FACULTY OF ECONOMICS
UNIVERSITY OF BANJA LUKA
SEMINAR PAPER ON
MICROSOFT AS Nº1 COMPUTER BRAND
STUDENT: Ognjen Saje, 76/07
PROFESSOR: Milica Bogdanovic
SEPTEMBER, 2010
Content
1. Introduction...........................................................................4
2. History...................................................................................5
3. 1985–1994: Windows and Office.........................................6
4. 1995–2005: Internet and the 32-bit era.................................7
5. 2006 on: Vista and Cloud computing...................................8
6. Windows & Windows Live Division, Server and Tools,
Online Services Division......................................................9
7. Business Division, Entertainment and Devices Division.....10
8. Culture...................................................................................11
9. Corporate affairs...................................................................12
10. Environment........................................................................13
11. Marketing............................................................................14
12. Conclusion..........................................................................15
13. References...........................................................................16
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1. Introduction
Microsoft Corporation is a public multinational corporation
headquartered in Redmond, Washington, USA that develops, manufactures,
licenses, and supports a wide range of products and services predominantly
related to computing through its various product divisions. Established on
April 4, 1975 to develop and sell BASIC interpreters for the Altair 8800,
Microsoft rose to dominate the home computer operating system (OS)
market with MS-DOS in the mid-1980s, followed by the Microsoft
Windows line of OSs. The ensuing rise of stock in the company's 1986
initial public offering (IPO) made an estimated four billionaires and 12,000
millionaires from Microsoft employees. Microsoft would come to dominate
other markets as well, notably the office suite market with Microsoft Office.
Primarily in the 1990s, critics contend the company used monopolistic
business practices and anti-competitive strategies including refusal to deal
and tying, put unreasonable restrictions in the use of its software, and used
misrepresentative marketing tactics; both the U.S. Department of Justice and
European Commission found the company in violation of antitrust laws.
Known for its interviewing process with obscure questions, various studies
and ratings were generally favorable to Microsoft's diversity within the
company as well as its overall environmental impact with the exception of
the electronics portion of the business.
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2. History
Paul Allen and Bill Gates, childhood friends with a passion in
computer programming, were seeking to make a successful business
utilizing their shared skills. The January 1975 issue of Popular Electronics
featured Micro Instrumentation and Telemetry Systems (MITS) Altair 8800
microcomputer. Allen noticed that they could program a BASIC interpreter
for the device; after a call from Gates claiming to have a working interpreter,
MITS requested a demonstration. Since they didn't actually have one, Allen
worked on a simulator for the Altair while Gates developed the interpreter.
Although they developed the interpreter on a simulator and not the actual
device, the interpreter worked flawlessly when they demonstrated the
interpreter to MITS in Albuquerque, New Mexico in March 1975; MITS
agreed to distribute it, marketing it as Altair BASIC. They officially
established Microsoft on April 4, 1975, with Gates as the CEO. In August
1977 the company formed an agreement with ASCII Magazine in Japan,
resulting in its first international office, "ASCII Microsoft". The company
moved to a new home in Bellevue, Washington in January 1979.
Microsoft entered the OS business in 1980 with its own version of
Unix, called Xenix. However, it was DOS (Disk Operating System) that
solidified the company's dominance. After negotiations with Digital
Research failed, IBM awarded a contract to Microsoft to provide a version
of the CP/M OS, which was set to be used in the upcoming IBM Personal
Computer (IBM PC). For this deal, Microsoft purchased a CP/M clone
called 86-DOS from Seattle Computer Products, branding it as MS-DOS,
which IBM rebranded to PC-DOS. Following the release of the IBM PC in
August 1981, Microsoft retained ownership of MS-DOS. Since IBM
copyrighted the IBM PC BIOS, other companies had to reverse engineer it
in order for non-IBM hardware to run as IBM PC compatibles, but no such
restriction applied to the operating systems. Due to various factors, such as
MS-DOS's available software selection, Microsoft eventually became the
leading PC OS vendor. The company expanded into new markets with the
release of the Microsoft Mouse in 1983, as well as a publishing division
named Microsoft Press. Paul Allen resigned from Microsoft in February
after developing Hodgkin's disease.
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3. 1985–1994: Windows and Office
While jointly developing a new OS with IBM in 1985, OS/2,
Microsoft released Microsoft Windows, a graphical extension for MS-DOS,
on November 20. Microsoft moved its headquarters to Redmond on
February 26, 1986, and on March 13 the company went public; the ensuing
rise in the stock would make an estimated four billionaires and 12,000
millionaires from Microsoft employees. Due to the partnership with IBM, in
1990 the Federal Trade Commission set its eye on Microsoft for possible
collusion; it marked the beginning of over a decade of legal clashes with the
U.S. Government. Microsoft announced the release of its version of OS/2 to
original equipment manufacturers (OEMs) on April 2, 1987; meanwhile, the
company was at work on a 32-bit OS, Microsoft Windows NT, using ideas
from OS/2; it shipped on July 21, 1993 with a new modular kernel and the
Win32 application programming interface (API), making porting from 16-bit
(MS-DOS-based) Windows easier. Once Microsoft informed IBM of NT,
the OS/2 partnership deteriorated.
Microsoft introduced its office suite, Microsoft Office, in 1990. The
software bundled separate office productivity applications, such as Microsoft
Word and Microsoft Excel. On May 22 Microsoft launched Windows 3.0
with a streamlined user interface graphics and improved protected mode
capability for the Intel 386 processor. Both Office and Windows became
dominant in their respective areas. Novell, a Word competitor from 1984–
1986, filed a lawsuit years later claiming that Microsoft left part of its APIs
undocumented in order to gain a competitive advantage.
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4. 1995–2005: Internet and the 32-bit era
Following Bill Gates internal "Internet Tidal Wave memo" on May
26, 1995 Microsoft began to redefine its offerings and expand its product
line into computer networking and the World Wide Web. The company
released Windows 95 on August 24, 1995, featuring pre-emptive
multitasking, a completely new user interface with a novel start button, and
32-bit compatibility; similar to NT, it provided the Win32 API. Windows 95
came bundled with the online service MSN, and for OEMs Internet
Explorer, a web browser. Internet Explorer was not bundled with the retail
Windows 95 boxes because the boxes were printed before the team finished
the web browser, and instead was included in the Windows 95 Plus! pack.
Branching out into new markets in 1996, Microsoft and NBC Universal
created a new 24/7 cable news station, MSNBC. Microsoft created Windows
CE 1.0, a new OS designed for devices with low memory and other
constraints, such as personal digital assistants. In October 1997, the Justice
Department filed a motion in the Federal District Court, stating that
Microsoft violated an agreement signed in 1994 and asked the court to stop
the bundling of Internet Explorer with Windows.
Bill Gates handed over the CEO position on January 13, 2000 to Steve
Ballmer, an old college friend of Gates and employee of the company since
1980, creating a new position for himself as Chief Software Architect.
Various companies including Microsoft formed the Trusted Computing
Platform Alliance in October 1999 to, among other things, increase security
and protect intellectual property through identifying changes in hardware
and software. Critics decry the alliance as a way enforce indiscriminate
restrictions over how consumers use software, and over how computers
behave, a form of digital rights management. On April 3, 2000, a judgment
was handed down in the case of United States v. Microsoft, calling the
company an "abusive monopoly"; it settled with the U.S. Department of
Justice in 2004. On October 25, 2001 Microsoft released Windows XP,
unifying the mainstream and NT lines under the NT codebase. In March
2004 the European Union brought antitrust legal action against the company,
citing it abused its dominance with the Windows OS, resulting in a judgment
of €497 million ($613 million) and to produce new versions of Windows XP
without Windows Media Player, Windows XP Home Edition N and
Windows XP Professional N.
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5. 2006 on: Vista and Cloud computing
Released in January 2007, the next version of Windows, Windows
Vista, focused on features, security, and a redesigned user interface dubbed
Aero. Microsoft Office 2007, released at the same time, featured a "Ribbon"
user interface which was a significant departure from its predecessors.
Relatively strong sales of both titles helped to produce a record profit in
2007. The European Union imposed another fine of €899 million
($1.4 billion) for Microsoft's lack of compliance with the March 2004
judgment on February 27, 2008, saying that the company charged rivals
unreasonable prices for key information about its workgroup and back office
servers. Microsoft stated that it was in compliance and that "these fines are
about the past issues that have been resolved".
Bill Gates retired from his role as Chief Software Architect on June
27, 2008 while retaining other positions related to the company in addition
to being an advisor for the company on key projects. Azure Services
Platform, the company's entry into the cloud computing market for
Windows, launched on October 27, 2008. On February 12, 2009, Microsoft
announced its intent to open a chain of Microsoft-branded retail stores, and
on October 22, 2009 the first retail Microsoft Store opened in Scottsdale,
Arizona; the same day the first store opened Windows 7 was officially
released to the public. Windows 7's focus was on refining Vista with ease of
use features and performance enhancements, rather than a large reworking of
Windows.
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6. Windows & Windows Live Division, Server and Tools,
Online Services Division
The company's Client division produces the flagship Windows OS
line such as Windows 7; it also produces the Windows Live family of
products and services. Server and Tools produces the server versions of
Windows, such as Windows Server 2008 R2 as well as a set of development
tools called Microsoft Visual Studio, Microsoft Silverlight, a web
application framework, and Systems Management Server, a collection of
tools providing remote-control abilities, patch management, software
distribution and a hardware/software inventory. Other server products
include: Microsoft SQL Server, a relational database management system,
Microsoft Exchange Server, for certain business-oriented e-mail and
scheduling features, Small Business Server, for messaging and other small
business-oriented features; and Microsoft BizTalk Server, for business
process management.
Microsoft provides IT consulting ("Microsoft Consulting Services")
and produces a set of certification programs handled by the Server and Tools
division designed to recognize individuals who have a minimal set of
proficiencies in a specific role; this includes developers ("Microsoft
Certified Solution Developer"), system/network analysts ("Microsoft
Certified Systems Engineer"), trainers ("Microsoft Certified Trainers") and
administrators ("Microsoft Certified Systems Administrator" and "Microsoft
Certified Database Administrator"). Microsoft Press, which publishes books,
is also managed by the division. The Online Services Business division
handles the online service MSN and the search engine Bing. As of
December 2009, the company also possesses an 18% ownership of the cable
news channel MSNBC without any editorial control; however, the division
develops the channel's website, msnbc.com, in a joint venture with the
channel's co-owner, NBC Universal.
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7. Business Division, Entertainment and Devices Division
The Microsoft Business Division produces Microsoft Office including
Microsoft Office 2010, the company's line of office software. The software
product includes Word (a word processor), Access (a relational database
program), Excel (a spreadsheet program), Outlook (Groupware, frequently
used with Exchange Server), PowerPoint (presentation software), and
Publisher (desktop publishing software). A number of other products were
added later with the release of Office 2003 including Visio, Project,
MapPoint, InfoPath and OneNote. The division also develops enterprise
resource planning (ERP) software for companies under the Microsoft
Dynamics brand. These include: Microsoft Dynamics AX, Microsoft
Dynamics NAV, Microsoft Dynamics GP, and Microsoft Dynamics SL.
They are targeted at varying company types and countries, and limited to
organizations with under 7,500 employees. Also included under the
Dynamics brand is the customer relationship management software
Microsoft Dynamics CRM, part of the Azure Services Platform.
The Entertainment and Devices Division produces the Windows CE
OS for embedded systems and Windows Phone 7 for smartphones.
Microsoft initially entered the mobile market through Windows CE for
handheld devices, eventually developing into the Windows Mobile OS and
now, Windows Phone 7. Windows CE is designed for devices where the OS
may not directly be visible to the end user, in particular, appliances and cars.
The division also produces computer games that run on Windows PCs and
other systems including titles such as Age of Empires, Halo and the
Microsoft Flight Simulator series as well as a line of reference works that
include encyclopedias and atlases, under the name Encarta, and houses the
Macintosh Business Unit which produces Mac OS software including
Microsoft Office 2008 for Mac. Microsoft's Entertainment and Devices
Division designs, markets, and manufactures consumer electronics including
the Xbox 360 game console, the handheld Zune media player, and the
television-based Internet appliance MSN TV. Microsoft also markets
personal computer hardware including mice, keyboards, and various game
controllers such as joysticks and gamepads.
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8. Culture
Technical reference for developers and articles for various Microsoft
magazines such as Microsoft Systems Journal (or MSJ) are available through
the Microsoft Developer Network (MSDN). MSDN also offers subscriptions
for companies and individuals, and the more expensive subscriptions usually
offer access to pre-release beta versions of Microsoft software. In April 2004
Microsoft launched a community site for developers and users, titled
Channel9, that provides a wiki and an Internet forum. Another community
site that provides daily video casts and other services, On10.net, launched on
March 3, 2006. Free technical support is traditionally provided through
online Usenet newsgroups, and CompuServe in the past, monitored by
Microsoft employees; there can be several newsgroups for a single product.
Helpful people can be elected by peers or Microsoft employees for
Microsoft Most Valuable Professional (MVP) status, which entitles them to
a sort of special social status and possibilities for awards and other benefits.
Noted for its internal lexicon, the expression "eating our own dog
food" is used to describe the policy of using prerelease and beta versions of
products inside Microsoft in an effort to test them in "real-world" situations.
This is usually shortened to just "dog food" and is used as noun, verb, and
adjective. Another bit of jargon, FYIFV or FYIV ("Fuck You, I'm [Fully]
Vested"), is used by an employee to indicate they are financially
independent and can avoid work anytime they wish. The company is also
known for its hiring process, mimicked in other organizations and dubbed
the "Microsoft interview", which is notorious for off-the-wall questions such
as "Why is a manhole cover round?".
Microsoft is an outspoken opponent of the cap on H1B visas, which
allow companies in the U.S. to employ certain foreign workers. Bill Gates
claims the cap on H1B visas make it difficult to hire employees for the
company, stating "I'd certainly get rid of the H1B cap" in 2005. Critics of
H1B visas argue that increasing (or eliminating) the cap only takes jobs
away from U.S. citizens due to H1B workers working for lower salaries. The
Human Rights Campaign Corporate Equality Index, a report of how
progressive the organization deems company policies towards LGBT
(lesbian, gay, bisexual and transsexual) employees, rated Microsoft as 87%
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from 2002 to 2004 and as 100% from 2005 to 2010 after they allowed
gender expression.
9. Corporate affairs
The company is run by a board of directors made up of mostly
company outsiders, as is customary for publicly traded companies. Members
of the board of directors as of June 2010 are: Steve Ballmer, Dina Dublon,
Bill Gates (chairman), Raymond Gilmartin, Reed Hastings, Maria Klawe,
David Marquardt, Charles Noski, and Helmut Panke. Board members are
elected every year at the annual shareholders' meeting using a majority vote
system. There are five committees within the board which oversee more
specific matters. These committees include the Audit Committee, which
handles accounting issues with the company including auditing and
reporting; the Compensation Committee, which approves compensation for
the CEO and other employees of the company; the Finance Committee,
which handles financial matters such as proposing mergers and acquisitions;
the Governance and Nominating Committee, which handles various
corporate matters including nomination of the board; and the Antitrust
Compliance Committee, which attempts to prevent company practices from
violating antitrust laws.
When Microsoft went public and launched its initial public offering
(IPO) in 1986, the opening stock price was $21; after the trading day, the
price closed at $27.75. As of July 2010, with the company's nine stock splits,
any IPO shares would be multiplied by 288; if one was to buy the IPO today
given the splits and other factors, it would cost about 9 cents. The stock
price peaked in 1999 at around $119 ($60.928 adjusting for splits). The
company began to offer a dividend on January 16, 2003, starting at eight
cents per share for the fiscal year followed by a dividend of sixteen cents per
share the subsequent year, switching from yearly to quarterly dividends in
2005 with eight cents a share per quarter and a special one-time payout of
three dollars per share for the second quarter of the fiscal year.
One of Microsoft's business tactics, described by an executive as
"embrace, extend and extinguish," initially embraces a competing standard
or product, then extends it to produce their own version which is then
incompatible with the standard, which in time extinguishes competition that
does not or cannot use Microsoft's new version. Various companies and
governments sue Microsoft over this set of tactics, resulting in billions of
dollars in rulings against the company.
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10. Environment
Greenpeace ranked the electronics portion of Microsoft's business
(e.g. game consoles, computer peripherals, etc.) 3rd worst in Microsoft's
introduction in November 2007 and 3rd worst in May 2010 out of 18
companies in its "Guide to Greener Electronics", an assessment of chemical-
disposal waste-reduction practices. Microsoft's main U.S. campus received a
silver certification from the Leadership in Energy and Environmental Design
(LEED) program in 2008, and it installed over 2,000 solar panels on top of
its buildings in its Silicon Valley campus, generating approximately 15
percent of the total energy needed by the facilities in April 2005.
Microsoft makes use of alternative forms of transit. It created one of
the worlds largest private bus systems, the "Connector", to transport people
from outside the company; for on-campus transportation, the "Shuttle
Connect" uses a large fleet of hybrid cars to save fuel. The company also
subsidises regional public transport as an incentive. In February 2010
however, Microsoft took a stance against adding additional public transport
and high-occupancy vehicle (HOV) lanes to a bridge connecting Redmond
to Seattle; the company did not want to delay the construction any further.
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11. Marketing
In 2004, Microsoft commissioned research firms to do independent
studies comparing the total cost of ownership (TCO) of Windows Server
2003 to Linux; the firms concluded that companies found Windows easier to
administrate than Linux, thus those using Windows would administrate
faster resulting in lower costs for their company (i.e. lower TCO). This
spurred a wave of related studies; a study by the Yankee Group concluded
that upgrading from one version of Windows Server to another costs a
fraction of the switching costs from Windows Server to Linux, although
companies surveyed noted the increased security and reliability of Linux
servers and concern about being locked into using Microsoft products.
Another study, released by the OSDL, claimed that the Microsoft studies
were "simply outdated and one-sided" and their survey concluded that the
TCO of Linux was lower due to Linux administrators managing more
servers on average and other reasons.
Microsoft adopted the so-called "Pac-Man Logo", designed by Scott
Baker, in 1987. Baker stated "The new logo, in Helvetica italic typeface, has
a slash between the o and s to emphasize the "soft" part of the name and
convey motion and speed." Dave Norris ran an internal joke campaign to
save the old logo, which was green, in all uppercase, and featured a fanciful
letter O, nicknamed the blibbet, but it was discarded. Microsoft's logo with
the "Your potential. Our passion." tagline below the main corporate name, is
based on a slogan Microsoft used in 2008. In 2002, the company started
using the logo in the United States and eventually started a TV campaign
with the slogan, changed from the previous tagline of "Where do you want
to go today?". During the private MGX (Microsoft Global Exchange)
conference in 2010, Microsoft unveiled the company's next tagline, "Be
What's Next.", as well as a new logo scheduled for use sometime in the
future.
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12. Conclusion
At Microsoft, they're motivated and inspired every day by how their
customers use their software to find creative solutions to business problems,
develop breakthrough ideas, and stay connected to what's most important to
them. They run their business in much the same way, and believe their five
business divisions offer the greatest potential to serve their customers. They
are committed long term to the mission of helping their customers realize
their full potential. Just as they constantly update and improve their
products, they want to continually evolve their company to be in the best
position to accelerate new technologies as they emerge and to better serve
their customers, and that’s the key to their success.
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13. References
1. http://en.wikipedia.org/wiki/Microsoft
2. http://www.microsoft.com/about/en/us/default.aspx
3. http://www.fundinguniverse.com/company-histories/Microsoft-
Corporation-Company-History.html
4. http://office.microsoft.com/en-us/
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