Microsoft Corporation is an American multinational software corporation headquartered in Redmond, Washington that develops, manufactures, licenses, and supports a wide range of products and services related to computing. The company was founded by Bill Gates and Paul Allen on April 4, 1975. Microsoft is the world's largest software maker measured by revenues.[4] It is also one of the world's most valuable companies.[5]

Microsoft was established to develop and sell BASIC interpreters for the Altair 8800. It rose to dominate the personal computer operating system market with MS-DOS in the mid-1980s, followed by the Microsoft Windows line of operating systems. The company's 1986 initial public offering, and subsequent rise in its share price, created an estimated three billionaires and 12,000 millionaires from Microsoft employees. Since the 1990s, it has increasingly diversified from the operating system market and has made a number of corporate acquisitions. In May 2011, Microsoft acquired Skype Technologies for $8.5 billion in its largest acquisition to date.[6]

As of 2013, Microsoft is market dominant in both the PC operating system and office suite markets (the latter with Microsoft Office). The company also produces a wide range of other software for desktops and servers, and is active in areas including internet search (with Bing), the video game industry (with the Xbox and Xbox 360 consoles), the digital services market (through MSN), and mobile phones (via the Windows Phone OS). In June 2012, Microsoft announced that it would be entering the PC vendor market for the first time, with the launch of the Microsoft Surface tablet computer.

In the 1990s, critics began to contend that Microsoft 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.
1972–83: Founding and company beginnings
Paul Allen and Bill Gates, childhood friends with a passion in computer programming, were seeking to make a successful business utilizing their shared skills. In 1972 they founded their first company named Traf-O-Data, which offered a rudimentary computer that tracked and analyzed automobile traffic data. Allen went on to pursue a degree in computer science at the University of Washington, later dropping out of school to work at Honeywell. Gates began studies at Harvard.[9] The January 1975 issue of Popular Electronics featured Micro Instrumentation and Telemetry Systems's (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.[7]:108, 112–114 They officially established Microsoft on April 4, 1975, with Gates as the CEO.[10] Allen came up with the original name of "Micro-Soft," the combination of the words microcomputer and software, as recounted in a 1995 Fortune magazine article. In August 1977 the company formed an agreement with ASCII Magazine in Japan, resulting in its first international office, "ASCII Microsoft".[11] The company moved to a new home in Bellevue, Washington in January 1979.[10]

Microsoft entered the OS business in 1980 with its own version of Unix, called Xenix.[12] However, it was MS-DOS that solidified the company's dominance. After negotiations with Digital Research failed, IBM awarded a contract to Microsoft in November 1980 to provide a version of the CP/M OS, which was set to be used in the upcoming IBM Personal Computer (IBM PC).[13] 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 operating systems vendor.[8][14]:210 The company expanded into new markets with the release of the Microsoft Mouse in 1983, as well as a publishing division named Microsoft Press.[7]:232 Paul Allen resigned from Microsoft in February after developing Hodgkin's disease.[7]:231
1984–94: Windows and Office

While jointly developing a new OS with IBM in 1984, OS/2, Microsoft released Microsoft Windows, a graphical extension for MS-DOS, on November 20, 1985.[7]:242–243, 246 Microsoft moved its headquarters to Redmond on February 26, 1986, and on March 13 the company went public;[15] the ensuing rise in the stock would make an estimated four billionaires and 12,000 millionaires from Microsoft employees.[16] 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.[17] Microsoft announced the release of its version of OS/2 to original equipment manufacturers (OEMs) on April 2, 1987;[7]:243–244 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.[18]

In 1990, Microsoft introduced its office suite, Microsoft Office. The software bundled separate office productivity applications, such as Microsoft Word and Microsoft Excel.[7]:301 On May 22 Microsoft launched Windows 3.0 with a streamlined user interface graphics and improved protected mode capability for the Intel 386 processor.[19] Both Office and Windows became dominant in their respective areas.[20][21] 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.[22]

On July 27, 1994, the U.S. Department of Justice, Antitrust Division filed a Competitive Impact Statement that said, in part: "Beginning in 1988, and continuing until July 15, 1994, Microsoft induced many OEMs to execute anti-competitive "per processor" licenses. Under a per processor license, an OEM pays Microsoft a royalty for each computer it sells containing a particular microprocessor, whether the OEM sells the computer with a Microsoft operating system or a non-Microsoft operating system. In effect, the royalty payment to Microsoft when no Microsoft product is being used acts as a penalty, or tax, on the OEM's use of a competing PC operating system. Since 1988, Microsoft's use of per processor licenses has increased.