Microsoft

US corporation, now the world's largest software supplier. Microsoft's first major product was a version of BASIC, written for the first personal computer, the MITS Altair, in 1975, and adopted by most of the desktop computer industry. Through MS-DOS, written for IBM, Windows, and related applications it has steadily increased its hold on the personal computer market.

Microsoft was founded by Bill Gates and Paul Allen in 1975. Bill Gates was the company's chief executive until January 2000, when he stepped down in order to spend more time on developing new technologies, becoming ‘chief software architect’, but remaining Microsoft's chairman. Steve Ballmer, the company's president since 1998, became chief executive.

Growth In 1980, when it had a staff of 40, Microsoft was contracted to produce a BASIC and DOS (Disk Operating System) for IBM's first mass market microcomputer, the IBM PC. With the success of the IBM PC, Microsoft grew rapidly to 6,000 staff and a turnover of US$1 billion in 1990, when it launched Windows 3, a hugely successful graphical user interface for DOS. In 1993 Microsoft was voted by Fortune magazine as the ‘most innovative company operating in the US’, and in 1997 in a public poll (carried out by Hart and Teeter), Microsoft was revealed as the ‘most admired’ company in one of the ‘most admired’ industries. With the launch of Windows 95 and Windows 98, and ancillary sales of Windows applications (Word, Excel, Microsoft Office) and CD-ROM programs such as Encarta, Microsoft then grew to more than 20,000 staff, supplied operating systems for around 90% of the world's personal computers, and had a turnover of US$44 billion in 2006. The accompanying growth in the value of the company's shares created three billionaires (Gates, Allen, and Ballmer) while hundreds, perhaps thousands, of Microsoft's programmers have become millionaires.

Federal investigations A US federal probe into charges that Microsoft was engaging in anticompetitive behaviour was carried out in 1990–93, from which date the US Justice Department launched its own investigations. Under a settlement reached in 1994, Microsoft agreed to end the uncompetitive practice of ‘per processor’ pricing, whereby PC manufacturers paid a fee for each machine produced irrespective of the software to be installed. In 1997, the Justice Department again accused Microsoft of anticompetitive behaviour by tying the installation of Windows 95 to the installation of Microsoft's free Web browser, Internet Explorer.

The fallout from this issue, which relates to Microsoft abusing its monopoly power against Netscape, its main competitor in Internet browsers, is not yet fully resolved. In December 1997, Microsoft was ordered to change its marketing policy. But in June 1998, an appeal court ruled that Microsoft was quite within its rights to combine its Internet browser with its operating system. This judgement was overturned in April 2000. Three months later, a federal judge ruled that the company should be split into two companies, one developing the Windows family of operating systems, and the other concentrating on applications software, such as the Microsoft Office suite of programs (including Word and Excel). Microsoft launched an appeal, and in September, the US Supreme Court ruled the appeal should be heard by a lower appeals court before the ruling was acted upon, allowing Microsoft to continue its business practices unhindered until the case is resolved. In June 2001, the appeals court in Washington, DC, unanimously reversed the order proposed by Judge Thomas Penfield Jackson to divide Microsoft, the world's dominant computer software company, in two. It also criticized the judge for his ‘appearance of partiality’, including making derogatory remarks about the company in media interviews. However, the court did accept the finding that Microsoft was a monopoly, and sent the case to a new judge to find an acceptable solution. In September, the US government said it would no longer seek the break-up of Microsoft. However, the Supreme Court rejected a plea by Microsoft to reverse the ruling that the software giant had broken antitrust laws.

Other developments In 1996, Microsoft launched another new operating system, Windows CE (Consumer Electronics), for handheld computers, pen-operated personal digital assistants, in-car systems, and similar applications. Suppliers of CE-based HPCs (handheld personal computers) include Casio, Compaq, Hewlett-Packard, Philips, and Sharp. Windows CE version 2 is also used in an improved version of WebTV: a set-top box that enables users to surf the Internet on their television sets. Microsoft purchased WebTV Networks for US$425 million in 1997. The first companies to supply WebTV systems were Philips, Sony, and Mitsubishi. In 2000 Windows CE was renamed Pocket PC. In 2002 Microsoft sponsored the new tablet PC, a model halfway between handheld and notebook PCs, and running under Windows XP Tablet PC Edition. According to Microsoft, the tablet PC version of the operating system offered new, advanced handwriting and speech recognition capabilities, enabling the creation, storage, and transmission of handwritten notes and voice input. In 2007 Microsoft launched Windows Vista, its latest PC operating system and replacement for Windows XP.