Microsoft

Microsoft Corporation
Public
Traded as
ISIN US5949181045
Industry
Founded April 4, 1975 (1975-04-04) in Albuquerque, New Mexico, U.S.
Founders
Headquarters Microsoft Redmond campus, Redmond, Washington, U.S.
Area served
 Worldwide
Key people
Products
Services
Revenue Decrease US$85.32 billion[1] (2016)
Increase US$19.86 billion[1] (2016)
Increase US$16.79 billion[1] (2016)
Total assets Increase US$193.69 billion[1] (2016)
Total equity Decrease US$71.99 billion[1] (2016)
Number of employees
 114,000[1] (2016)
Subsidiaries List of Microsoft subsidiaries
Website microsoft.com

Microsoft Corporation (/ˈmaɪkrəˌsɒft/,[2][3] abbreviated as MS) is an American multinational technology company with headquarters in Redmond, Washington. It develops, manufactures, licenses, supports and sells computer software, consumer electronics, personal computers, and services. Its best known software products are the Microsoft Windows line of operating systems, the Microsoft Office suite, and the Internet Explorer and Edge web browsers. Its flagship hardware products are the Xbox video game consoles and the Microsoft Surface tablet lineup. As of 2016, it is the world's largest software maker by revenue,[4] and one of the world's most valuable companies.[5] The word "Microsoft" is a portmanteau of "microcomputer" and "software".[6]

Microsoft was founded by Paul Allen and Bill Gates on April 4, 1975, to develop and sell BASIC interpreters for the Altair 8800. It rose to dominate the personal computer operating system market with MS-DOS in the mid-1980s, followed by Microsoft Windows. The company's 1986 initial public offering (IPO), and subsequent rise in its share price, created three billionaires and an estimated 12,000 millionaires among Microsoft employees. Since the 1990s, it has increasingly diversified from the operating system market and has made a number of corporate acquisitions—their largest being the acquisition of LinkedIn for $26.2 billion in December 2016,[7] followed by Skype Technologies for $8.5 billion in May 2011.[8]

As of 2015, Microsoft is market-dominant in the IBM PC-compatible operating system market and the office software suite market, although it has lost the majority of the overall operating system market to Android.[9] The company also produces a wide range of other consumer and enterprise software for desktops and servers, including Internet search (with Bing), the digital services market (through MSN), mixed reality (HoloLens), cloud computing (Azure) and software development (Visual Studio).

Steve Ballmer replaced Gates as CEO in 2000, and later envisioned a "devices and services" strategy.[10] This began with the acquisition of Danger Inc. in 2008,[11] entering the personal computer production market for the first time in June 2012 with the launch of the Microsoft Surface line of tablet computers; and later forming Microsoft Mobile through the acquisition of Nokia's devices and services division. Since Satya Nadella took over as CEO in 2014, the company has scaled back on hardware and has instead focused on cloud computing, a move that helped the company's shares reach its highest value since December 1999.[12][13]

History

1972–1985: The founding of Microsoft

Paul Allen and Bill Gates pose for the camera on October 19, 1981, in a sea of PCs after signing a pivotal contract with IBM.[14]:228

Childhood friends Paul Allen and Bill Gates sought to make a successful business utilizing their shared skills in computer programming.[15] In 1972 they founded their first company, named Traf-O-Data, which sold a rudimentary computer to track and analyze automobile traffic data. While Gates enrolled at Harvard, Allen pursued a degree in computer science at Washington State University, though he later dropped out of school to work at Honeywell. [16] The January 1975 issue of Popular Electronics featured Micro Instrumentation and Telemetry Systems's (MITS) Altair 8800 microcomputer,[17] which inspired Allen to suggest that they could program a BASIC interpreter for the device. After a call from Gates claiming to have a working interpreter, MITS requested a demonstration. Since they didn't yet have one, Allen worked on a simulator for the Altair while Gates developed the interpreter. Although they developed the interpreter on a simulator and not the actual device, it worked flawlessly when they (in March 1975) demonstrated the interpreter to MITS in Albuquerque, New Mexico. MITS agreed to distribute it, marketing it as Altair BASIC.[14]:108, 112–114 Gates and Allen officially established Microsoft on April 4, 1975, with Gates as the CEO.[18] The original name of "Micro-Soft" was suggested by Allen.[19][20] In August 1977 the company formed an agreement with ASCII Magazine in Japan, resulting in its first international office, "ASCII Microsoft".[21] Microsoft moved to a new home in Bellevue, Washington in January 1979.[18]

Microsoft entered the operating system (OS) business in 1980 with its own version of Unix, called Xenix.[22] However, it was MS-DOS that solidified the company's dominance. After negotiations with Digital Research failed, IBM awarded a contract to Microsoft in November 1980 to provide a version of the CP/M OS, which was set to be used in the upcoming IBM Personal Computer (IBM PC).[23] For this deal, Microsoft purchased a CP/M clone called 86-DOS from Seattle Computer Products, which it branded as MS-DOS, though IBM rebranded it to PC DOS. Following the release of the IBM PC in August 1981, Microsoft retained ownership of MS-DOS. Since IBM had copyrighted the IBM PC BIOS, other companies had to reverse engineer it in order for non-IBM hardware to run as IBM PC compatibles, but no such restriction applied to the operating systems. Due to various factors, such as MS-DOS's available software selection, Microsoft eventually became the leading PC operating systems vendor.[24][25]:210 The company expanded into new markets with the release of the Microsoft Mouse in 1983, as well as with a publishing division named Microsoft Press.[14]:232 Paul Allen resigned from Microsoft in 1983 after developing Hodgkin's disease.

1985–1994: Windows and Office

Windows 1.0 was released on November 20, 1985 as the first version of the Microsoft Windows line
Timeline of Windows

Despite having begun jointly developing a new operating system, OS/2, with IBM in August 1985,[26] Microsoft released Microsoft Windows, a graphical extension for MS-DOS, on November 20.[14]:242–243, 246 Microsoft moved its headquarters to Redmond on February 26, 1986, and on March 13 the company went public,[27] with the resulting rise in stock making an estimated four billionaires and 12,000 millionaires from Microsoft employees.[28] Microsoft released its version of OS/2 to original equipment manufacturers (OEMs) on April 2, 1987.[14] In 1990, due to the partnership with IBM, the Federal Trade Commission set its eye on Microsoft for possible collusion, marking the beginning of over a decade of legal clashes with the U.S. government.[29] :243–244 Meanwhile, the company was at work on a 32-bit OS, Microsoft Windows NT, using ideas from OS/2. It shipped on July 21, 1993, with a new modular kernel and the Win32 application programming interface (API), making porting from 16-bit (MS-DOS-based) Windows easier. Once Microsoft informed IBM of NT, the OS/2 partnership deteriorated.[30]

In 1990, Microsoft introduced its office suite, Microsoft Office. The software bundled separate office productivity applications, such as Microsoft Word and Microsoft Excel.[14]:301 On May 22 Microsoft launched Windows 3.0 with a streamlined user interface graphics and improved protected mode capability for the Intel 386 processor.[31] Both Office and Windows became dominant in their respective areas.[32][33] Novell, a Word competitor from 1984–1986, filed a lawsuit years later claiming that Microsoft left part of its APIs undocumented in order to gain a competitive advantage.[34]

On July 27, 1994, the U.S. Department of Justice, Antitrust Division filed a Competitive Impact Statement that said, in part: "Beginning in 1988, and continuing until July 15, 1994, Microsoft induced many OEMs to execute anti-competitive "per processor" licenses. Under a per processor license, an OEM pays Microsoft a royalty for each computer it sells containing a particular microprocessor, whether the OEM sells the computer with a Microsoft operating system or a non-Microsoft operating system. In effect, the royalty payment to Microsoft when no Microsoft product is being used acts as a penalty, or tax, on the OEM's use of a competing PC operating system. Since 1988, Microsoft's use of per processor licenses has increased."[35]

1995–2007: Foray into the Web, Windows 95, Windows XP, and Xbox

Microsoft released the first installment in the Xbox series of consoles in 2001. The Xbox, graphically powerful compared to its rivals, featured a standard PC's 733 MHz Intel Pentium III processor.

Following Bill Gates's internal "Internet Tidal Wave memo" on May 26, 1995, Microsoft began to redefine its offerings and expand its product line into computer networking and the World Wide Web.[36] The company released Windows 95 on August 24, 1995, featuring pre-emptive multitasking, a completely new user interface with a novel start button, and 32-bit compatibility; similar to NT, it provided the Win32 API.[37][38]:20 Windows 95 came bundled with the online service MSN (which was at first intended to be a competitor to the Internet), and for OEMs Internet Explorer, a web browser. Internet Explorer was not bundled with the retail Windows 95 boxes because the boxes were printed before the team finished the web browser, and instead was included in the Windows 95 Plus! pack.[39] Branching out into new markets in 1996, Microsoft and General Electric's NBC unit created a new 24/7 cable news channel, MSNBC.[40] Microsoft created Windows CE 1.0, a new OS designed for devices with low memory and other constraints, such as personal digital assistants.[41] In October 1997, the Justice Department filed a motion in the Federal District Court, stating that Microsoft violated an agreement signed in 1994 and asked the court to stop the bundling of Internet Explorer with Windows.[14]:323–324

In 1996, Microsoft released Windows CE, a version of the operating system meant for personal digital assistants and other tiny computers.

Bill Gates handed over the CEO position on January 13, 2000, to Steve Ballmer, an old college friend of Gates and employee of the company since 1980, creating a new position for himself as Chief Software Architect.[14]:111, 228[18] Various companies including Microsoft formed the Trusted Computing Platform Alliance in October 1999 to, among other things, increase security and protect intellectual property through identifying changes in hardware and software. Critics decry the alliance as a way to enforce indiscriminate restrictions over how consumers use software, and over how computers behave, a form of digital rights management; for example the scenario where a computer is not only secured for its owner, but also secured against its owner as well.[42][43] On April 3, 2000, a judgment was handed down in the case of United States v. Microsoft,[44] calling the company an "abusive monopoly";[45] it settled with the U.S. Department of Justice in 2004.[27] On October 25, 2001, Microsoft released Windows XP, unifying the mainstream and NT lines under the NT codebase.[46] The company released the Xbox later that year, entering the game console market dominated by Sony and Nintendo.[47] In March 2004 the European Union brought antitrust legal action against the company, citing it abused its dominance with the Windows OS, resulting in a judgment of €497 million ($613 million) and to produce new versions of Windows XP without Windows Media Player, Windows XP Home Edition N and Windows XP Professional N.[48][49] In November 2005, the Xbox 360 was released.

2007–2011: Microsoft Azure, Windows Vista, Windows 7, and Microsoft Stores

CEO Steve Ballmer at the MIX event in 2008. In an interview about his management style in 2005, he mentioned that his first priority was to get the people he delegates to in order. Ballmer also emphasized the need to continue pursuing new technologies even if initial attempts fail, citing the original attempts with Windows as an example.[50]

Released in January 2007, the next version of Windows, Windows Vista, focused on features, security and a redesigned user interface dubbed Aero.[51][52] Microsoft Office 2007, released at the same time, featured a "Ribbon" user interface which was a significant departure from its predecessors. Relatively strong sales of both titles helped to produce a record profit in 2007.[53] The European Union imposed another fine of €899 million ($1.4 billion) for Microsoft's lack of compliance with the March 2004 judgment on February 27, 2008, saying that the company charged rivals unreasonable prices for key information about its workgroup and backoffice servers. Microsoft stated that it was in compliance and that "these fines are about the past issues that have been resolved".[54] 2007 also saw the creation of a multi-core unit at Microsoft, as they followed in the steps of server companies such as Sun and IBM.[55]

Gates retired from his role as Chief Software Architect on June 27, 2008, a decision announced in June 2006, while retaining other positions related to the company in addition to being an advisor for the company on key projects.[56][57] Azure Services Platform, the company's entry into the cloud computing market for Windows, launched on October 27, 2008.[58] On February 12, 2009, Microsoft announced its intent to open a chain of Microsoft-branded retail stores, and on October 22, 2009, the first retail Microsoft Store opened in Scottsdale, Arizona; the same day the first store opened, Windows 7 was officially released to the public. Windows 7's focus was on refining Vista with ease of use features and performance enhancements, rather than a large reworking of Windows.[59][60][61]

As the smartphone industry boomed beginning in 2007, Microsoft struggled to keep up with its rivals Apple and Google in providing a modern smartphone operating system. As a result, in 2010, Microsoft revamped their aging flagship mobile operating system, Windows Mobile, replacing it with the new Windows Phone OS; along with a new strategy in the smartphone industry that had Microsoft working more closely with smartphone manufacturers, such as Nokia, and to provide a consistent user experience across all smartphones using Microsoft's Windows Phone OS. It used a new user interface design language, codenamed "Metro", which prominently used simple shapes, typography and iconography, and the concept of minimalism. Microsoft is a founding member of the Open Networking Foundation started on March 23, 2011. Other founding companies include Google, HP Networking, Yahoo, Verizon, Deutsche Telekom and 17 other companies. The nonprofit organization is focused on providing support for a new cloud computing initiative called Software-Defined Networking.[62] The initiative is meant to speed innovation through simple software changes in telecommunications networks, wireless networks, data centers and other networking areas.[63]

2011–2014: Windows 8/8.1, Xbox One, Outlook.com, and Surface devices

Start screen on Windows 8.1
Surface Pro 3, part of the Surface series of laplets by Microsoft
Xbox One console
Xbox 360 Kinect sensor

Following the release of Windows Phone, Microsoft underwent a gradual rebranding of its product range throughout 2011 and 2012—the corporation's logos, products, services and websites adopted the principles and concepts of the Metro design language.[64] Microsoft previewed Windows 8, an operating system designed to power both personal computers and tablet computers, in Taipei in June 2011.[65] A developer preview was released on September 13, and was replaced by a consumer preview on February 29, 2012.[66] On May 31, 2012, the preview version was released. On June 18, 2012, Microsoft unveiled the Surface, the first computer in the company's history to have its hardware made by Microsoft.[67][68] On June 25, Microsoft paid US$1.2 billion to buy the social network Yammer.[69] On July 31, 2012, Microsoft launched the Outlook.com webmail service to compete with Gmail.[70] On September 4, 2012, Microsoft released Windows Server 2012.[71]

In July 2012, Microsoft sold its 50% stake in MSNBC.com, which it had run as a joint venture with NBC since 1996.[72] On October 1, Microsoft announced its intention to launch a news operation, part of a new-look MSN, at the time of the Windows 8 launch that was later in the month.[73] On October 26, 2012, Microsoft launched Windows 8 and the Microsoft Surface.[68][74] Three days later, Windows Phone 8 was launched.[75] To cope with the potential for an increase in demand for products and services, Microsoft opened a number of "holiday stores" across the U.S. to complement the increasing number of "bricks-and-mortar" Microsoft Stores that opened in 2012.[76] On March 29, 2013, Microsoft launched a Patent Tracker.[77]

The Kinect, a motion-sensing input device made by Microsoft and designed as a video game controller, which was first introduced in November 2010, was upgraded for the 2013 release of the eighth-generation Xbox One video game console. Kinect's capabilities were revealed in May 2013. The new Kinect uses an ultra-wide 1080p camera, it can function in the dark due to an infrared sensor, it employs higher-end processing power and new software, it can distinguish between fine movements (such as a thumb movements), and the device can determine a user's heart rate by looking at his/her face.[78] Microsoft filed a patent application in 2011 that suggests that the corporation may use the Kinect camera system to monitor the behavior of television viewers as part of a plan to make the viewing experience more interactive. On July 19, 2013, Microsoft stocks suffered its biggest one-day percentage sell-off since the year 2000 after its fourth-quarter report raised concerns among the investors on the poor showings of both Windows 8 and the Surface tablet; with more than 11 percentage points declining Microsoft suffered a loss of more than US$32 billion.[79] For the 2010 fiscal year, Microsoft had five product divisions: Windows Division, Server and Tools, Online Services Division, Microsoft Business Division and Entertainment and Devices Division.

On September 3, 2013, Microsoft agreed to buy Nokia's mobile unit for $7 billion.[80] Also in 2013, Amy Hood became the CFO of Microsoft.[81] The Alliance for Affordable Internet (A4AI) was launched in October 2013 and Microsoft was part of the coalition of public and private organizations that also included Facebook, Intel and Google. Led by World Wide Web inventor Tim Berners-Lee, the A4AI seeks to make Internet access more affordable so that access is broadened in the developing world, where only 31% of people are online. Google will help to decrease Internet access prices so that they fall below the UN Broadband Commission's worldwide target of 5% of monthly income.[82] In line with the maturing PC business, in July 2013, Microsoft announced that it would reorganize the business into four new business divisions by function: Operating System, Apps, Cloud and Devices. All previous divisions will be diluted into new divisions without any workforce cut.[83]

2014–present: Windows 10, Windows 10 Mobile, Microsoft Edge and HoloLens

John W. Thompson has been appointed the chairman of Microsoft, taking over from Bill Gates.

Corporate affairs

On February 4, 2014, Steve Ballmer stepped down as CEO of Microsoft and was succeeded by Satya Nadella, who previously led Microsoft's Cloud and Enterprise division.[84] On the same day, John W. Thompson took on the role of chairman, with Bill Gates stepping down from the position, while continuing to participate as a technology advisor.[85]

On April 25, 2014, Microsoft acquired Nokia Devices and Services for $7.2 billion.[86] The new subsidiary was renamed Microsoft Mobile Oy.[87] In May 2016, the company announced it will lay off 1,850 workers, taking an impairment and restructuring charge of $950 million. During the previous summer of 2015 the company wrote down $7.6 billion related to its mobile-phone business and fired 7,800 employees from those operations.[88]

On September 15, 2014, Microsoft acquired the video game development company Mojang, best known for its wildly popular flagship game Minecraft, for $2.5 billion.[89]

On June 8, 2017, Microsoft acquired Hexadite, an Israeli security firm, for $100 million.[90][91]

Products

On January 21, 2015, Microsoft announced the release of their first Interactive whiteboard, Microsoft Surface Hub (part of the Surface family).[92] On July 29, 2015, Microsoft released the next version of the Windows operating system, Windows 10.[93] Its server sibling, Windows Server 2016, was released in September 2016.

In Q1 2015, Microsoft was the third largest maker of mobile phones selling 33 million units (7.2% of all), while a large majority (at least 75%) of them do not run any version of Windows Phone – those other phones are not categorized as smartphones by Gartner – in the same time frame 8 million Windows smartphones (2.5% of all smartphones) were made by all manufacturers (but mostly by Microsoft).[94] Microsoft's share of the U.S. smartphone market in January 2016 was 2.7%.[95]

On March 1, 2016, Microsoft announced the merger of its PC and Xbox divisions, with Phil Spencer announcing that Universal Windows Platform (UWP) apps would be the focus for Microsoft's gaming in the future.[96]

On January 24, 2017, Microsoft showcased Intune for Education at the BETT 2017 education technology conference in London.[97] Intune for Education is a new cloud-based application and device management service for the education sector.[98] Microsoft will launch a preview of Intune for Education "in the coming weeks", with general availability scheduled for spring 2017, priced at $30 per device, or through volume licensing agreements.[99]

Services

In June 2016, Microsoft announced a project named, Microsoft Azure Information Protection. It aims to help enterprises protect their data as it moves between servers and devices.[100]

In November 2016, Microsoft joined the Linux Foundation as a Platinum member during Microsoft’s Connect(); developer event in New York.[101] The cost of each Platinum membership is US$500,000 per year.[102] Some analysts deemed this unthinkable ten years prior. In 2001 Steve Ballmer called Linux "cancer".[103]

Businesses

Toronto Microsoft Store
Microsoft Talo, the headquarters of Microsoft Mobile

Windows and devices division

Windows and devices division produces the flagship operating system, Windows. It is also responsible for development of devices such as Microsoft Surface, a series of touchscreen Windows personal computers and interactive whiteboards; Microsoft HoloLens, a set of virtual reality smartglasses; Xbox, a home gaming console brand; and various accessories such as mice, keyboards, webcams, headsets, game controllers and wireless display adapters. It is also responsible for designing of MSN web portal. It also produces various server products of Microsoft such as Windows Server, Exchange Server, Skype for Business Server, SQL Server and various others.

Cloud and Enterprise division

Cloud and Enterprise division produces company's cloud computing platform, Microsoft Azure. It also produces Microsoft Visual Studio, a set of programming tools and compilers. It also develops Microsoft Dynamics, a line of enterprise resource planning (ERP) and customer relationship management (CRM) software applications.

Office Product division

This group produces various products of Microsoft Office family. It includes Microsoft Office, an office suite for Windows PCs and Macs, Office Mobile, a line of apps for smartphones and tablets and Office Online, a combination of Microsoft Office Web Apps (an online version of Microsoft Office's core apps) and various formerly Windows Live branded web services all connected via Microsoft accounts. It also designs Skype, an application that specializes in providing video chat and voice call services.

AI and Research division

AI and Research division is responsible for development of Bing, a web search engine (advertised as a "decision engine"[104]) from Microsoft. Microsoft Research was created with the intent to advance state of the art computing and solve difficult world problems through technological innovation in collaboration with academic, government, and industry researchers.

Future Decoded

Future Decoded is a business networking event held every year by Microsoft that allows business partners of the company to share their views on what the future holds for business, society, leadership and technology.

Corporate affairs

Board of Directors

The company is run by a board of directors made up of mostly company outsiders, as is customary for publicly traded companies. Members of the board of directors as of January 2016 are John W. Thompson, Bill Gates, Teri L. List-Stoll, Mason Morfit, Satya Nadella, Charles Noski, Helmut Panke, Sandi Peterson, Charles W. Scharf, John W. Stanton, and Padmasree Warrior.[105] Board members are elected every year at the annual shareholders' meeting using a majority vote system. There are five committees within the board which oversee more specific matters. These committees include the Audit Committee, which handles accounting issues with the company including auditing and reporting; the Compensation Committee, which approves compensation for the CEO and other employees of the company; the Finance Committee, which handles financial matters such as proposing mergers and acquisitions; the Governance and Nominating Committee, which handles various corporate matters including nomination of the board; and the Antitrust Compliance Committee, which attempts to prevent company practices from violating antitrust laws.[106]

Financial

Five year history graph of NASDAQ: MSFT stock on July 17, 2013[107]

When Microsoft went public and launched its initial public offering (IPO) in 1986, the opening stock price was $21; after the trading day, the price closed at $27.75. As of July 2010, with the company's nine stock splits, any IPO shares would be multiplied by 288; if one were to buy the IPO today given the splits and other factors, it would cost about 9 cents.[14]:235–236[108][109] The stock price peaked in 1999 at around $119 ($60.928 adjusting for splits).[110] The company began to offer a dividend on January 16, 2003, starting at eight cents per share for the fiscal year followed by a dividend of sixteen cents per share the subsequent year, switching from yearly to quarterly dividends in 2005 with eight cents a share per quarter and a special one-time payout of three dollars per share for the second quarter of the fiscal year.[110][111] Though the company had subsequent increases in dividend payouts, the price of Microsoft's stock remained steady for years.[111][112]

Standard and Poor's and Moody's have both given a AAA rating to Microsoft, whose assets were valued at $41 billion as compared to only $8.5 billion in unsecured debt. Consequently, in February 2011 Microsoft released a corporate bond amounting to $2.25 billion with relatively low borrowing rates compared to government bonds.[113] For the first time in 20 years Apple Inc. surpassed Microsoft in Q1 2011 quarterly profits and revenues due to a slowdown in PC sales and continuing huge losses in Microsoft's Online Services Division (which contains its search engine Bing). Microsoft profits were $5.2 billion, while Apple Inc. profits were $6 billion, on revenues of $14.5 billion and $24.7 billion respectively.[114] Microsoft's Online Services Division has been continuously loss-making since 2006 and in Q1 2011 it lost $726 million. This follows a loss of $2.5 billion for the year 2010.[115]

On July 20, 2012, Microsoft posted its first quarterly loss ever, despite earning record revenues for the quarter and fiscal year, with a net loss of $492 million due to a writedown related to the advertising company aQuantive, which had been acquired for $6.2 billion back in 2007.[116] As of January 2014, Microsoft's market capitalization stood at $314B,[117] making it the 8th largest company in the world by market capitalization.[118] On November 14, 2014, Microsoft overtook Exxon Mobil to become the 2nd most valuable company by market capitalization, behind only Apple Inc. Its total market value was over $410B — with the stock price hitting $50.04 a share, the highest since early 2000.[119] In 2015, Reuters reported that Microsoft Corp had earnings abroad of $76.4 billion which were untaxed by the IRS. Under U.S. law corporations don't pay income tax on overseas profits until the profits are brought into the United States.[120]

Marketing

Windows 8 Launch Event in Akihabara, Tokyo on October 25, 2012

In 2004, Microsoft commissioned research firms to do independent studies comparing the total cost of ownership (TCO) of Windows Server 2003 to Linux; the firms concluded that companies found Windows easier to administrate than Linux, thus those using Windows would administrate faster resulting in lower costs for their company (i.e. lower TCO).[121] This spurred a wave of related studies; a study by the Yankee Group concluded that upgrading from one version of Windows Server to another costs a fraction of the switching costs from Windows Server to Linux, although companies surveyed noted the increased security and reliability of Linux servers and concern about being locked into using Microsoft products.[122] Another study, released by the Open Source Development Labs, claimed that the Microsoft studies were "simply outdated and one-sided" and their survey concluded that the TCO of Linux was lower due to Linux administrators managing more servers on average and other reasons.[123]

As part of the "Get the Facts" campaign, Microsoft highlighted the .NET trading platform that it had developed in partnership with Accenture for the London Stock Exchange, claiming that it provided "five nines" reliability. After suffering extended downtime and unreliability[124][125] the LSE announced in 2009 that it was planning to drop its Microsoft solution and switch to a Linux-based one in 2010.[126][127]

In 2012, Microsoft hired a political pollster named Mark Penn, whom the New York Times called "famous for bulldozing" his political opponents[128] as Executive Vice-President, Advertising and Strategy. Penn created a series of negative ads targeting one of Microsoft's chief competitors, Google. The ads, called "Scroogled", attempt to make the case that Google is "screwing" consumers with search results rigged to favor Google's paid advertisers, that Gmail violates the privacy of its users to place ad results related to the content of their emails and shopping results which favor Google products. Tech publications like TechCrunch have been highly critical of the ad campaign,[129] while Google employees have embraced it.[130]

Layoffs

In July 2014, Microsoft announced plans to lay off 18,000 employees. Microsoft employed 127,104 people as of June 5, 2014, making this about a 14 percent reduction of its workforce as the biggest Microsoft lay off ever. This included 12,500 professional and factory personnel. Previously, Microsoft has laid off 5,800 jobs in 2009 in line with US financial crisis.[131][132] In September 2014, Microsoft laid off 2,100 people, including 747 people in the Seattle-Redmond area, where the company is headquartered. The firings came as a second wave of the layoffs that were previously announced. This brings the total number to over 15,000 out of the 18,000 expected cuts.[133] In October 2014, Microsoft revealed that it was almost done with the elimination of 18,000 employees which was its largest ever layoff sweep.[134] In July 2015, Microsoft announced another 7,800 job cuts in the next several months.[135] In May 2016, Microsoft announced another 1,850 job cuts mostly in (Nokia) mobile phone division. As a result, the company will record an impairment and restructuring charge of approximately $950 million, of which approximately $200 million will relate to severance payments.[136]

United States government

Microsoft provides information about reported bugs in their software to intelligence agencies of the United States government, prior to the public release of the fix. A Microsoft spokesperson has stated that the corporation runs several programs that facilitate the sharing of such information with the U.S. government.[137] Following media reports about PRISM, NSA's massive electronic surveillance program, in May 2013, several technology companies were identified as participants, including Microsoft.[138] According to leaks of said program, Microsoft joined the PRISM program in 2007.[139] However, in June 2013, an official statement from Microsoft flatly denied their participation in the program:

We provide customer data only when we receive a legally binding order or subpoena to do so, and never on a voluntary basis. In addition we only ever comply with orders for requests about specific accounts or identifiers. If the government has a broader voluntary national security program to gather customer data, we don't participate in it.[140]

During the first six months in 2013, Microsoft had received requests that affected between 15,000 and 15,999 accounts.[141] In December 2013, the company made statement to further emphasize the fact that they take their customers' privacy and data protection very seriously, even saying that "government snooping potentially now constitutes an "advanced persistent threat," alongside sophisticated malware and cyber attacks".[142] The statement also marked the beginning of three-part program to enhance Microsoft's encryption and transparency efforts. On July 1, 2014, as part of this program they opened the first (of many) Microsoft Transparency Center, that provides "participating governments with the ability to review source code for our key products, assure themselves of their software integrity, and confirm there are no "back doors."[143] Microsoft has also argued that the United States Congress should enact strong privacy regulations to protect consumer data.[144] In 2016, the company sued the U.S., arguing that secrecy orders were preventing the company from disclosing warrants to customers in violation of the company's and customers' rights.

Corporate identity

Corporate culture

The Commons, located on the campus of the company's headquarters in Redmond

Technical reference for developers and articles for various Microsoft magazines such as Microsoft Systems Journal (MSJ) are available through the Microsoft Developer Network (MSDN). MSDN also offers subscriptions for companies and individuals, and the more expensive subscriptions usually offer access to pre-release beta versions of Microsoft software.[145][146] In April 2004 Microsoft launched a community site for developers and users, titled Channel 9, that provides a wiki and an Internet forum.[147] Another community site that provides daily videocasts and other services, On10.net, launched on March 3, 2006.[148] Free technical support is traditionally provided through online Usenet newsgroups, and CompuServe in the past, monitored by Microsoft employees; there can be several newsgroups for a single product. Helpful people can be elected by peers or Microsoft employees for Microsoft Most Valuable Professional (MVP) status, which entitles them to a sort of special social status and possibilities for awards and other benefits.[149]

Noted for its internal lexicon, the expression "eating our own dog food" is used to describe the policy of using pre-release and beta versions of products inside Microsoft in an effort to test them in "real-world" situations.[150] This is usually shortened to just "dog food" and is used as noun, verb, and adjective. Another bit of jargon, FYIFV or FYIV ("Fuck You, I'm [Fully] Vested"), is used by an employee to indicate they are financially independent and can avoid work anytime they wish.[151] The company is also known for its hiring process, mimicked in other organizations and dubbed the "Microsoft interview", which is notorious for off-the-wall questions such as "Why is a manhole cover round?".[152]

Microsoft is an outspoken opponent of the cap on H1B visas, which allow companies in the U.S. to employ certain foreign workers. Bill Gates claims the cap on H1B visas makes it difficult to hire employees for the company, stating "I'd certainly get rid of the H1B cap" in 2005.[153] Critics of H1B visas argue that relaxing the limits would result in increased unemployment for U.S. citizens due to H1B workers working for lower salaries.[154] The Human Rights Campaign Corporate Equality Index, a report of how progressive the organization deems company policies towards LGBT (lesbian, gay, bisexual and transsexual) employees, rated Microsoft as 87% from 2002 to 2004 and as 100% from 2005 to 2010 after they allowed gender expression.[155]

Environment

In 2011, Greenpeace released a report rating the top ten big brands in cloud computing on their sources of electricity for their data centers. At the time, data centers consumed up to 2% of all global electricity and this amount was projected to increase. Phil Radford of Greenpeace said "we are concerned that this new explosion in electricity use could lock us into old, polluting energy sources instead of the clean energy available today,"[156] and called on "Amazon, Microsoft and other leaders of the information-technology industry must embrace clean energy to power their cloud-based data centers."[157] In 2013, Microsoft agreed to buy power generated by a Texas wind project to power one of its data centers.[158] Microsoft is ranked on the 17th place in Greenpeace's Guide to Greener Electronics (16th Edition) that ranks 18 electronics manufacturers according to their policies on toxic chemicals, recycling and climate change.[159] Microsoft's timeline for phasing out brominated flame retardant (BFRs) and phthalates in all products is 2012 but its commitment to phasing out PVC is not clear. As of January 2011, it has no products that are completely free from PVC and BFRs.[160]

Microsoft's main U.S. campus received a silver certification from the Leadership in Energy and Environmental Design (LEED) program in 2008, and it installed over 2,000 solar panels on top of its buildings in its Silicon Valley campus, generating approximately 15 percent of the total energy needed by the facilities in April 2005.[161] Microsoft makes use of alternative forms of transit. It created one of the world's largest private bus systems, the "Connector", to transport people from outside the company; for on-campus transportation, the "Shuttle Connect" uses a large fleet of hybrid cars to save fuel. The company also subsidises regional public transport, provided by Sound Transit and King County Metro, as an incentive.[161][162] In February 2010 however, Microsoft took a stance against adding additional public transport and high-occupancy vehicle (HOV) lanes to the State Route 520 and its floating bridge connecting Redmond to Seattle; the company did not want to delay the construction any further.[163] Microsoft was ranked number 1 in the list of the World's Best Multinational Workplaces by the Great Place to Work Institute in 2011.[164]

Headquarters

The corporate headquarters, informally known as the Microsoft Redmond campus, is located at One Microsoft Way in Redmond, Washington. Microsoft initially moved onto the grounds of the campus on February 26, 1986, weeks before the company went public on March 13. The headquarters has since experienced multiple expansions since its establishment. It is estimated to encompass over 8 million ft2 (750,000 m2) of office space and 30,000–40,000 employees.[165] Additional offices are located in Bellevue and Issaquah (90,000 employees worldwide). The company is planning to upgrade its Mountain View, California campus on a grand scale. The company has occupied this campus since 1981. The company is planning to buy the 32-acre campus.[166] The plans submitted involve expanding the campus by 25%. It is expected that it will take three years to complete the expansion. If approved, construction will start in early 2017.[166] Microsoft operates an East Coast headquarters in Charlotte, North Carolina.[167]

Flagship stores

On October 26, 2015, the company opened its flagship retail location on Fifth Avenue in New York City. The location features a five-story glass storefront and is 22,270 square feet.[168] As per company executives, Microsoft had been on the lookout for a flagship location since 2009.[169] The company's retail locations are part of a greater strategy to help build a connection with its consumers. The opening of the store coincided with the launch of the Surface Book and Surface Pro 4.[170] Notably, the second floor has a large area designated for consumers to play Xbox games. The third floor has been named the "Dell Experience at the Microsoft Store," which showcases various Dell products. The fourth floor is for employees and administrative operations. The fifth floor has been designed as a pseudo-conference center, as it will hold events and meetings.[169] On November 12, 2015, Microsoft opened a second flagship store, located in Sydney's Pitt Street Mall.[171] The two-storey, 6000 sq ft location features Microsoft's flagship products including the Surface line and Xbox One, there is also an Answer Desk on site for customers to get product support.[172]

Microsoft adopted the so-called "Pac-Man Logo", designed by Scott Baker, in 1987. Baker stated "The new logo, in Helvetica italic typeface, has a slash between the o and s to emphasize the "soft" part of the name and convey motion and speed."[173] Dave Norris ran an internal joke campaign to save the old logo, which was green, in all uppercase, and featured a fanciful letter O, nicknamed the blibbet, but it was discarded.[174] Microsoft's logo with the tagline "Your potential. Our passion." – below the main corporate name – is based on a slogan Microsoft used in 2008. In 2002, the company started using the logo in the United States and eventually started a television campaign with the slogan, changed from the previous tagline of "Where do you want to go today?"[175][176][177] During the private MGX (Microsoft Global Exchange) conference in 2010, Microsoft unveiled the company's next tagline, "Be What's Next."[178] They also had a slogan/tagline "Making it all make sense."[179]

On August 23, 2012, Microsoft unveiled a new corporate logo at the opening of its 23rd Microsoft store in Boston, indicating the company's shift of focus from the classic style to the tile-centric modern interface, which it uses/will use on the Windows Phone platform, Xbox 360, Windows 8 and the upcoming Office Suites.[180] The new logo also includes four squares with the colors of the then-current Windows logo which have been used to represent Microsoft's four major products: Windows (blue), Office (red), Xbox (green) and Bing (yellow).[181] The logo resembles the opening of one of the commercials for Windows 95.[182][183]

  • 1975–1980
  • 1980–1982
  • 1982–1987
  • 1987–2012
  • 2012–present

Sponsorship

The company was the official jersey sponsor of Finland's national basketball team at the 2015 EuroBasket.[185]

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