Microsoft at 40: 5 Successes, 5 Failures
In honor of Microsoft's 40th birthday, InformationWeek reflects on the successes, failures, and lessons learned that built the company as it stands today.
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In 1975, 19-year-old Bill Gates dropped out of Harvard and teamed up with his buddy Paul Allen to revolutionize the history of computing. Shortly afterwards, Microsoft was born with the mission of putting a computer in every home.
Four decades and three CEOs later, the company has evolved into an empire that continues to dominate personal computing around the world, albeit while dealing with issues of middle age. There may not be a computer in every household around the world, but Microsoft is markedly closer to achieving this goal than it was upon its inception.
The celebration of Microsoft's 40th birthday is one that marks many decades of hard work and the great triumphs and disappointing failures that came with it. After all, you don't evolve from a tiny startup to a billion-dollar enterprise without a few setbacks.
[Windows 10: Redstone Update in 2016]
We learned that when Microsoft succeeds, it makes a splash. From the inception of MS-DOS to the widely applauded Windows 95, to the current development of Windows 10, the tech giant has made clear that it's a force to be watched. Its software has become a staple of businesses and consumers throughout the world.
However, with great success come great failures. There have been times that Microsoft has arrived too late (or too early) to the game when trying to pin down the next big tech trend. Sometimes it completely missed the mark, and consequently suffered as customers fled in favor of competitors like Apple.
In celebration of its 40th birthday, former CEO Gates wrote an email to employees running the corporation that he has since left in the hands of successors Steve Ballmer and, now, Satya Nadella as he focuses his time on philanthropic efforts. Gates briefly reflected on a largely successful history but also noted, "What matters now is what we do next."
We've spent plenty of time pondering how Microsoft's current projects will affect its future. Will Windows 10 appeal to a global audience that mostly trashed its predecessor, Windows 8? Will Windows Phone ever see growth in a market dominated by Apple and Samsung? Will Satya Nadella's "mobile first, cloud first" vision carry Microsoft into a successful future?
Let's take a break from speculation and reflect on how Microsoft grew into the company it is today. On the following pages, we'll look back at some of the moments that built Microsoft -- and some products that, perhaps, should have stayed ideas.
In August 1981, Microsoft released operating software entitled Microsoft Disk Operating System (MS-DOS). The OS was created in response to IBM, which had approached the young company about a project code-named "Chess." Microsoft developed MS-DOS as a foundation on which computers could run, bridging the gap between hardware and programs. This creation marked Microsoft's entry into the personal computing space, which it would eventually grow to overpower in coming years.
In 1983, Microsoft announced the developed of Windows 1.0, a visually enhanced version of MS-DOS. The first Windows-branded OS shipped in 1985.
By the time Windows 95 was released in August 1995, prior versions of Windows and MS-DOS operating systems were being used on about 80% of PCs around the world. The newest version of Windows brought welcomed improvements including a new GUI, the taskbar, and the Start menu. It also delivered built-in Internet support, new plug-and-play capabilities, and dial-up networking. Its 32-bit structure brought new multimedia capabilities and better integrated networking and mobile features.
Windows 95 got its share of fanfare in a hugely publicized announcement. The new OS was the center of a $300 million marketing campaign that featured stars like Jay Leno and the Rolling Stones. It sold more than one million copies within the first hour of its release and a record-breaking seven million in the first five weeks.
The first iteration of Microsoft Office, known as Office 1.0, was released in November 1990, containing Word 1.1, Excel 2.0, and PowerPoint 2.0. Each product was an individual success, but ultimately they were much stronger when packaged together.
Office has since grown to become one of Microsoft's most universally popular products and the go-to productivity suite for both enterprise and consumer use. The addition of Microsoft Outlook only strengthened its power. The suite has undergone a vast series of updates and is now compatible with touchscreens, in addition to competitor products. Office has since become a part of current CEO Nadella's strategy to broaden global use of Microsoft products. Now users of Android and iOS products can access its programs.
Of course, even a success story like Office has had its share of blunders. (More on those later.)
Windows XP, often touted as Microsoft's best operating system, was released on October 25, 2001. From then it went on to become a bestseller for Microsoft as XP Home Edition and XP Professional were embraced by consumer and business users over the following years.
Windows XP delivered features like the ability the create movie special effects and 3D animation, in addition to improved digital photo capabilities, and engineering and scientific programs. It was more intuitive and brought online delivery of security updates to allay user fears of viruses and hackers.
Its popularity proved a blessing and a curse for Microsoft, which was forced to extend support time and again. When successor Windows Vista hit the market, XP was five years old. Consumers and businesses were stubbornly resisting the upgrade to Vista, which was markedly less appealing. By the time Microsoft terminated extended support for XP, it was almost 12.5 years old.
Okay, so maybe it's a bit early to call Windows 10 a success, but so far Microsoft's new OS is set to address the failings of Windows 8 in the same way that Windows 7 appeased users who found fault in Windows Vista.
Microsoft announced its new OS at a major press event held at the end of January 2015. After a rocky few years that included the launch of a globally criticized operating system and appointment of a new CEO, many were curious to see what kind of features Microsoft would prioritize in its new system and in its strategy going forward.
Those who took the time to watch the event, whether online or in person, were not disappointed. In addition to a new OS that would bring back missed features like the Start menu, Microsoft publicized the development of a new productivity tool in its Surface Hub and a holographic headset, HoloLens. Windows 10 is undergoing testing by Windows Insiders and will be released later this summer.
Where Apple locked its success in the mobile market, Microsoft fell flat. Former Microsoft CEO Steve Ballmer notably laughed at the iPhone when it was first announced in 2007.
In an interview following Apple's news, Ballmer shared his reaction: "500 dollars? Fully subsidized? With a plan? I said that is the most expensive phone in the world. And it doesn't appeal to business customers because it doesn't have a keyboard. Which makes it not a very good email machine."
Ballmer's confidence was boosted by the fact that Microsoft was selling millions of phones per year in 2007. Apple, in contrast, wasn't selling any. Windows Mobile, the predecessor to Windows Phone, used to be a dominant product when smartphones were less mainstream. When business people needed a personal computer and phone in one device. This made sense, given that Microsoft had already cornered the productivity market.
Over the following years, the iPhone grew to dominate a market that Microsoft could no longer touch. Sure, it tried to keep up with Windows Phone, but Microsoft's smartphone offerings are light-years away from competing with Apple and Samsung.
Microsoft is struggling to figure out the demands of its consumer market. Current CEO Nadella is quoted as saying, "Any thinking consumer should consider Microsoft because, guess what, you're not just a consumer. You're also going to go to work, you're also going to be productive, and we can do a better job for you in there."
Microsoft found its success in productivity, and it continues to employ that as a key feature in attracting consumers. The problem is, most consumers don't need productivity capabilities in their smartphones. They have those in their desktops, laptops, and tablets. Rather than telling consumers what they should want, Microsoft should focus more on giving them what they're already asking for. It has since tried to follow in Apple's shoes with the Windows Phone, but so far consumers aren't biting.
In an interview, former Microsoft CEO Steve Ballmer stated that he considered Windows Vista his biggest regret during his term as leader. Vista, codenamed Longhorn (apparently Microsoft really likes codenames), was deemed "the worst Windows version of all time" as reported on CIO.com.
When Vista arrived (after a delay), it was missing prominent features that it had promised to deliver. Customers were irritated by issues surrounding compatibility, usability, privacy, and security, on top of the annoying User Account Controls. Even Ballmer says it "wasn't a great product" and that Windows 7 was the fixed version of Vista.
Vista also brought a host of legal troubles to Microsoft, which had allowed hardware providers to label their devices as "Windows Vista Capable" when the products could only handle "Vista Home Basic." A federal judge granted the lawsuit with class-action status, claiming that Microsoft had "unjustly enriched" itself with such a promotion.
Microsoft Bob was the company's early attempt to provide a personal assistant in 1995. The on-screen character, depicted as a smiley face with glasses, popped up when he believed he could help the user perform a certain function. A dog, nicknamed Rover, was another such character.
Bob was developed to provide an easier interface for Windows 95. He guided users through his cartoon home, where objects could be clicked to access different features (guided by Rover). Clicking a pen, for example, launched the "letter writer" app. The accompanying software was pricey, at $100, and failed to attract users who could otherwise use Macs if they wanted a simpler experience. Bob became history in 1996.
Clippy, the Office assistant that even Microsoft started to mock, wasn't much better. The irritating little cartoon clip arrived in Office 97 and existed to provide mostly unnecessary advice.
Microsoft launched the Zune in November 2006 in an effort to compete with Apple's iPod in the portable music space. Unfortunately, it never even came close in terms of either sales or popularity.
By the time Zune hit the market, Apple had already sold more than 100 million iPods and largely dominated the market. Zune, in contrast, sold 1.2 million between its launch date and mid-2007. It took until May 2008 to sell two million devices, Time reported.
While admittedly a market flop, Zune did serve a purpose in teaching Microsoft a lesson. It was one of the first attempts by Microsoft to design products on its own, rather than take inspiration from Apple devices. This strategy was further reflected in Windows 8 and the Surface tablet, each of which also delivered valuable lessons.
Customers were reluctant to upgrade to Windows Vista, but they were even more hesitant to embrace Windows 8. (The numbers don't lie.)
Microsoft's attempt to optimize its OS for touchscreen and mobile devices left its desktop users in the dust. Windows 8 ditched the Start menu and traditional design in favor of a "Metro" tile interface that is, yes, half-way decent for tablet use, but useless for a desktop. Users had to abandon everything they had previously learned about Windows to adapt to the new OS, since its navigation was unintuitive for desktop devices.
Current plans for Windows 10 will address many of the Windows 8 shortcomings with the elimination of a tile-only interface and the reintroduction of the Start menu. The goal is to appeal to tablet and desktop users alike.
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