for your enjoyment (1 Viewer)

Jan 7, 2004
I got this article from Encarta Reference Library 2003. if u are bored enough u can read it. (encarta was produced by Microsoft)

Microsoft Corporation

Microsoft Corporation, leading American computer software company. Microsoft develops and sells a wide variety of software products to businesses and consumers and has subsidiary offices in more than 60 countries. The company’s Windows operating systems for personal computers are the most widely used operating systems in the world. Microsoft has its headquarters in Redmond, Washington.

(Microsoft is the publisher of Encarta Encyclopedia.)

Microsoft’s other well-known products include Word, a word processor; Excel, a spreadsheet program; Access, a database program; and PowerPoint, a program for making business presentations. These programs are sold separately and as part of Office, an integrated software suite. The company also makes software applications for a wide variety of server products for businesses. Microsoft’s Internet Explorer (IE) allows users to browse the World Wide Web. Among the company’s other products are reference applications; games; financial software; programming languages for software developers; input devices, such as pointing devices and keyboards; software for personal digital assistants (PDAs) and cellular telephones; handwriting-recognition software; software for creating Web pages; and computer-related books.

Microsoft operates the Microsoft Network (MSN), a collection of news, travel, financial, entertainment, and information Web sites. Microsoft and the National Broadcasting Company (NBC) jointly operate MSNBC, a 24-hour news, talk, and information cable-television channel and companion Web site.


Microsoft was founded in 1975 by William H. Gates III and Paul Allen. The pair had teamed up in high school through their hobby of programming on the original PDP-10 computer from the Digital Equipment Corporation. In 1975 Popular Electronics magazine featured a cover story about the Altair 8800, the first personal computer (PC). The article inspired Gates and Allen to develop a version of the BASIC programming language for the Altair. They licensed the software to Micro Instrumentation and Telemetry Systems (MITS), the Altair’s manufacturer, and formed Microsoft (originally Micro-soft) in Albuquerque, New Mexico, to develop versions of BASIC for other computer companies. Microsoft’s early customers included fledgling hardware firms such as Apple Computer, maker of the Apple II computer; Commodore, maker of the PET computer; and Tandy Corporation, maker of the Radio Shack TRS-80 computer. In 1977 Microsoft shipped its second language product, Microsoft Fortran, and it soon released versions of BASIC for the 8080 and 8086 microprocessors.


In 1979 Gates and Allen moved the company to Bellevue, Washington, a suburb of their hometown of Seattle. (The company moved to its current headquarters in Redmond in 1986.) In 1980 International Business Machines Corporation (IBM) chose Microsoft to write the operating system for the IBM PC personal computer, to be introduced the following year. Under time pressure, Microsoft purchased 86-DOS (originally called QDOS for Quick and Dirty Operating System) from Seattle programmer Tim Paterson for $50,000, modified it, and renamed it MS-DOS (Microsoft Disk Operating System). As part of its contract with IBM, Microsoft was permitted to license the operating system to other companies. By 1984 Microsoft had licensed MS-DOS to 200 personal computer manufacturers, making MS-DOS the standard operating system for PCs and driving Microsoft’s enormous growth in the 1980s. Allen left the company in 1983 but remained on its board of directors until 2000.


As sales of MS-DOS took off, Microsoft began to develop business applications for personal computers. In 1982 it released Multiplan, a spreadsheet program, and the following year it released a word-processing program, Microsoft Word. In 1984 Microsoft was one of the few established software companies to develop application software for the Macintosh, a personal computer developed by Apple Computer, Inc. Microsoft’s early support for the Macintosh resulted in tremendous success for its Macintosh application software, including Word, Excel, and Works (an integrated software suite). Multiplan for MS-DOS, however, faltered against the popular Lotus 1-2-3 spreadsheet program made by Lotus Development Corporation.


In 1985 Microsoft released Windows, an operating system that extended the features of MS-DOS and employed a graphical user interface. Windows 2.0, released in 1987, improved performance and offered a new visual appearance. In 1990 Microsoft released a more powerful version, Windows 3.0, which was followed by Windows 3.1 and 3.11. These versions, which came preinstalled on most new personal computers, rapidly became the most widely used operating systems. In 1990 Microsoft became the first personal-computer software company to record $1 billion in annual sales.

As Microsoft’s dominance grew in the market for personal-computer operating systems, the company was accused of monopolistic business practices. In 1990 the Federal Trade Commission (FTC) began investigating Microsoft for alleged anticompetitive practices, but it was unable to reach a decision and dropped the case. The United States Department of Justice continued the probe.

In 1991 Microsoft and IBM ended a decade of collaboration when they went separate ways on the next generation of operating systems for PCs. IBM chose to pursue the OS/2 operating system (first released in 1987), which until then had been a joint venture with Microsoft. Microsoft chose to evolve its Windows operating system into increasingly powerful systems. In 1993 Apple lost a copyright-infringement lawsuit against Microsoft that claimed Windows illegally copied the design of the Macintosh’s graphical interface. An appellate court later upheld the ruling.

In 1993 Microsoft released Windows NT, an operating system for business environments. In 1994 the company and the Justice Department reached an agreement that called for Microsoft to change the way its operating system software was sold and licensed to computer manufacturers. In 1995 the company released Windows 95, which featured a simplified interface, multitasking, and other improvements. An estimated 7 million copies of Windows 95 were sold worldwide within seven weeks of its release.

A Business Developments

In the mid-1990s Microsoft began to expand into the media, entertainment, and communications industries, launching MSN in 1995 and MSNBC in 1996. Also in 1996 Microsoft introduced Windows CE, an operating system for handheld personal digital assistants (PDAs). In 1997 Microsoft paid $425 million to acquire WebTV Networks, a manufacturer of low-cost devices to connect televisions to the Internet. That same year Microsoft invested $1 billion in Comcast Corporation, a U.S. cable-television operator, as part of an effort to expand the availability of high-speed connections to the Internet.

In June 1998 Microsoft released Windows 98, which featured integrated Internet capabilities. In the following month Gates appointed Steve Ballmer, executive vice president of Microsoft, as the company’s president, giving him supervision of most day-to-day business operations of the company. Gates retained the title of chairman and chief executive officer (CEO).

In 1999 Microsoft paid $5 billion to telecommunications company AT&T Corp. to use Microsoft’s Windows CE operating system in devices designed to provide consumers with integrated cable television, telephone, and high-speed Internet services. Also in 1999, the company released Windows 2000, the latest version of the Windows NT operating system. In January 2000 Gates transferred his title of CEO to Ballmer. While retaining the position of chairman, Gates also took on the title of chief software architect to focus on the development of new products and technologies.

In 2001 Microsoft released a new operating system known as Windows XP, the company’s first operating system for consumers that was not based on MS-DOS. The same year the company also released Xbox, its first venture into video-game consoles. Microsoft announced a new business strategy in 2001 known as .Net (pronounced dot net). The strategy sought to enable a variety of hardware devices, from PCs to PDAs to cell phones, to communicate with each other via the Internet, while also automating many computer functions.

In 2002 the first major component of this strategy was released, a product known as Visual Studio .NET which was aimed at software developers. Other major business developments in 2002 included the release of MSN 8, a new version of the Microsoft Network that featured improved parental controls, and the development with several major computer manufacturers of the Tablet PC, a laptop computer that featured handwriting recognition software and a wireless connection to the Internet.

B Legal Challenges

In late 1997 the Justice Department accused Microsoft of violating the 1994 agreement by requiring computer manufacturers that installed Windows 95 to also include Internet Explorer, Microsoft’s software for browsing the Internet. The government contended that Microsoft was illegally taking advantage of its power in the market for computer operating systems to gain control of the market for Internet browsers. In response, Microsoft argued that it should have the right to enhance the functionality of Windows by integrating Internet-related features into the operating system. Also in late 1997, computer company Sun Microsystems sued Microsoft, alleging that it had breached a contract for use of Sun’s Java universal programming language by introducing Windows-only enhancements. In November 1998 a federal district court ruled against Microsoft on an injunction filed by Sun earlier that year. The injunction forced Microsoft to revise its software to meet Sun’s Java compatibility standards. The two companies settled the case in 2001, with Microsoft agreeing to pay Sun $20 million for limited use of Java.

Microsoft temporarily settled with the Justice Department in its antitrust case in early 1998 by agreeing to allow personal computer manufacturers to offer a version of Windows 95 that did not include access to Internet Explorer. However, in May 1998 the Justice Department and 20 states filed broad antitrust suits charging Microsoft with engaging in anticompetitive conduct. The suits sought to force Microsoft to offer Windows without Internet Explorer or to include Navigator, a competing browser made by Netscape Communications Corporation. The suits also challenged some of the company’s contracts and pricing strategies.

The federal antitrust trial against Microsoft began in October 1998. Executives from Netscape, Sun, and several other computer software and hardware companies testified regarding their business deals with Microsoft. In November 1999 Judge Thomas Penfield Jackson issued his findings of fact in the antitrust case, in which he declared that Microsoft had a monopoly in the market for personal computer operating systems. In 2000 Jackson ruled that the company had violated antitrust laws by engaging in tactics that discouraged competition. He ordered Microsoft to be split into two companies: one for operating systems and another for all other businesses, including its Office software suite. He also imposed a number of interim restrictions on the company’s business practices. The judge put these penalties on hold while Microsoft appealed the decision.

In June 2001 an appeals court upheld Jackson’s findings that Microsoft had monopoly power and that the company used anticompetitive business practices to protect its Windows monopoly. However, the appeals court threw out the trial court’s ruling that Microsoft had illegally integrated Internet Explorer into Windows, returning the issue to a lower court for review under a different legal standard. The appeals court also reversed Jackson’s order to break up the company, in part because of the judge’s failure to hold a proper hearing on the remedy and in part because of comments he made to reporters outside the courtroom about the merits of the case. The court found that Jackson’s comments were improper because they created the appearance of bias, even though the court found no evidence of actual bias. The appeals court ordered that the case be assigned to a different district court judge to reconsider the remedy for Microsoft’s violations of antitrust law.

The case was assigned to Judge Colleen Kollar-Kotelly who urged both parties to reach a settlement. In November 2001 Microsoft announced a settlement with the Justice Department and nine of the states. Key provisions included requiring Microsoft to reveal technical information about the Windows operating system to competitors so that software applications known as middleware would be compatible with Windows, while also enabling personal computer manufacturers to hide icons for activating Microsoft software applications. A computer manufacturer could therefore remove access to Internet Explorer and enable another Internet browser to be displayed on the desktop. A three-member, independent technical committee was to be established to oversee compliance with the settlement. However, nine other states and the District of Columbia refused to accept the agreement and pressed for harsher remedies. (Of the original 20 states, South Carolina and New Mexico dropped out of the case before the settlement was reached.) In early 2002 Kollar-Kotelly held hearings to review the terms of the settlement and to consider the objections raised by the dissenting parties.

In November 2002 Kollar-Kotelly approved most of the provisions of the settlement and rejected nearly all of the harsher remedies proposed by the dissenting parties. However, the judge amended the settlement by extending the remedies regarding middleware to server applications and by specifying that the compliance committee should be made up of at least three outside members of Microsoft’s board of directors, who would be held responsible for complying with the terms of the settlement.

Microsoft ® Encarta ® Reference Library 2003. © 1993-2002 Microsoft Corporation. All rights reserved.

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