Microsoft’s technological evolution is nothing short of extraordinary, spanning nearly five decades of relentless innovation and strategic repositioning. From its humble beginnings in 1975 to becoming a giant in cloud computing and artificial intelligence, the company’s journey reflects a combination of visionary leadership, technological breakthroughs, and navigating complex regulatory landscapes.
1 The Age of the Basics
On April 4, 1975, a pair of young programmers, William Henry Gates, aged 19, and Paul Allen, aged 22, established what would become one of the world’s most influential tech companies, Microsoft, in Albuquerque, New Mexico. Their partnership was born during their days at Lakeside School, an elite private high school in Seattle, where Gates had founded a programming club that Allen quickly joined.
Their early collaborative efforts bore fruit in projects like Traf-O-Data, software designed to analyze traffic flow data. Running on a custom-built "home" computer with an Intel 8008 processor—a pioneering 8-bit microprocessor—the project showcased their technical capabilities.
In 1973, Gates moved to Harvard University in Cambridge, Massachusetts, while Allen took a programming job at Honeywell near Boston. Even as they pursued their academic journeys, the microprocessor revolution was gaining momentum, capturing their keen interest. The January 1975 cover story of Popular Electronics announced the Altair 8800—an inexpensive, kit-built microcomputer featuring the Intel 8080 processor and just 256 bytes of memory, operated via switches and indicator LEDs.
The Altair’s launch by Micro Instrumentation and Telemetry Systems (MITS)—originally a company that produced sensors for model rocketry—sparked a new era. Gates and Allen proposed to make programming more accessible through their version of BASIC (Beginner’s All-Purpose Symbolic Instruction Code), a language created in the 1960s at Dartmouth College that used English-like commands, including the renowned "PRINT."
Their adaptation for the Altair went beyond the original, adding features like subroutine support and commands such as PEEK and POKE to directly access memory addresses. A formal agreement with MITS formalized Gates and Allen as vice-presidents of software development, based in Albuquerque, with Allen remaining in contact with Gates as he finished his studies.
Meanwhile, an issue arose when MITS initially hesitated to broadly license the BASIC interpreter, fearing exclusivity. However, arbitration clarified that the contract was non-exclusive, opening the door for clones and third-party hardware.
By November 1976, the name “Microsoft”—a contraction of "Microcomputer" and "Software"—was officially registered. During this period, Gates and Allen expanded their BASIC offerings to include versions for other microprocessors, notably the 6502 from MOS Technology. This same year marked a significant milestone in personal computing: Apple was founded and introduced its first computer, the Apple I, on April 1.
2 The Era of DOS
In 1980, Microsoft released its first operating system, Xenix—a 16-bit, multi-user version of UNIX based on AT&T’s UNIX. The company’s portfolio of programming languages grew to include Pascal, while Steve Ballmer, a close associate of Gates from their school days, joined the burgeoning enterprise from Procter & Gamble.
Most notably, negotiations with IBM began in earnest around that time. IBM initially considered acquiring Atari or partnering with Digital Research—the company of Gary Kildall, creator of the influential CP/M OS—before turning to Microsoft. Following failed negotiations with Digital Research, Microsoft secured the opportunity to supply IBM with an OS, under the project code name “Project Chess.” On August 12, 1981, IBM launched the IBM PC, powered by an Intel 8088 processor running at 4.77 MHz, with 16 KB of RAM (expandable to 256 KB), and featuring floppy disk drives.
Microsoft’s contribution was on the software front: the IBM Disk Operating System, or MS-DOS, built from Seattle Computer Products’ SCP-DOS, a version inspired by CP/M. This strategic move allowed Microsoft to license MS-DOS to other computer manufacturers, enabling a burgeoning clone market based on standard components.
Their careful negotiations included safeguards against exclusive rights, enabling Microsoft to market and license MS-DOS broadly—fueling an explosion of clone machines. By 1982, Microsoft’s revenues topped $1 million, and the company expanded internationally, establishing its first foreign office in Japan in 1983. Moving headquarters to Bellevue near Seattle in 1986, Microsoft also launched its first 16-bit software—Multiplan, a spreadsheet program—and Word, its word processor.
The mid-1980s saw the first graphical applications on Windows, largely inspired by the Macintosh’s GUI. To that end, Microsoft struck a licensing deal with Apple, allowing it to incorporate certain Mac-like features into Windows, chiefly to support applications like Word and Excel, which would be released in 1985. The Windows interface was initially a graphical shell that ran on top of MS-DOS, but it marked the start of a broader graphical user interface effort.
By 1986, Microsoft moved its headquarters to Redmond, Washington, and went public, raising $61 million in its IPO. That same year, it launched the Office suite, combining Word, Excel, and other productivity applications, setting the stage for dominance in office software.
3 The Windows Era
1985 marked the debut of Microsoft Windows, a graphical interface extending MS-DOS. Initially requiring two floppy drives and at least 192 KB of RAM, Windows 1.0 included basic applications such as Notepad, Paint, and Calendar. Its early reception was mixed, with critics citing performance issues and a steep learning curve. Nevertheless, Windows gained traction, bolstered by strategic alliances and its growing familiarity as the standard Windows interface.
In 1987, Windows 2.0 improved on its predecessor with overlapping windows and better graphics support. That same year, Microsoft acquired developer Forethought, which brought PowerPoint into its fold. Microsoft continued to develop Windows, leading to Windows 3.0 in 1990, which offered a more refined interface and won widespread adoption.
Simultaneously, Microsoft pushed into hardware with products like the Z-80 SoftCard for the Apple II, enabling users to run CP/M and other systems. The company also expanded its software portfolio with applications like Multiplan—predecessor to Excel—and Word for Windows, emphasizing a graphical interface.
The launch of Windows 3.1 in 1992 was a major success, incorporating features such as TrueType fonts and better multitasking capabilities, and was globally localized in multiple languages. It marked Microsoft’s transition from a software company to a major player in operating systems.
The mid-1990s heralded a new age: the introduction of Internet connectivity and multimedia. Microsoft collaborated with Intel to enhance multimedia features, including sound and video. The pivotal moment came with Windows 95, released on August 24, 1995, which was promoted extensively online. This system incorporated the revolutionary Start menu, Plug & Play hardware support, and integrated Internet Explorer—though initially as an add-on.
Within days, Windows 95 sold over a million copies, and by October, sales reached 7 million units. Microsoft also launched MSN, its online portal, and began to embed its services into the OS, laying the groundwork for the digital ecosystems of today.
4 The Internet Age
Throughout the 1990s, Microsoft expanded into multimedia and internet services. It partnered with companies like Intel to embed audio and visual capabilities into Windows applications, acquired firms such as Softimage for 3D animation, and established joint ventures with DreamWorks.
A critical turn came in August 1995 with Windows 95’s launch, the first major OS to operate independently of MS-DOS. The system introduced Internet Explorer, initially a supplementary browser based on Spyglass technology, signaling Microsoft’s growing attention to the web. The company’s aggressive leadership was challenged by antitrust investigations, notably in 1998 when the US Department of Justice filed a lawsuit alleging Microsoft used its dominance to stifle competition—particularly by bundling Internet Explorer and pressuring PC manufacturers to favor it.
Microsoft’s legal battles led to a series of settlements and consent decrees, including agreements to prevent exclusive deals and to improve interoperability. The company’s revenues surged past $100 million in the late 1980s, and by 1995, it was a titan in global software sales.
The late 1990s saw the launch of online services like Hotmail, acquired in December 1997 for a then-unprecedented $500 million, and the introduction of the .NET framework, which laid the groundwork for future web services and applications.
Despite facing regulatory scrutiny, Microsoft continued to diversify with projects like Windows CE for mobile and embedded devices, and the development of Internet Explorer on Mac and other platforms. The company faced ongoing legal, competitive, and technological challenges, but maintained its central role in shaping digital infrastructure.
5 The Mobile and Device Era
The early 2000s saw Microsoft investing heavily in mobile and hardware. In 2001, it launched Windows XP, lauded for its stability and user-friendliness, consolidating the Windows NT line for consumer computers. Meanwhile, Microsoft entered the gaming world with the Xbox in 2000, shipping millions of units worldwide and establishing itself as a formidable player in entertainment.
In 2002, following acquisitions like Navision (later Dynamics), Microsoft expanded its enterprise services. The company also invested billions in telecom companies like Telewest. Concurrently, it began to explore tablet computing—introducing the Tablet PC standard in 2002, with stylus-based input, and later developing Windows Mobile, originating from early PDA projects in the 1990s.
By the late 2000s, Windows Mobile was succeeded by Windows Phone, emphasizing touch input and modern app ecosystems. Reduce reliance on legacy Windows Mobile, Microsoft targeted mobile markets through partnerships with manufacturers like HTC, Samsung, and LG—though initial efforts faced challenges in gaining significant market share.
In 2011, Microsoft’s strategic alliance with Nokia aimed to bolster its mobile ambitions. Nokia agreed to shift focus from Symbian and MeeGo to Windows Phone, which launched as Windows Phone 7. The OS was designed around touchscreen interfaces, and the Lumia series became its flagship.
However, market penetration remained limited, and in 2013, Microsoft acquired Nokia’s devices division for over €5 billion, aiming to unify hardware and software. The integration proved complex and expensive, leading to layoffs and a decline in Windows Phone’s market share, which remained under 10% globally by the mid-2010s.
6 The Cloud Transformation
The pivot to cloud computing became the defining shift in Microsoft’s latest era. In 2015, the company launched Windows 10 and unified its platform under a common core, Windows 10 Mobile, culminating in the release of Windows 10 Mobile in 2015, which aimed to provide a seamless experience across devices.
Under new leadership—Satya Nadella took over from Steve Ballmer in 2014—Microsoft prioritized cloud services, AI, and subscription models. Nadella’s vision was to embed cloud computing and mobile integration into the fabric of Microsoft’s thriving ecosystem.
The company’s crown jewel in this era is Azure, launched in 2009, which has grown to become the leading cloud platform globally, with Linux now surpassing Windows in its cloud offerings. Initially limited in features, Azure rapidly expanded, becoming central in enterprise data management, AI research, and hybrid cloud strategies. However, this expansion has not been without conflicts, including legal disputes and regulatory scrutiny in the U.S. and Europe over data privacy and competitive practices.
Major acquisitions under Nadella include LinkedIn (for over $26 billion in 2016), which has fueled integration across Microsoft’s productivity tools; GitHub (for $7.5 billion in 2018), strengthening its developer ecosystem; and numerous startups to enhance AI and cloud technologies further. This ecosystem now includes a broad array of services, from Office 365 to Dynamics 365, all tightly integrated with Azure cloud infrastructure.
Regulatory challenges persist, with ongoing investigations into data governance, antitrust proceedings across continents, and compliance with privacy regulations like GDPR—all requiring continual adaptation.
7 The AI Age
The latest chapter emerged in 2019 when Microsoft announced a strategic partnership with OpenAI, pledging an investment of $1 billion. This collaboration has positioned Microsoft at the forefront of deep learning and generative AI models, culminating in the release of GPT-based services accessible via API, well before the public debut of ChatGPT in November 2022.
ChatGPT’s phenomenal popularity catalyzed widespread attention, prompting Microsoft to accelerate its AI developments. A subsequent $10 billion investment in OpenAI in early 2023 extended their partnership, making Microsoft the primary provider of cloud infrastructure for OpenAI’s models.
This relationship has sparked legal and regulatory debates, including lawsuits from the New York Times claiming copyright breaches and concerns from European authorities about potential de facto mergers, which were ultimately dismissed. Meanwhile, the integration of GPT models into Microsoft’s products—like Copilot in Office and Windows—has transformed productivity and user engagement.
Microsoft has also developed proprietary AI models—such as the SLM Phi series—while collaborating with other AI firms like Mistral AI, expanding the competitive landscape. Despite heavy reliance on GPT technologies, Microsoft’s strategic investments and internal development demonstrate a commitment to leadership in AI, shaping the future of computing.
8 The End of Legacy Products and the Path Forward
Recent years have seen the sunset of several Microsoft products. The company announced the discontinuation of Skype and Hololens, its mixed-reality headset, as a response to shifting priorities toward cloud and AI. The Microsoft Store physical retail locations have also closed, with the last stores shutting down in 2020 amid global pandemic disruptions.
Similarly, Windows 10X, intended for dual-screen devices like the Surface Neo, was canceled before release. Support for Windows 7 reached its end in January 2020, marking the full transition to Windows 10. The company has also phased out older virtual assistant Cortana from mainstream Windows deployments.
In hardware, the HoloLens AR-headset has shifted from consumer focus to enterprise and industrial applications. Meanwhile, Windows 11, launched in 2021, builds on the Windows Core OS architecture, further unifying Microsoft’s platform.
An ongoing initiative called the Secure Future Initiative reflects Microsoft’s commitment to cybersecurity, addressing vulnerabilities exposed over recent years—such as the Zerologon and PrintNightmare flaws—and evolving hardware security with technologies like Pluton, integrated into newer processors and designed to fortify the root of trust against cyber threats.
In the broader context, Microsoft continues balancing its legacy products with innovative strategies, navigating regulatory scrutiny and market shifts, intensifying its push towards AI, cloud, and quantum computing, all aiming to secure its leadership in the digital age.
In summary, Microsoft’s history is a testament to constant adaptation—transforming from a small software firm into a global technology leader shaping the future of digital infrastructure, AI, and cloud computing, while managing the complexities of regulatory environments and market dynamics.
