In March 1975, two young men stood before a room of skeptical engineers in Albuquerque, New Mexico, and claimed to have a working software interpreter for a new microcomputer called the Altair 8800. Bill Gates and Paul Allen had never actually built the software for the device, yet they convinced Micro Instrumentation and Telemetry Systems to let them demonstrate it. Gates had called the company earlier and lied about having a working product to secure a meeting, a bold move that would define the company's aggressive early culture. Allen built a simulator on a mainframe computer while Gates wrote the actual code, and when they finally connected the machine to the Altair, the software worked flawlessly. This single demonstration led to a contract that allowed them to market the software as Altair BASIC, and on the 4th of April 1975, they officially founded Microsoft. The company started as a small partnership, but the gamble on the Altair 8800 set the stage for a future where software would become the most valuable asset in the technology industry. Gates, then only nineteen years old, and Allen, who had dropped out of Washington State University, had turned a lie into a business empire that would eventually dominate the personal computer market.
The Operating System Monopoly
The pivotal moment that cemented Microsoft's dominance occurred in November 1980 when IBM approached the company to provide an operating system for its new Personal Computer. Microsoft did not own an operating system at the time, so they purchased a clone of CP/M called 86-DOS from Seattle Computer Products and rebranded it as MS-DOS. The deal was structured in a way that allowed Microsoft to retain ownership of the software while licensing it to IBM, a decision that would prove to be the most financially significant in corporate history. When the IBM PC launched in August 1981, other manufacturers could reverse engineer the BIOS to create compatible machines, but they had to license MS-DOS from Microsoft to run them. This strategy allowed Microsoft to become the de facto standard for personal computing, releasing nine versions of MS-DOS between 1980 and 2021 with a median frequency of two years. The company moved its headquarters from Bellevue to Redmond, Washington, on the 26th of February 1986, just weeks before going public. The initial public offering on the 13th of March 1986, created three billionaires and an estimated 12,000 millionaires among employees, transforming the company from a startup into a financial juggernaut. By 1990, Microsoft had introduced the Windows graphical interface, which would eventually replace the command-line world of MS-DOS and become the dominant operating system for the next three decades.The Web and The Antitrust War
In May 1995, Bill Gates issued an internal memo titled Internet Tidal Wave, acknowledging that the company had been slow to recognize the potential of the World Wide Web. This document triggered a massive shift in strategy, leading to the release of Windows 95 on the 24th of August 1995, which featured a new user interface and a start button that became an icon of the digital age. The company bundled Internet Explorer with the operating system, a move that would eventually lead to a decade-long legal battle with the U.S. Department of Justice. The government argued that Microsoft used its monopoly power to stifle competition, filing a competitive impact statement in July 1994 that detailed how the company induced OEMs to sign anti-competitive per processor licenses. These licenses required computer manufacturers to pay Microsoft a royalty for every processor sold, regardless of whether the computer ran a Microsoft operating system. The legal battles intensified in 1997 when the Justice Department filed a motion to stop the bundling of Internet Explorer, and in 2004, the European Union imposed a fine of €497 million for abusing its dominance. The antitrust era marked a turning point where Microsoft's aggressive business tactics were scrutinized by governments around the world, yet the company continued to expand its influence through products like Windows XP and the Xbox gaming console.