Microsoft
Current Microsoft logo.
Microsoft logo of 1984.
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Microsoft Corporation, headquartered in Redmond, Washington, is the world's largest software company, trading on the NASDAQ stock market under the symbol 'MSFT'. Microsoft develops, manufactures, licenses and supports a wide range of software products for various computing devices. The company was founded in Albuquerque, New Mexico in 1975 by Bill Gates and Paul Allen to develop and sell BASIC interpreterss under the company name Micro-soft.
Microsoft products
Software
Microsoft produces a wide range of software products.Network Services
In the mid-1990s, Microsoft began to expand its product line into the networked computer world. It launched its online service MSN (Microsoft Network) on August 24, 1995, which was a direct competitor to AOL. MSN became an umbrella service for all of Microsoft's online services.
In 1996, Microsoft and NBC, an American broadcasting network, created MSNBC, a combined 24-hour news television channel and online news service.
At the end of 1997, Microsoft acquired Hotmail, the original and most popular webmail service. It was rebranded MSN Hotmail and was used as a platform to boost Passport, a universal login service.
MSN Messenger, an instant messaging client, was introduced in 1999 to compete with the popular AOL Instant Messenger (AIM).
Training
Microsoft has created a number of training initiatives, based on multiple-choice exams, with the intention of creating a pool of low-cost employees with skills relating exclusively to Microsoft products. The best known of these is the MCSE qualification, which stands for "Microsoft Certified Systems Engineer".
Another popular certification is the Microsoft Certified Solution Developer (briefly called MCSD.NET). This certification is a developer's qualification, aimed towards developers who can demonstrate with success their skills with Microsoft's development tools and architectures.
Hardware
Microsoft also produces a number of computing related hardware products.History of Microsoft
Formed in 1975, Microsoft started by selling a BASIC interpreter which quickly established a reputation for excellence. As the popularity of Microsoft BASIC grew, other manufacturers adopted Microsoft BASIC's syntax to maintain compatibility with existing Microsoft BASIC implementations. Because of this feedback loop, Microsoft BASIC became a de facto standard, and the company cornered the market. Later, it tried (unsuccessfully) to extend their grip on the home computer market by designing the MSX home computer standard.
The name "Micro-soft" (for microcomputer software) was used by Bill Gates in a letter to Paul Allen for the first time on November 29, 1975. "Microsoft" became a registered trademark on November 26, 1976.
In late 1980, International Business Machines needed an operating system for its new home computer, the IBM PC. Microsoft licensed Quick and Dirty Operating System, from Tim Patterson's Seattle Computer Products in order to sell it to IBM as the standard operating system for the IBM PC. Microsoft subsequently purchased all rights to QDOS for $10,000, and renamed it MS-DOS (for Microsoft Disk Operating System). It was released as IBM PC-DOS 1.0 with the introduction of the PC in 1981. In contracting with IBM, however, Microsoft had retained the rights to license the software to other computer vendors as MS-DOS. The early 1980s saw a flood of IBM PC clones, and Microsoft were quick to leverage their position to dominate the operating system market. (In the 1990s, Microsoft adopted exclusionary licensing, later determined to be illegal, under which the PC manufacturers were required to pay for an MS-DOS licence even when the system shipped with an alternative operating system.)
Software running on PC hardware was not necessarily technically better than the mainframe software that it replaced, but it was much lower cost, empowering billions of people to join the computing revolution. Microsoft's success rode on the PC boom.
The now highly profitable and cash rich Microsoft diversified into a wide variety of software products including:
- compilers and interpreters for programming languages
- word processors, spreadsheets and other office software
Microsoft has devoted huge amounts of effort to marketing in developing their products and services, as well as to the integration of their software products with one another in an attempt to create a seamless and consistent computing environment for the user.
Microsoft has attempted to leverage the powerful Windows brand into many other markets, with products such as Windows CE for PDAss and their "Windows powered" Smartphone products.
For instance, while many software companies often place an entry level software developer in a cubicle desk within a large office space filled with other cubicles, Microsoft assigns a private or semi-private closed office to every developer or developer duo. In addition, key decision makers at every level are either developers or former developers.
In a sense, the software developers at Microsoft are considered the "stars" of the company in the same way that sales staff at IBM are considered the "stars" of their company.
Many have noted that one of the effects of this policy is to constantly push the development of products which software developers find useful for their immediate needs (regardless of the perceived needs of the general market, as stated by others) given the great influence the developers as a whole (but not necessarily individually) have on corporate orientations.
By the 1990s, the perception that Microsoft had become the "bad guy" had increased substantially. It was frequently accused of leveraging its market dominance in desktop computing in order to try to exploit its customers unfairly. Microsoft has rarely failed to own any market it set its sights on; as a result, Microsoft has been able to dampen the future of successful young companies simply by announcing an intention to someday release a competing product. (Though on a few occasions, Microsoft has failed to own a market, such as in the fight between Microsoft Money and Intuit's Quicken, followed by the government's block of Microsoft's attempt to purchase Intuit.)
In recent years, Microsoft has been accused of anti-competitive business practices by the US government, the European Union, and Microsoft's competitors; this has generated huge negative perceptions.
Microsoft has been called "the Borg" after the fictional race of aliens in the Star Trek universe. The name began to be used in reference to Microsoft soon after the Borg's first appearance in . It reflects the perception that Microsoft tends to acquire technology from competitors rather than developing it in-house, as well as to Microsoft's ability to adapt to and overwhelm its opponents' strategies by having vastly superior resources.
Some observers claim that the characterization of Microsoft as a monopoly leaves its competitors in a conflict:
After its bundling of the Internet Explorer web browser into its Windows operating system, Microsoft acquired an extremely large market share in the browser market. Partly as a result of this dominance, Microsoft was convicted by a USA federal court for abusing its monopoly in the desktop operating systems market (see Microsoft antitrust case for more details).
In 2003, it emerged that the European Commission was investigating the bundling of media player software into Windows, which rivals complained was destroying the market for their own products. Negotiations with the EC broke down in March 2004 and it was reported that the EC planned to fine the company a record €497 million ($613 million) for breaches of EU competition law. Separate investigations into alleged abuses of the server market were also ongoing at the same time.
Microsoft has in all of these cases depicted its actions as its response to customer demand.
Critics also decry Microsoft's "embrace and extend" strategy of adding proprietary features to open, de facto standards, thereby using its market dominance to gain de facto ownership of standards "extended" in this way.
Microsoft's licensing policy has helped somewhat in the success of virus distribution channels, because the first Service pack to Windows XP checked for known pirate keys. However, chief cause in the spread of viruses has been unskilled users failing to apply available patches, sometimes as much as nine months old. Windows XP Service Pack 2 attempts to address this by forcing users to automatically apply patches.
Microsoft's practice of designing and configuring software to make it easier to use and less intimidating to novices has facilitated the spread of these viruses and worms. For example, Windows operating systems released since 1995 hide file extensions by default, which can help malicious programmers trick unwitting e-mail recipients into opening dangerous file attachments that masquerade as harmless files with innocuous extensions. (Recent versions of Outlook and Outlook Express disable dangerous file types upon receipt, so that users cannot open them.) Critics charge that this focus on usability and automation has come at the expense of important security considerations.
In January 2002, Gates announced the Trustworthy Computing initiative, which he described as a long-term, companywide initiative to make the computing experience as trustworthy as other established experiences such as the telephone. Many people focussed on the aspect of trustworthy computing that focussed on the new emphasis on security and privacy in all of Microsoft's products. The initiative prompted the company to reevaluate and redesign several of its practices and processes, and delayed the release of Windows Server 2003, the successor to the Windows 2000 Server family of operating systems. Reaction to the Trustworthy Computing initiative has been mixed, with observers lauding Microsoft's increased focus on security but charging that the company still has a lot of work to do.
In February 2004, the partial source code of Windows NT/2000 was leaked and widely distributed on filesharing networks. The archive contains source code for network protocols, parts of Internet Explorer, certificate handling and kernel code. The potential for hacks and exploits as a result of the leak is an obvious sign that Microsoft's security protocols to protect its intellectual property from abuse has failed. However, to date no known current exploits have been released based on the source code, and the code was widely considered to be of unexpectedly good quality.
Microsoft also generally provided third-party programmers with hooks into their software, and the solutions and plugins built by third-party programmers also led to more Microsoft sales.
Now the ubiquity of Microsoft software allows the user to benefit from so-called network effects. For example, the large installed base of Microsoft Office makes MS Office files the de-facto standard word-processor format, making a copy of MS Office essential for most business users. In addition, more potential employees having training in MS Office than competing products. Hence using MS Office can result in reduced training requirements, especially in the case of temporary employment.
Microsoft software is also designed to be easy to configure, allowing companies to hire lower-paid non-expert systems administrators. Microsoft supporters argue that this results in a lower "total cost of ownership" than competing Unix-based solutions.
Microsoft software also represents a "safe" option for IT managers purchasing software systems, in that the ubiquity of Microsoft software allows them to claim that they are following accepted best practices. This is a particularly attractive option for IT managers with limited technical knowledge.
Microsoft software makes heavy use of software re-use. This is one of the main reasons the resources of most Microsoft software can be used from most other Microsoft software. This advantage can be misused, however, see below.
Microsoft software carries a high level of vendor lock-in, based on its extensive set of proprietary APIs.
The European Commission quotes Microsoft head of C++ development Aaron Contorer as stating in an internal Microsoft report for senior management:
Earlier versions of Microsoft products had a security stance of "permitted unless forbidden", which is hard to change, as much Microsoft software relies on this policy. This stance can be taken advantage of to cause security problems. For example, macros embedded in documents or HTML in email can run programs allowing an attacker to take over the user's computer.
This is demonstrated in the proliferation of worm and virus programs that attack Microsoft software. This problem is compounded by the very ubiquity of Microsoft software, cited as an advantage above. Once a working virus is released, it is almost certain to spread very widely because almost every computer it comes across is able to replicate and spread the virus. This effect has recently been dubbed the "Microsoft monoculture," by analogy to the problems associated with lack of biodiversity in an ecosystem. As an acknowledgement of the problem, the National Science Foundation on November 25, 2003 announced it had granted US$750,000 (Lemos, 2003) to computer scientists at Carnegie Mellon University and the University of New Mexico to further understand the causes and the (presumably) negative effects of the homogenization of the world's computing platforms (National Science Foundation, 2003).
A result of the dominance of Microsoft software is that the advantage mentioned above of being able to hire less highly trained, and therefore cheaper, systems administrators is offset by two factors:
With the increasing popularity of Linux, with Walmart selling a cheap consumer PC running Lindows (now called Linspire), Microsoft CEO Steve Ballmer has stated that Linux is a "tough competitive force... It's non-traditional, it's free and it's cheap. We have to educate people why what they pay for [our offerings] is more than offset by the value we deliver. We used to be the cheap guys. We were cheaper than Novell, cheaper than Oracle. We can't do that with this one." (Reported in CRN.com, June 17, 2002).
However, with $50 billion in cash reserves, it is unlikely that Microsoft will lose its position as a major player in the computer market anytime soon.
Microsoft is working to leverage its current success in desktop operating systems into new markets such as media players, server software, handheld devices, web services and video games, with varying degrees of success.
It is also looking to move towards a "subscription model" for licensing. Microsoft's current revenue scheme depends on users buying upgrades on a periodical basis, but this is becoming increasingly difficult, as many users fail to see the benefits of upgrades and continue to use older packages, such as Windows 98, Windows ME and Windows 2000 instead of the latest Windows XP and Windows Server 2003. Microsoft would like to switch to a subscription basis, whereby users pay an annual fee for software.
At the same time, Microsoft is engaging in a major public relations and branding exercise to try to combat the negative PR associated with the recent accusations regarding its business practices.
Microsoft is now positioning PCs running Windows XP Media Center Edition as a home entertainment hub.
Based on recent Microsoft management comments, it appears that Microsoft is attempting to move up-market, positioning its products and services as high-value, rather than low-cost. Steve Ballmer was quoted as saying in 2002 "We are actually having to learn how to say, 'We may have a high price on this one, but look at the additional value and how that value actually leads to a lower cost of ownership despite the fact that our price may be higher,'" (Reported in VARbusiness, July 15 2002).
Furthermore, in regard to the name of the initiative and its components, critics also point out that not only are the terms ".net" and "CLI" in use to mean other things (Microsoft used CLI to stand for Common Language Infrastructure), but that Microsoft regularly overloads generic terms (e.g. "Windows", "Word", "DNS") to refer to its proprietary technology, and then attempts to control them using trademark law and patent law.
Microsoft intends that Longhorn will have many new features such as speech recognition and an enhanced user interface but it is likely that the operating system itself will be an extension of and improvement on Windows XP and Windows Server 2003.
Longhorn was initially to ship during 2003, but has since slipped to 2006. One of its key new features is a database-centric file system.
Business culture
The software developer
Microsoft has often been described as having a developer-centric business culture. A great deal of time and money is spent each year on recruiting young university-trained software developers meeting very exacting criteria. Resources are continuously invested in measures devised to keep them in the company, year after year. Canine nourishment
Within Microsoft the expression "eating your own dog food" is used to describe the policy of using Microsoft products as internal tools, above everything else. It seems to be very difficult for management and support staff to get the permission to use software from Microsoft competitors. It seems to be difficult even for the software developers, who are the "stars" of the company, to use software tools made by the competition. This policy is justified by the need to make employees aware of the products. Long term wariness
Microsoft fosters a general attitude of long term strategic wariness in its managers. Everybody must be ready for anything the competition or the market can throw on the road in any number of years. In this frame of mind being the largest software company in the world is not seen as a form of safety or a guarantee of future success. For instance: Future competitors could rise from related industries which are not now in the software business in a very concentrated way. Giant hardware companies who tower over Microsoft could turn their attention to it in a few years from now and try to crush it. Consumers of vast segments of Microsoft software could decide they do not wish to upgrade anymore, or at least for a few more years than usual. Because of these imponderables Microsoft managers must maintain an unending vigilance and do everything to sustain a dynamic expansion in new markets.Public perceptions
For a long time, Microsoft was widely seen as the "good guy" in the computer software market, providing an inexpensive alternative to the expensive systems provided by the major mainframe and UNIX vendors, and it was admired for the large amounts of money it made in doing so.The monopoly question
Microsoft's Windows product has an effective monopoly in the desktop operating systems market. Those who make this claim point out that, among other things, almost every PC sold has a copy of Microsoft Windows pre-installed. In a 2003 publication, Dan Geer argued the prevalence of Microsoft products has resulted in a monoculture. This assertion has been responded to directly in a publication sympathetic to Microsoft, MCP Magazine.
Monopoly or not, there is no doubt that:
Critics of Microsoft have accused it of using its dominance in desktop operating system to try to leverage market share in other sectors of the computer market, such as web browsers (Internet Explorer), server operating systems (Windows NT), office software suites (Microsoft Office), and streaming media (Windows Media).Security
By 2002, several of Microsoft's networking- and Internet-related products had become the subject of intense criticism following several high-profile security lapses. Malicious programmers increasingly exploited weaknesses in Microsoft software by creating and distributing worms, viruses, and Trojan horses designed to spread across the Internet and waste computing resources or destroy data. These exploits targeted Microsoft's Outlook and Outlook Express e-mail programs, Internet Information Server (IIS) Web server, and SQL database server software. Microsoft contends that its dominant position in several Internet-related software categories naturally subjects the company's products to more attacks, because the products themselves are so widespread. Critics counter that these attacks also target Microsoft products that do not hold commanding market shares, and suggest that this is because Microsoft products in general are fundamentally less secure than those of the company's competitors.Advantages of Microsoft software
The best general features of Microsoft software that helped it gain the market share it now enjoys:
These three qualities were important in Microsoft applications being seen as better or safer options that their competitors - if Microsoft's product wasn't the best option at the time, it probably would be in the next version, and there was likely to be support and upgrades for the product for years to come.Disadvantages of Microsoft software
Vendor lock-in
Security problems
Detractors argue that users do not own Microsoft software and that therefore Total Cost of Ownership comparisons with open source software do not compare like with like.The Future
The open source movement is traditionally at odds with Microsoft for
In recent years Linux has become a popular server OS, particularly for the low-margin, price-sensitive hosting market, with most low-end hosts hosting on the free OS.Microsoft .NET initiative
The .NET initiative is a major company-wide effort by Microsoft. It has several aspects including:
It will achieve this by using a proprietary extension of XML to link several different devices together to be controlled quickly and easily by other computers. Microsoft Next-Generation Secure Computing Base initiative
Microsoft has now launched the Next-Generation Secure Computing Base, recently renamed from Palladium operating system initiative. This effort is also called Trusted Computing. Microsoft presents this as their solution to computer insecurity. Opponents have characterised it as another exercise in entrenching and extending their monopoly, effectively allowing Microsoft to control all uses of PC technology. In particular, they have accused Microsoft of using it as a way to combat the emergence of free software.The Future of Windows
Microsoft has a number of new initiatives: .NET, Palladium and the "Longhorn" operating system (Longhorn is the next home Windows release).References
See also
External links
Microsoft sites
Microsoft OSS (Open_source) projects
Discussions whether MS is Monopolistic
Alternatives to Microsoft systems
Financial situation
Satire