The Microsoft Story Part One

Published Jul 8, 2013, 4:31 PM

How did Microsoft get started? How were Microsoft and Apple closely tied together? How successful was Microsoft's IPO?

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Get in touch with technology with tech Stuff from Stuff dot Com. Everyone, and welcome to tech Stuff. I'm Jonathan Strickland, and and we're going to do another one of our episodes where we start to focus on a company. This will be at least a two partner because the company has been around well since the mid seventies, so they're kind of important. Yeah, it made some big contributions to the world of tech as it turns out. We're talking of course about Microsoft and UM. To really look at the origins of Microsoft, we're gonna go back quite a bit, back to nineteen fifty five when on October a certain Bill Gates was born to a wealthy family in Washington, UM. He came from a not so humble background. He actually was born into a very well to do family, UM, and that gave him certain advantages. He was able to take advantage of a pretty pretty interesting education. He went to Lakeside, which was a private school, and that's where he met Paul Allen, who would also be become important to this company. Yea Paul Allen who was two years older than Bill Gates. So it was interesting that these two struck up a friendship. They were separated by a couple of years in age and in grade, but both of them became fascinated with a machine at the school. It's a teletype machine. And you may, oh, my, Drew, geese have forgotten what these machines are like. Things changing, so scory and everyone quick to forget. But teletype machine. Yeah. Essentially, it was using telephone lines and you could send information across and it would type out the information. And they began to um kind of figure out ways of playing with it and learning how it worked and manipulating it. Supposedly, according to Wire, the pair exhausted the school's annual budget for time on this computer within a matter of weeks, and they soon started to um work with a with a local computer contract center to um find software bugs in exchange for extra time on the computers. Interesting, so they like the computers so much that they would work in orders for them to be able to continue to them. In nineteen seventy two, according to the BBC, Gates used the teletype machine to manipulate school schedules for a purpose that I find incredibly creepy. It was to to try to find the get the right girls a k a. The girls that he thought were kind of pretty into his classes with him. Yeah. Essentially, you know, he was just anyone who had who was wanting certain classes. He wanted to make sure that that the right mix of people were in the classes. He was in the right makes of people, being all the cute girls social engineer. Yeah, little creepy, little creepy. However, in ninety three, he yeah, he graduated, graduated, began to attend Harvard, and that's where he met someone else who would become really important in the Microsoft story, Mr Steve Balmer. They lived down the hall from each other in the same dormitory. Right, So then we move over into nineteen seventy four, moving right along, and uh, that's when the magazine Popular Electronics published its article about the Altair hundred. It was called the world's first micro computer kit to rival commercial models. Um, and yeah it was. It was talking about the Altaire and Intel's U four zeroes Ero four chip. And yeah, this was this was the dawning of the personal computer age. The Altair was, of course a kit that you could order and then build your own computer. Now, this was incredibly early on, so micro computers at this point were pretty primitive and there there wasn't a whole lot of software that you can run on them, because, uh, up until this point, computers were really pretty much only in research facilities, in in large companies that needed databases. They weren't. Again, you kind of had to rent time on them if you're going to really use them on a personal level, all right, and there wasn't much to do on a personal level. I mean, these were really machines meant to do calculations. There just weren't. I mean, it was not like it's not like there's a lot of word processing software even let alone games. Although of course anytime you have a machine and you've got people and they are smart and they are board, they will make games. Are They're small things that are easy, too easy to program. So right, So but the al tear comes out, and uh, the company that made the al Tear mits m I t S, invited readers to submit programming languages for the computer. Now in early nine as in like the day or two days after this this issue had hit the supposedly, um, I think Paul Allen came like came like running down the hall and was like, well check this out. Yeah, he had he had the copy of the magazine, and he said, let's do this, let's build a computer language for the al tear, and we can we can be the ones to to make history. And they, from at least one account, the account that I read in the BBC, they apparently told myths that they in fact had the programming language before they had you know, built it. But not. It's not to say that they didn't have the skills. They certainly did. They just they just didn't have the work done yet. But they pretty much committed themselves to it. And then over the course of several hours, maybe a couple of days, they built their computer language, which was a variant of the Basic computer language, which has been invented in the sixties, but this was the first one for this particular chip set. Yes, they had actually been playing with Basic way back in high school together, right, So now they created a simulator of the al tear on another machine, the deck PDP ten they had one. They ended up creating an emulator for the al tear so that they could actually test this programming language because otherwise they have no way of knowing if it would work or not. They didn't have access to an al tear, so uh. They then submit this programming language to MITS and uh, and it's met with some approval, so much so that Paul Allen was made the VP and director of software for the company. So I would say that that was a rousing success. Yeah, yeah and uh. Also Bill, Bill Gates and Paul Allen both moved to UM to its headquarters in Albuquerque. Ye Albuquerque, which just makes me think of weird all Yankovic. But anyway, or bugs Bunny should have taken that left in Albuquerque. But so on. On November twenty nine, Bill Gates sends a letter to Paul Allen, and the letter contains a certain name in it. It is micro dash Soft, which is the earliest known written reference of the company name. Although they had been talking about this for a while beforehand, according to most interviews, but this was the first time, the first the earliest written reference anyone has found. They had also tossed around something like Gates and Allen, Inc. Or something like that. Exciting stuff, you know. So they came up with this idea, and by the end of the year, the partnership that would eventually become Microsoft had earned sixteen thousand and five dollars in revenue and had a grand total of three employees. Uh. When you get to the next year nine, this is a huge year in personal computers, a huge year that people probably at the time could not have predicted would turn out to be so instrumental in shaping what the future of personal computing would be. This is the same year that two other individuals, uh some some rather prankster ish types, the Steve Steve Jobs and Steve West. They they had decided to uh work together to build their own personal computer. Now keep in mind, Gates and Allen aren't building computers. They're building not not even not even operating systems, right, not even Yeah, this is this is before personal computers really had what we would call an operating system. This is when you would put a uh some you would hook it up to some form of media, and then you would use a a ligne command to run a program. But that's about it. There's it's it's not so advanced as to call it an operating system. So Steve Jobs and Steve Wozniak are designing their own computer, which the first one was called the Apple One, which didn't you know, they only made a few hundred of them, as I recall, and the original price was six hundred sixty six dollars and sixty six cents for the Apple one. But they were they got to meet with Bill Gates and Paul Allen. In fact, uh uh they were chatting early at the Palo Alto Homebrew Computer Club about the possibility of using programming languages. So and even at the earliest days, Microsoft and Apple had a relationship. It wasn't a formal relationship by that point, but they knew each other. You know, people knew one another in these communities that this homebrew club was. That was a big organization. I mean, maybe not big, but but certainly a lot of people who had become key players in the industry over the years. Uh started out started out there, and for for a large part it was it was hobbyists at the time, but uh folks, folks like h like like Steve and Bill where um much more business minded, I think than than most other kids hanging out. Yeah. Yeah, they definitely had a bigger picture in mind than just hey, this is this is this is really this is a really cool device. I want to see what else I can do with it. Some some people were more than content to just keep it a hobby, but others were seeing the potential for this to be a game changer to be in its own industry. Well. In March of ninet, Bill Gates delivered the opening address at the first annual World I'll Tear Computer Convention, which as far as I know, is no longer happening. I've never been. Don't think that I would wonder what it would look like if you were to attend a World Altare computer convention in Paul Allen resigned from midst that year in my ts that year to work full time on the Microsoft project, and on November twenty six, nineteen seventy six, Allen and Gates trademarked the term Microsoft. They had since lost the hyphen. Yeah, now it's just Microsoft, no hyphen, just one word. That's same. Around that same time, Bill Gates officially drops out of Harvard. He had been uh, he took a break for a little while, then he went back, and at this point he had decided that he wanted to concentrate Microsoft um. Gates also writes an open letter to hobbyists where he addresses the issue of software piracy. Now keep in mind, this is the earliest days of personal computing, and already there was this this interesting, interesting dichotomy. Okay, you had people who wanted to have software freely available, which would then encourage more people to get into the hobby and more innovation. And then you had the people who are developing software who are saying, in order for me, don't let us make money, then we can't continue making cool stuff for you to play with. So yeah, there's no incentive for me to put in work if I'm not getting any reward from it. I mean, I love this as much as you guys do, but a guy has got to eat. I dropped out of Harvard, so uh so he wrote this open letter to to address these problems of software piracy, which is it's kind of funny because when you think about it, you know, we were more than three decades later, and we still have the same issues. It's now just on a larger scale scale. Exactly that next year nine, Bill Gates becomes the president and Paul Allen the vice president of Microsoft is now an official company and before they were considered to be general partners in this, and this was the first time that that they delineated their their responsibilities within the come right and Gates at this point owned more of Microsoft than Alan. Actually that's true all the way through the history. So Gates had a greater part of the ownership of the company, and they begin with a license deal to Apple. They were the ones who provided the Apple version of Basic, called Microsoft apple Soft Basic. So that's interesting to me too that the programming language for the Apple two computer was in fact developed by Microsoft, because a lot of people think then Microsoft and Apple have always had a very contentious, yea acrimonious relationship, like they were constantly butting heads, and that's not really true. In fact, there were a lot of times throughout for a long time they were they were really trying to help each other out. Yeah, they were working together because when you think about it, they're in two they were in two different businesses. Okay, So you had Apple that was developing all of their own hardware and software and Microsoft was just software. So it wasn't like they were wret competition with one another. Especially in those early days. They were all looking at a burgeoning industry and saying, how can we make this grow? Yeah, and everyone was trying to make money. By working together, you can make more money yea. Um speaking about money. Uh. In eight uh, Microsoft sales of Basic eighty eight alone exceeded one million dollars, so incredible. The company itself has been around essentially two years. Depending upon how you wanted to find the actual company, you could say as many as three, but it really that that first year it was really a partnership and not an official company at all. So they've already hit one million in revenue and sales. This is this is phenomenal. They also developed a programming language for another early personal computer that has there are people who love this machine. One of the Commodore is right, yep, the Commodore Personal Electronic Transactor or PET, the Commodore PET. So yeah, they developed the basic programming language for that as well. The next year, nineteen seventy nine, that's when they made their big move literally from from Albuquerque back up to Washington State. Yep. Now they weren't they weren't in their current headquarters yet. That's they hadn't quite moved that far. They went into Bellevue, which was actually not very far from where Paul Allen and Bill Gates grew up, and they formed the consumer Products division of Microsoft. This was an idea to development market retail products and to provide support for customers, and they actually started to develop their own in house game. All right, Microsoft Adventure came out of that. Yeah, people who remember Adventure remember it fondly. It was I mean, by any measure of today's standards, it's an incredibly primitive game. But at the time it was one of those things that people just fell in love with, but that they they invested in this, they tried to develop it, and ultimately they decided that it wasn't really performing up to their expectations, so they eventually folded it back into the overall company. Right right, During that year, they grew from thirteen to twenty eight employees. So then and Basic was was doing really well. It was kind of on the verge of becoming the standard language for for micro computers. Right. I think it's funny thirteen to twenty eight employees. You could say within that year they more than double size from thirteen to eight. Uh, humble beginnings. Now, if you move up to the next year, to nineteen eighty, that's when Bill Gates makes a very famous hire. He hires his old buddy from Harvard, Steve Balmer, and Steve Balmber becomes Microsoft's first business manager. Steve Balmer was the salesman. He was the guy who was known as he He just he understands the sales aspect. He could build these relationships between different companies. He can develop them because you know, most of Microsoft's business was really in partnering with their companies, not so much uh directing business directly at the consumer, right right, Yes, since as we said, they were just creating software at the time. It was you know, all convincing other people to uh yeah, let them develop programming languages for their platforms. Things like you know, the stuff that you would see that Microsoft had a hand in. Where that was the stuff that would come when you bought the computer you were buying, Like when you bought an Apple too and you started programming stuff, you were using the Microsoft programming language. But it wasn't like you bought a computer and then you ran out to grab the Microsoft copy of whatever software it was. It was all packaged together. So the business relationships were key in those early years with Microsoft. Yeah. Um, speaking of those business relationships, in July, they entered an agreement for the upcoming IBM PC. The code name of this project was Chess. Yeah. IBM has a history with Chess uh, they would actually at this point it would be a future with chess because IBM Suh IBM would famously u show that a computer chess champion could defeat the human grand chess champion. But at any rate, Yes, this this this code name project was for the developing software and operating system information for an upcoming personal computer developed by IBM and and and again Microsoft at the time was not was not creating operating systems. This was really kind of one of the first that was out there. Um, they a Gates and Bomber wound up buying something called QUDS Quick and Dirty operating System for about fifty grand, right, and they wound up a repackaging it or recoding recoding. They essentially used that as think of it as using that as the foundation to build their own operating system on top of So we don't mean to say that they just took They just weren't bought one thing and then repackaged it and then sold it. They definitely did. Microsoft did change that, but that was the basis of that operating system. Just as you would say that there are lots of different Linux distributions out there that take the basic Linux and then create something on top of it that makes it makes it more usable for a certain part of the audience, right right, But they renamed it disc operating System and licensed it to IBM for eight grand um, which which sounds like a small amount, and it was even at the time a relatively small amount, but um. But they also had an agreement to earn on top of any any PC sales that the system went on too. In addition to that, they were even more savvy because they retained the licensing rights so that they could license that same operating system to other manufacturers. Now, for those who aren't aware, when the IBM compatible computers started coming out, that these were machines that were built by other companies besides IBM that could run the same sort of software because they were using a very similar or identical chip set to the IBM PC. So that meant that Microsoft, because they retained this licensing agreement that they could license other manufacturers, could provide the operating system. So that meant that suddenly you had all these different machines from different manufacturers that could do essentially the same thing as the IBM PC, but because they were offered by someone else and they were using perhaps different materials, sometimes the price would be significantly lower. This is what would eventually one of the factors I should say that would eventually lead IBM to pull out of the consumer PC market, because once this train got set in motion, it really was hard to derail it. It meant that IBM had to compete essentially against itself. They had invented the approach that they wanted to take, and then everyone else could just copy it. Um Apple, by the way, had a very similar situation for a while after Steve Jobs was politely asked to leave or he left on his own, depending upon whom you ask uh, and then Apple did a very similar thing where they actually licensed out the Apple designed to other manufacturers. When Jobs came back, he put a stop to that. Technically, I think it had already kind of stopped before he came back, but he definitely um So anyway, this was one of those things where it was a great move for Microsoft. Maybe not such a great move for IBM PC, but it meant that Microsoft had guaranteed yet more revenue down the line by licensing this operating system to other manufacturers. They also started to develop their own hardware in the form of special microprocessors, circuit boards that could allow the computer computers that have are based around one particular design to run programs that were built for other types of computers. So, in other words, it's kind of like an emulator. So you know, like if you had an Apple To computer and I had an IBM computer and I had this program I wanted you to be able to use, you couldn't use it on your Apple TO. The architecture is totally different. It just wouldn't work. So what Microsoft was starting to do was build up microchips or or actually circuit boards that you could insert into a computer, put it in one of the computer's expansion slots. Yeah, and so, uh, it wasn't like it was a magic pill that would work on every computer. They had only a few specific ones that would allow one type of computer to run one type of other software. So, but it was an interesting move that they were getting into hardware. This was their first time of really doing that. Otherwise they were just concentrating on code. Now. Um, then that's when we actually get launch of ms DOS Microsoft disc Operating System. Uh, and that's introduced on the IBM PC. UM and that's also when Microsoft got a visit from a certain Mr. Steve Jobs, and he Steve Jobs, arrived at Microsoft to give them an early look at what would be the Macintosh computer. This is one The Macintosh computer does not come out until nineteen four, so this is several years in advance of the debut of this computer. And it just shows really that the development cycle for these kinds of devices can take several years sure, and also just shows the strength of the relationship at that stage in the game. But you know, it's you know, being being willing to show something that secretive at that point, and uh, it was. It was kind of fun I think, um uh. People were referring it to it as a wonderful machine and eventually there would be a funny little acronym about that. But I'll get to that in a little bit later. So that same year Microsoft incorporated, but was still a privately held company. They did not have an initial public offering yet, and Gates was became the president and chairman and Alan became the executive vice president. And by the end of the year, the revenues hit sixteen million dollars and they had a hundred and twenty eight employees. Yeah, that's that's a great number for a computer programmer, A hundred twenty eight, because it's falling into the pattern there. Um In the Microsoft developed something internally called the Microsoft Local Area Network or MILAN, and that was to connect all their in house development computers together. So this was essentially a very early computer network that Microsoft was using. There had been other computer networks before this one, obviously, I mean our ponnet existed at this time, and that was a network of networks that was the predecessor to the Internet. But this is an early implementation of computer networks. And uh and at that time, a man named James Town became the president and CEO of Microsoft. Bill Bill Gates hired him to kind of take over the operational duties exactly. Yeah. And this is something that we would see throughout Microsoft's history as well, is that Bill Gates really wanted to concentrate on developing business, to develop actual product. And as he became more and more of a personality um within I mean not just within the company, but but in terms of of marketing power, you know that the day to day stuff has never really interested him I think as much as right, and and it just meant that it took away time from the stuff you really like to do, like to work on projects and to uh to lead teams to develop new products. So, I mean, we understand why he was why he was doing this, but it was kind of an interesting move that he he hires someone else from outside the company to become the president CEOO right right. That was also the year that work on Windows originally began under the code name Interface Manager. Yeah. So, uh, that might also surprise you because everyone remembers that when the Macintosh debut in four that that the graphics user interface was such a huge leap from the old days. Now, granted again again they had seen that this early, these early prototypes of the mac and also remember that the graphics user interface wasn't that new. As it turns out, Xerox had been working on that for several years. Precisely to the average computer or the potential computer customer, it was revolutionary. So two comes and goes, we get up to three. That's when they actually announced that they're working on the graphics user interface. Uh. At that same year, Paul Allen is diagnosed with Hodgkins disease, so he ends up stepping back from working full time at Microsoft. Simultaneously, Jamestown resigned as the CEO. Yeah, and uh, and so a new president and CEO comes on for Microsoft. His name is John Shirley, and he came from the Tandy Corporation. I remember Tandy Computers me too. I I read that and I was like, Tandy, It's been so long since I've seen that name that it was kind of brought back memories. Um. And that's when Bill Gates became the He was essentially the chairman of the board and the and and an executive vice president, which is an interesting common nation. And uh. And that's the same year that Microsoft word for MS DOS one point oh launched. So we get our first example of Microsoft's land breaking amazing word processor that I could not stand for the longest time, which is what I'm looking at my show notes on right now. Now. I love it. Well, I mean not not not for MS DOS one point, you know. No, we we've actually upgraded from MS DOS one point. In the office. We now are on Windows three point one. Uh. That's a that's a joke. We get that next year around around three By the way, they were just lots of software agreements going on with Apple. Um, they were they were both kind of just just really continuing that relationship and helping each other out, which again is funny considering the way the Night four iconic commercial comes into play. Well. Also in n three the company hit fifty million dollars in revenues employees at that point, phenomenal growth within the company. That's when the Macintosh launches, and of course the famous commercial was very much UM trying to to get that Orwellian feeling, the idea of Uh, the IBM computer is very very uniform and design and there's no personality there and it's supposed to strip away anything that's fun or that. The Macintosh was this creative powerhouse that yeah, and it's for the individual who has exactly it's supposed to be. For the rainbow connection, the lovers, the dreamers and me. Uh, this was not necessarily a shot across the bow at Microsoft. This was a shot at IBM. Again, one of those things where we think back and like, but didn't Apple hate Microsoft because of that? You know, think about that commercial. That commercial was really aimed at the way IBM was doing business, not at or the way IBM was was portrayed. You know that, and that this is that's a business computer that's where business you know, this is something that's for the creative individual. Um. So it really wasn't a shot at Microsoft. Uh. And then that's you know, Microsoft actually ended up taking a big role in developing software for the Macintosh program. A lot of those early programs on the Mac came from Microsoft. And the program that Microsoft engaged in for developing software for the Macintosh was called sand This is that cute acronym. I was talking about Steve's amazing new device. Yeah. So, I mean everyone at Microsoft thought that Steve jobs and and the work that he was doing over an Apple was pretty cool. Yeah. So yeah. One of the software projects was Microsoft Excel, which was the spreadsheet program that later would come to the PC. It actually hit the Mac first, or the Macintosh, I should say it shouldn't call it a Mac because it's different type of computer, right right. They started actually all the way back in two m in on an agreement with Apple to create that spreadsheet program that would become Excel eventually business graphics and also a database structure. So the relationships tight right now. And uh and and they were not allowed that they the terms of the agreement where to um reserve it for Apple for a year before Microsoft could use it themselves. All right, So we're picking back up and we're in nine now, that's the year that Microsoft Windows ships on Nove So this is, uh, this is really a graphical extension of MS DOSS. It's not really a full graphics user interface operating system in its own right. It's more like something that gets kind of piggybacked onto the MS DOSS operating system. So it's a little different from the future versions of Windows. Really, you have to get to two Windows three point one before we start seeing a Windows operating system that looks familiar to someone who who uses it today, right, right. This was a very very basic first attempt there, but it was successful and the company revenues hit about a hundred and forty million dollars. They had up to uh, what was en employees, so just under a thousand. At this point, Bill Gates was becoming a very public figure at the time. He was he was being shown on the cover of all kinds of magazines, UM and uh marketing campaigns, calling calling Microsoft, you know, like trying to be the IBM of software and getting getting the concept of a computer on every desk and in every home we're starting to come out. Yeah, it's funny too, because if you start looking back at some of the predictions that people, even people like Bill Gates had about how many computers would be in the home within X number of years, the amazing thing was their predictions at the time seemed as ambitious. Everyone was thinking, that is just it's insane, who would who would need that? And then ten years down the road, you'd realize that they were being incredibly conservative. That you know, people weren't taking into account things like Moore's law, which states that not only are computers getting more powerful over time because we're able to fit more dis elements upon one square inch of silicon, but also that the price goes down because the manufacturing processes get more efficient and we end up learning better ways to build computers. So with prices going down and the complexity coming down because people are figuring out better ways of designing operating systems, it was pretty natural for people to want to adopt computers. I mean, a lot of these were things that people kind of wanted, but they were a little intimidated by, especially in the early days, because they didn't have that hobbyist mentality. Sure, sure, and so it wasn't until these uh the these these gooey systems, they have system graphic interface, I have no problem with. So with with all of this money that they were making and with this this kind of outrageous number of employees, they relocated to Redmond, which was just outside Seattle, and this is in fact where Microsoft makes its headquarters today. They do, of course have corporate locations in other parts of the world, but that's their home bases. And red from from did not mentioned that we had moved on time waits for no man or Microsoft marches on. Yes it does. And uh so. Microsoft then also that year held its initial public offering, the I p O. Now, this, of course is when a private company becomes a publicly traded company, and so ownership is then spread out through shares. You can buy shares in the company and that represents a certain percentage of ownership of that company. It opened at one dollar per share and by the end of that day the stock price was at twenty eight dollars per share, So it showed a high level of confidence in the company and not bad at all. And they raised about sixty one million dollars, which at the time was the most money any tech company had raised in an I p O. Uh. Since then, of course, that that's changed when even when you factor in things like inflation, it's still not hasn't held up. But at the time it was incredibly impressive. Now, that year they also introduced Microsoft Works, which had based sick word processing, spreadsheet database, and other functions all kind of wrapped up together, and they held the first International Conference on CD ROM technology. Yeah, yeah, I mean, you know, I'm pretty sure that I still had five and a quarter inch floppies on my Yeah, that a three and a half inch disk drive to me was the future, let alone a c D. Now, of course, what we're talking about here is that a lot of the if you aren't familiar with the computers from back in the eighties all the way up into the early nineties, they used magnetic storage media like discs, discs that had uh, these these little they were called floppy disks, not necessarily because they were floppy, but that was to differentiate from the hard disk that you would have part as integrated part of a computer, right right, and and and part part of the floppy disks was in fact a I mean, the disc itself would usually be rigid for um safety purposes. But the film, but the film inside was it was a film, a magnetic film, right, and so they they the original ones, well, original ones came up in like seven inch seven points something inches, but approximately as big as my civic, but five and a quarter was the standard by the time I was getting into computers. That was what the Apple two used, and then three and a half inch discs. It's funny because as the size of the disc went down, the capacity and that was one of those things that as a kid before I understood anything about computers, just confused the heck out of me, Like, how is it that this can hold more chapters of my dad's book than this one? Doesn't matter, let's erase it, um, because I have saves I want to make. Uh. Well, the CD, of course, was going to blow all of that all the water. The optical drive had the capacity to hold way more information and access it much more quickly than magnetic did, but not for a good few years. Yeah, And this was an early early discussion where Microsoft could see that the writing was on the wall and that that was going to be an important technology and they wanted to get on the forefront of that. Un a new marketing manager joins Microsoft, and she would become very important in the life of the co founder of the company. Right, this is this is Melinda French um and uh, Melinda French and Bill Gates and first met at a Microsoft press conference event in Manhattan that year and she began to work for the company and uh, and we can I'm imagining that the little hearts appeared over their heads. Shortly thereafter m Microsoft launched Windows two point oh that year, and we're still not quite to the level where it's a version of Windows that most of us would recognize. And they also announced that they would release Windows or Microsoft Excel for Windows, so now we would get Excel. It would no longer be exclusive to the Macintosh computer. It would now also come to any PC that could run Windows. And they also bought a company called Forethought Incorporated, which developed a presentation software called power Point, so that the if you've ever seen a power point presentation, you know it's it's designed so that you create slides which you can use their print as sheets of paper. You could in the old days, print them as slides and put them in a slide projector because I used to do that I'm old, or you just use them on your computer and you project them digitally for you know, one of those typical presentations, usually standing up on a stage and you have a lectern there and a little clicker in your hand, and I've done this way too many times. By the way, power Point they actually bought the company that developed it, and they saw this as an opportunity to kind of bring power Point into the suite of productivity software that they had been developing in house since their early days. So all that word processing and spreadsheet they were saying, you know, this is a good business for us to be in. It's it's more and more offices in the United States and around the world are starting to incorporate computers into their everyday experiences. And if we're the ones who are creating the software that allows them to get business done, we will do crazy amounts of business. And it turned out to be really, really true. Um, so they were jumping ahead on that one, and they also became that they turned Forethought Incorporated from an acquired company into a full division within Microsoft called the Graphics Business Unit. That's also when they launched Microsoft Bookshelf, which was a cd ROM, which again very early for cd ROMs, and the cd ROM had ten reference works on the disk, and this was the first real general purpose application on cd ROM for PC users. Not that many people could really take advantage of it at this time, you know, just like any new technology. When CD ROMs first hit the scene, it was expensive and it was hard to find. I remember that it took me quite a while just to get a CD player, much less a CD ROM for my computer. So this is definitely early days for that. But again, they wanted to be on that bleeding edge of this technology. That next year, that's when that little love Eve relationship between Apple and Microsoft turns a little set work. Yeah, that was when Apple filed a lawsuit against Microsoft. Um, they were they were basically saying that Windows looked and felt too much like um, like Apple's own graphics Centerface. Yeah, and which which really kind of Apple had soared stolen from Xerox. Yeah. That that that Xerox alto PC that we were talking about, um small Talk being the graphics Centerface operating system that they were using. Any time. A lot of people credit the Macintosh for inventing the graphics user interface and the mouse, which both of those actually came out of work at Xerox and other research laboratories. But McIntosh was the first computer, the personal computer to make it popular. Yeah, it was the first commercially successful computer that used it. They really designed it well. So I mean not to take anything away from Apple, because they were able to make something that appealed to consumers. Uh. Now they're saying that that Microsoft essentially was copying them, and you know, pointing out, Hey, Steve Jobs came over and showed you what we were working on, and then you suddenly come up with a graphics user interface. What's going on? Except they were doing it in legally. So it probably wasn't as flippant as that. The lawsuit would last six years and eventually the court would rule against Apple and say that Microsoft did not there wasn't enough evidence that Microsoft had actually copied Apple's approach, and so this this would eventually turn out to be a fruitless effort on the part of Apple. And it was not the only time that Apple and Microsoft would clash, obviously, certainly not. Also, Microsoft became the world's largest PC software company based on sales, so they were doing pretty good. Yeah, they were not not too shabby. Business is booming. In nine, they released Microsoft Office one point oh, both on standard discs and on CD rum. Uh so Microsoft Office at one point oh. This again is the beginning of the productive any software suite that many of us are familiar with. I've been using some version of Microsoft Office for what year? Is it? Probably fifteen years now? Um? Maybe maybe more than that. Actually, way longer than that now that I think about it. But it was one lotus for a long time. Did I use word perfect as my word processing program of choice for ages on purpose? Well, I preferred it. I knew that you if you wanted to bowl the word, you hit F eight. Um. And and so anyway, this the suite would become incredibly important to Microsoft. It becomes one of their flagship products. If you think about Microsoft as far as the software side, their flagship products, I would argue are Windows and Office. Those are the two big ones. Lots of other stuff obviously, but those are the two I think that are kind of the cornerstone for what Microsoft's offtware is all about. Absolutely. And also this was this was one of their big moves in in in bundling software products together, which would become very important and kind of legally contentious Yes later on Yes nineteen, Microsoft then ships Windows three point oh. So here's the version of Windows that starts to look more like the stuff that we're used to. And within two weeks of launching Windows three point oh, the company has sold a hundred thousand copies. Now, that probably doesn't sound like a lot to you, but keep in mind this is before computer adoption has really grown that large. Not everyone has an IBM compatible computer, uh, and those who do not everyone has an IBM compatible computer capable of running Windows three point oh. This was one of those things that I found, uh initially off putting by graphics user interfaces. I was. I was brought up learning DOSS, so I used DOSS all the time. I did not like the idea of a graphics user interface, not because I thought that this was going to be, you know, dumbing down my experience, but rather that I thought, why would I want to dedicate so many of my computer's resources to running an operating system when I'm perfectly capable of doing this on my own. Yeah, I just want to be able to play my games. But then more and more of my games became Windows games, not DOSS games, and eventually I was forced to become one of the herd of sheep. Now, I say that all mostly in jest. At the time, I was very bitter about it. These days, I mean, if you were to put me in front of a DOS computer now, I'd be lost. Ye. Not that I was ever particularly found in DOSS. I I never I never really used it myself. I would just you would. All you would hear from me, Lauren, from my desk is where's the start button? Yeah, that's kind of the only thing I would be able to say over and over and cry. I'd cry too. Um, But at any rate, three point oh launches sell hoppies. Only fifteen of households back in even had a computer according to the Bureau of Labor Statistics, so not that many people have computers, so a hundred thousand copies is a significant number. Microsoft decides at that point that they will focus exclusively on developing Windows, rather than supporting both Windows and further versions of DOSS also known as OS two. Now, this is not great news for IBM. They were not terribly happy with this. But Microsoft said, you know, we see where the future is. The future is going to be in this graphic user interface. UM. As more and more people adopt these computers, they're going to want something that's that's more accessible than a blinking cursor where they have to figure out what code they need to type in in order to get stuff done. So they said, this is what we're gonna do. We're gonna just completely focus on developing the Windows opbring system. That same year, John Shirley retired as president and CEO and he was replaced by Michael R. Hollman. For Yeah, which is interesting, right, I mean you're going from Tandy, which was another you know that was at least within the industry, to Boeing, which you could argue was you know, related to but outside the industry of computers. However, of course, keeping in mind this is for the person who's doing the administrative, the the corporate oversight of the day to day workings of a company, not actually talking about share. Yeah, so keeping that in mind, it makes more sense. Um. Now at that point, uh, it had been fifteen years since the company had been founded, So fifteen years after the founding of the company, they were in a pretty secure place financially. They had had a very successful I p O and revenue was at a staggering one point one eight billion dollars. They were the first software company to get over a billion dollars in revenue a year. This was also the year that the FTC, the Federal Trade Commission, began kind of poking into um some antitrust kind of kind of issues, right, So they didn't they didn't launch an official investigation yet. I just thought, Hey, that sounds kind of like Microsoft might be muscling out some competition, Like you were saying, Lauren, this idea of bundling software. I mean, it makes sense from someone who wants to have a lot of uh utility in their software and have cross utility, right, and especially if you've already I'm like many of the programs and the Microsoft Office Suite, a lot of the base coding is is the same UM and and it's and it's built up, you know, just in different ways. Well, especially when you get later on into office where you want to do something like embed a chart that you create an Excel into a power Point spreadsheet, but you don't want to just copy and paste a picture and you want it to be functional, yeah, kind of like a living chart. So that way, let's say that as it gets closer to your time to present whatever the presentation is, that your numbers get updated. Well, instead of having to go in and UH and copy that picture again and then paste it back into a new version of the presentation. If if your systems are connected, then what you can do is go into the Excel sheet where you generated the image in the first place and change the numbers there and it updates. Right. Yeah, so now great, that is later on. That's not the earliest version of Microsoft Office. Yeah. And and in these days that the FTC was really looking at, UM, the relationship that IBM and Microsoft had and UH and the way that DOS was being propagated across all IBM computers at the time. Right, It's it's one of these things where they start wondering if there's maybe some anti competitive practices being put in place, so that would become a more important part of Microsoft's history. Shortly thereafter, UH in ninety two, that's when Forbes proclaims that Bill Gates is the richest man in America for the first time, at six point three billion dollars in net worth. UH. Bill Gates would end up being richest man in America several times UM over the next several years and uh, it would flip flop back and forth between other people, and eventually he becomes the richest man in the world a couple of times too, so pretty phenomenal. Mike Hallman at that point leaves Microsoft. Uh you know, remember he had just joined as the president back in two he leaves. So at that point the company does something interesting. Rather than a point a new president, they created what they called the Office of the President, which was held by three executives. Three executives would be the people manning the Office of the President. So it's almost like a triumbrit. It's a tribunal. Uh you have what brutus? Uh you have uh? Uh no, no, it was so the officer of the President was held by three executives. In those first three were Steve Balmer, so, uh he had stuck with the company all this time and now was the worldwide state else in support guy, and that's the part that he oversaw. As part of the Office of the President. You also had Frank Goddet, who oversaw worldwide operations of the company, and Mike Maples who saw oversaw the worldwide products for the company. All three of them, as the Office of the President reported directly to Bill Gates and that same year Microsoft's stock split. And a stock split is when the value of a company keeps on growing but they want to be able to have It's it's kind of complicated, but the idea is that you have when you first have the the I p O. You have a certain amount of stock, certain number of shares that are available, right, and each share is worth a certain amount. And when you multiply those two numbers together the number of shares times the value of the share, that kind of gives you a valuation of the company. Uh. If a company's value continues to increase, you may consider splitting up that stock so that instead of the stock being incredibly expensive, you have decrease the value of individual stocks. However, in order to compensate your shareholders, you give them more stock, So it could be this would be the first in a series of several splits. So essentially, what it means is it allows the company to increase in value without stock price getting so high that no one wants to buy or sell it. Uh, I'm drastically oversimplifying. So all of my my business majors out there who are screaming at me, maya culpa. But and for those of you who aren't the liberal arts majors, I'm sorry. Uh So anyway, Um, the stock split showed that this was a company that was going to continue to grow in value, or at least that was the that was the hope, as it turns out, hope that was well placed. And Bill Gates that year received an award from the President of the United States, George Bush Yes, the first George Bush Yes, and that award was the National Medal of Technology for Technological Achievement in Technology and Tech. I may added a couple of there there were two technologies in the metal of Technology for technological Achievement, which I think is already so uh you know, it's it's self referential. Uh. In n three, they released the Windows in T platform, which was an enterprise software. Enterprise of course means companies. When you talk about enterprise software, you're talking about software is specifically designed for other corporations as opposed to individuals. So that's what Windows in T was, and it's kind of a client server solution. Um. And then at that that same year, IBM saw Microsoft overtake it in corporate value. So the company Microsoft becomes more valuable from a sheer numbers perspective than IBM. That's amazing. The the huge company for which Microsoft got its most of its early revenue apart from you know, the early early days with Apple, is now worth less than the actual software company. That's pretty phenomenal. That was that was on the slightly less awesome route. The investigation that the FTC had sort of begun got passed over to the Department of Justice, which basically meant that it was getting it was getting serious. Yeah, now now it's gone from I wonder if those people are up to no good to those people are probably up to no good, and we're going to look into it much more seriously. This would not be the only time that Microsoft would deal with these sort of things. One of the one of the issues you get when you get really, really successful in your industry is sometimes you might, through your certain practices, discourage other people from entering that industry, whether you mean to or not. That can be seen as anti competitive, and that can get the government governments from around the world really on your case. Because again the United States, we're talking about the U S specifically here, but they are not the only entity that has looked into fire. We will get into that a little bit more later on. That's the same year. Also three is when company introduced Microsoft in Carter. It's a multimedia encyclopedia on CD. Did you ever see the Incarda I owned in CARTERA I owned in Carta as well. I remember everyone owning card I think there anyone I think you were required to own in Carta like there were there were a couple. If you owned a computer that was running Windows, you are essentially required to own in CARTERA and possibly four hundred and seventy three A O L discs. I had approximately that many. So yeah, I just get sent in the mail all the time. I used to make costumes out of them. It was great. But it seems, I mean in Carda seems like the incredible future to me. That was That was one of those early things that I remember, I mean not not you know, one of those original things that I remember thinking like, like, these computer things are really here and they're really doing something interesting. Yeah. That keep in mind in Carter this is before we as Plebeian people have access to the Internet. We didn't have Wikipedia. There was no Worldwide Web at this point, so or at least roll by web was so young in n that hardly anyone knew about it. Technically, there was a worldwide web because Tim berners Lee had actually invented the first web page, but everyone had a O L discs And yeah, I can remember. I think the first time I saw a web page was maybe maybe late ninety three or early ninety four. It was when I was in college dating myself here. I was in college, and I remember seeing someone navigating using something called a web browser to navigate a web page, and I took a look at and it took a really long time for it to load up, and it was pretty primitive graphics, and I thought, I'll never take off and I'll just use my tail knit program. Speaking of dating yourself, people who were dating at the time, I got interesting segue. Bill and Melinda got married. Yep, that was there was obviously a very important time for for the two of them, and they have created together not only an amazing family but also a phenomenal philanthropic organization that we'll talk about in our next episode. Before we get to that, however, I did want to mention that was the year that Microsoft agreed to a federal consent decree, which was the outcome of this entire FTC Department of Justice investigation at the time. And what they were doing was they had been uh entering into these license agreements in which in which PC makers had been agreeing to pay a licensing fee for DOSS with each model of a computer ship, even if that particular computer did not contain UM interesting. So that was and and and the federal government was like that, that's not cool, guys, could you knock that off? So so, so so that was and and that was kind of the first thing. And this would come back in a minute, um, well, more like in several days, because we're going to take a break here, ladies and gentlemen. This is gonna be the end of part one of the Microsoft story because we have so much more to say and we don't want to have a two and a half hour long episode about it. So we're gonna take a quick break here for us and slightly longer one for you. And uh, if you guys have any suggestions for things that we should cover on future episodes of Tech Stuff, whether it's a company, a type of technology, type of software, personality in tech, or you just want to hear us take yet another film and deconstruct it in our eyes of tech and science. Let us know. Write us. Our email address is tech stuff at Discovery dot com, or get in touch with us on Twitter or Facebook. You can find us there with the handle tech stuff. Hs W and Lauren and I will talk to you again really soon. For more on this and thousands of other topic is it how stuff works dot com

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