment Windows, they also manufactured a mouse. Realizing the Apple is another major company in the PC industry, Microsoft releases its software, including Word and Excel, an updated version of Multiplan, for Apple products. In 1986, Microsoft stock went public. In its first day of trading, the stock rose $6. Within the same year, Bill Gates became the youngest billionaire at the age of 31. That same year, Microsoft reports $197 million of revenue and has 1,200 employees. Microsoft had offices in Europe, which helped them become the largest software publisher in the world based on revenue. Sales of their products in the U.S. attribute only 48 percent of their total. This same period also saw the resignation of Paul Allen who left the company after being diagnosed with Hodgkin’s disease. Microsoft had also run into legal trouble again. Apple had brought a lawsuit against Microsoft claiming the Windows product had stolen the ‘look and feel’ of their Lisa computer, which had been released in 1983. After five years of litigation, the case was dismissed. The company, again, moved their headquarters to their own compound in Redmond, Washington. The largest software company in the world still had no dress code and they hired employees based only on intelligence. The 1990s were even better for this software giant. Before the release of the landmark operating system, Windows 3.1, Microsoft offered many products. Their most popular were Microsoft Bookshelf, a collection of reference works, and Office, a productivity package including Word, Excel, PowerPoint, and Access. Even before Windows 3.1 was released, more than one million orders had been placed. Less than two years after its release, Microsoft had the number one and two most popular operating systems in the world with Windows for Workgroups 3.11 just beating out Windows 3.1. Perhaps the most awaited Microsoft release came in the form of Windows 95. This product included Internet Explorer. When the PC industry had boomed in the late 80s and early 90s, so had PC communications. Computers were connected together so that information could be shared. A global network known as the internet had blossomed. When users wanted to use or view the internet, they used a web browser. The most popular browser of the time was Netscape Navigator. Microsoft wanted to capitalize on the growing popularity of the internet and released its own browser, Internet Explorer. Microsoft also launches its own internet service provider, The Microsoft Network. Within the first three months of operation, there are already more than 500,000 subscribers, making it one of the largest providers. In cooperation with NBC, Microsoft also launches MSNBC, a 24 hour news and information channel. The large expansion into different media sectors would cause Microsoft trouble in the future. One of the best and worst years for Microsoft was 1998. The release of their next operating system, Windows 98, was announced. The bad news, however, had just begun to come in. Earlier in the decade, Microsoft was ordered to stop bundling Internet Explorer with Windows 95. The biggest lawsuit was still to come. The U.S. Department of Justice along with 20 State Attorney Generals filed two antitrust cases against Microsoft. The government argued that Microsoft had a monopoly on the operating system market, that Microsoft used its monopoly to prevent other companies from selling competing software, and that Microsoft’s business practices were detrimental to consumers. In April of 2000, Judge Thomas Jackson ruled that Microsoft was guilty of antitrust violations, did control almost all operating systems, and does do injury to consumers. The Department of Justice and 17 states recommended that Microsoft be split into two separate companies. One company would control the Office software, and the other would control the Windows operating system. The decision is appealed by Microsoft and overturned in June 2001. The entire trial was closely watched, since the decision would have been the largest breakup since AT&T. Even under heavy investigation and criticism, Microsoft continued to release new products. Perhaps the biggest project, .NET, was unveiled in 2000. The .NET (dot-Net) platform aims at providing easier, more productive internet experiences with advanced software through the internet. Currently Microsoft offers many, many products. In the Windows family, most home users have Windows XP, while the newest server operating system is Windows Server 2003. Office 2003 is the newest version of the popular productivity software. Microsoft has also expanded into the mobile device industry with Windows CE, and Pocket PC. Microsoft has also entered into the gaming business with the launch of Xbox in 2001. The Xbox is the first console gaming system with online gaming. Most recently, Microsoft operating systems have been the target of numerous virus attacks. The company has been forced to release updates for its products almost every month. The most recent string of viruses have been the MyDoom virus, Bagle virus, Sober worm, and NetSky virus. In addition, many flaws in the popular MSN Messenger program were found. Microsoft itself, along with the government has recommended not using the product. Microsoft has also had to deal with their source code being stolen. Part of the code for Windows 2000 was stolen and made available to the public, although some good has come from it. It has been reported that someone who obtained the code and reviewed it found a security flaw. Microsoft has grown from a two-man tag team in an apartment, to the most valuable business in the world. Bill Gates has invested much of his own resources and time into expanding his business as much as possible. Microsoft has survived though many trials, and somehow managed to come out victorious in all of them. With much experience behind them, and the government close at their heels, Microsoft seems poised to become a monopoly. They will watch how they conduct business much closer now, but still continue growing. Download 18.35 Kb. Share with your friends:
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