Microsoft – The Rise and Fall of a Technology Company


Microsoft is a technology corporation headquartered in Redmond, Washington, that designs and manufactures computer software, hardware, video games, computer and gaming consoles, and online services. Its best-known products are the Windows operating system and the Office productivity suite, both of which are included with most personal computers. The company also produces the Internet Explorer Web browser and the MSN search service, and owns or has a stake in several content-distribution channels including the MSNBC news site and the Encarta electronic encyclopedia.

It was founded in 1975 by Harvard University classmates Bill Gates and Paul Allen. The two began Microsoft by writing a BASIC interpreter for the Altair 8800, a primitive early microcomputer kit. They licensed their work to Micro Instrumentation and Telemetry Systems (MITS), and the Altair became a hit. Microsoft later adapted the OS of the more advanced IBM PC and released a version called MS-DOS, which helped it dominate the market.

In the 1990s, Microsoft began to face challenges from new technologies and competitors. For example, it was slow to recognize the commercial potential of network systems and the World Wide Web. By 1993, however, Microsoft had released Windows NT, which tied disparate PCs together and improved reliability, security and network performance. Microsoft was soon a clear leader in networking software, surpassing Novell NetWare.

Microsoft’s legal troubles grew in the late 1990s, when European and US regulators accused it of abuse of its monopoly power. For example, it used a tactic known as “embrace, extend and extinguish” to enter product categories by first producing standard software that met widely used specifications, then extending the standards with proprietary capabilities, and finally excluding competitors. In 2004, the EU levied the largest fine in its history against Microsoft in retaliation for anticompetitive practices.

After years of being regarded as a lumbering, protective giant, Microsoft under Nadella changed its culture in many ways. One way was to treat its employees like a startup, encouraging them to collaborate and create fast-paced solutions for business problems. Nadella also had the company focus on customer feedback and use data to inform product development. For instance, rather than going by sales, a lagging indicator in fast-moving markets, Nadella had developers track usage of the products they created on dashboards.

This shift in culture accelerated the pace of innovation at Microsoft. For example, rather than hiring people from established tech companies, the company started to recruit primarily from small startups that were on the forefront of new technology. The company also emphasized the importance of experimenting and collaborating across disciplines. The company even sponsored hackathons, short-term events in which employees could work together on any projects they dreamed up, and these impromptu teams made connections that translated into faster, more innovative commercial projects. This kind of experimentation and collaboration is what makes a great team, and it’s the core of how startups are able to move quickly to seize opportunity. But, in order to scale, such an approach must be integrated into the entire culture of a large corporate organization.

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