Established in 1975, Microsoft is currently commemorating its 50th anniversary, having played a significant role in the personal computing revolution, initially with MS-DOS and later with Windows.
During the 1980s, Microsoft showcased, through the IBM Project Chess, one of the earliest personal computers, that business computing could be accessible to everyone, not just limited to IT professionals in server rooms.
With the introduction of VisiCalc, a spreadsheet program originally developed for the Apple II, when the IBM PC was launched in 1981, it had a standout application that allowed business users to analyze data without relying on the data processing department.
Breakthroughs of the nineties
However, the 1990s ushered in a shift in personal computing from the MS-DOS command-line interface to a graphical user interface (GUI) with Windows.
Additionally, the separation of IBM and Microsoft, which had been mutually beneficial, led IBM to promote an operating system called OS/2 to its loyal customers, while exploring collaborations with Apple and Motorola to develop a competitor to the x86 architecture of PCs, known as PowerPC.
Meanwhile, Microsoft focused on enhancing its Windows GUI, with significant progress seen in 1990 with the launch of Windows 3. By 1993, development began on a server operating system, Windows NT, to support the SQL Server database, which originated from a partnership with Sybase and Ashton-Tate, initially running on the IBM OS/2 platform.
During this period, remarkable advancements were occurring, with the emergence of the World Wide Web and the availability of the Mosaic browser to the masses. In 1995, Windows 95 was introduced as Microsoft’s first fully GUI-based operating system.
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Simultaneously, Linux was gaining popularity as an alternative to proprietary Unix servers in data centers. In response, Microsoft launched Exchange in 1996, an email server compatible with the Windows NT Server operating system.
By the early 2000s, Microsoft’s server offerings began to take shape, supported by the stability of the rebranded server operating systems – initially Windows 2000, followed by Windows Server 2003.
The upgrade dilemma
Meanwhile, on the desktop front, Microsoft aimed to transition users to Windows XP, but faced resistance from those sticking with the older Windows Me operating system. This challenge of user adoption has persisted with each subsequent Windows version.
In October of this year, Microsoft is set to launch its latest Windows version. Windows 10 will be officially phased out in the same month, giving Windows 11 users a five-year window to migrate to the new OS introduced in October 2021.
While many organizations are familiar with this five-year upgrade cycle, the shift to a new Windows version typically raises the minimum hardware requirements, rendering older hardware incompatible. This often leads to increased purchases of new PCs.
Over the past year, Microsoft has been preparing its customers for the era of desktop artificial intelligence (AI), where every PC will necessitate a neural processing unit (NPU) for local AI tasks.
Love for developers
Former Microsoft CEO Steve Ballmer famously emphasized “developers” as he celebrated the software developer community at a Microsoft event.
When Paul Allen and Bill Gates founded Microsoft in 1975, they recognized the significance of supporting a software developer ecosystem. This began with Microsoft Basic, a programming language tailored for the first microcomputer, Altair 8080. The widespread licensing of Basic led to its inclusion in popular home computers of the 1980s.
With Windows, Microsoft introduced a software developer kit (SDK) to foster an ecosystem for developers to create software compatible with the new platform. This initiative not only spurred the development of Windows applications but also paved the way for Windows-based integrated development environments (IDEs), such as Microsoft’s Visual Studio, now a standard for Windows developers.
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Relationship with regulators
Throughout its history, Microsoft has focused on establishing standards to drive technology adoption. The PC architecture, known as an industry standard architecture (ISA), enabled Windows to operate, with Microsoft leading various industry standards and open standards initiatives, some of which have become obsolete.
Microsoft has committed to releasing technical documents for protocols used in Windows Client, Windows Server, Office, SharePoint, Exchange Server, and SQL Server to facilitate communication with other Microsoft products. By utilizing these protocols, third-party developers can create products that integrate with Microsoft offerings.
However, Microsoft’s bundling of functionalities into Windows and its business practices related to these protocols have put the company at odds with competition laws. In 2000, it faced anti-competitive allegations for bundling Internet Explorer with Windows, and more recently, EU regulators fined Microsoft €2.2bn for integrating Teams with Office 365 and Microsoft 365 products.
Change of tack with open source
While initially competing with Red Hat and SuSE to position Windows Server against Linux and open source technologies in data centers, Microsoft has embraced open source to cater to developer preferences.
In a surprising move, Microsoft acquired the open-source repository GitHub in 2016 for $7.6bn.
Windows now includes a Linux subsystem, enabling Linux administrators to utilize familiar command-line tools within the Windows environment.
The cloud and AI
Despite Amazon Web Services (AWS) leading in public cloud services, Microsoft has significantly expanded its Azure public cloud to become a major contender. Its strong rapport with Windows enterprise customers has played a pivotal role in Azure’s success.
As Microsoft’s products have become integral to corporate IT, its relationship with customers has facilitated cross-selling and upselling Azure and cloud-based services. Data from the fourth quarter of 2024 shows Amazon at 30% market share, Microsoft at 21%, and Google Cloud at 12%.
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Microsoft’s $10bn investment in OpenAI in 2023, the mastermind behind ChatGPT, has propelled the company into the AI era and is poised to drive its public cloud growth.
“Our analysis suggests that since the launch of ChatGPT, GenAI has contributed significantly to the growth in cloud service revenues, either through new GenAI/GPU services or AI-driven enhancements to existing cloud services,” stated John Dinsdale, chief research analyst at Synergy Research Group.
What next?
Satya Nadella has led Microsoft as CEO since 2014, steering the company towards becoming a prominent AI enterprise. Moving forward, Microsoft faces the challenge of evolving LinkedIn, acquired for over $26bn in 2016.
According to the second quarter 2025 results transcript, the professional social networking platform generates annual revenue of $2.2bn and is projected to experience “low to mid single-digit” growth this year.
However, Microsoft has yet to clarify how LinkedIn integrates with its enterprise software portfolio.
