Microsoft celebrates 50 years of adapting to change

On April 4, 1975, two childhood friends, Paul Allen and Bill Gates, started what is today one of the world’s leading technology companies. Inspired by the January cover of Popular Electronics magazine, they created Microsoft (then Micro-Soft, referring to microprocessors and software) to develop software for the Altair 8800, one of the first personal computers on the market.

Half a century later, and after establishing its operations center in Redmond, Washington, in 1986, the company has diversified its activity, from Windows operating systems to the cloud and the video game industry, reaching a present dominated by artificial intelligence (AI).

In the stock market — where it listed in March 1986 — it has always occupied the top positions on the Nasdaq, where it is known as one of “the magnificent seven” along with other major players in the digital landscape.

Throughout these five decades it has only had three global CEOs: Bill Gates himself, Steve Ballmer and Satya Nadella, in an industry accustomed to the constant dance of names. But in that time it has acquired and merged with hundreds of companies, including Hotmail, Nokia’s mobile devices division, and more recently Skype, GitHub, Linkedin and Activision Blizzard, the latter, related to gaming, being the most expensive at $68.7 billion.

But let’s look back to some of the earliest milestones in the development of the organization. In 1980, Gates and Allen signed an agreement to provide an operating system for IBM’s first personal computer. After presenting its MS-DOS PC in 1981, Windows came along in 1985 and, by the end of the decade, it was already the most recognized software brand on the planet. The first version of Microsoft Office arrived around that time, the productivity suite that today, under the Microsoft 365 brand, is used by more than 1.5 billion people.

One of the first images of the Microsoft team, TAKEN shortly after its founding. In the bottom row are Bill Gates (left) and Paul Allen (right).Microsoft

During the 1990s, Bill Gates’ vision of the potential of the World Wide Web led to the integration of the company’s products and services into the network and the creation of one of the most famous browsers in the digital world, Internet Explorer. Gates has become one of the leading gurus of the computer industry and his thinking has permeated the world through numerous lectures, public appearances and published books.

In 1995 he set out a roadmap for the IT revolution in his first major text, The Road Ahead. Of the changes to come, he told Time magazine in a 1997 interview, “People always fear change. People feared electricity when it was invented, didn’t they?” That year he created the Bill and Melinda Gates Foundation to address health and education issues of our time.

The arrival of the new century crowned a new CEO, Steve Ballmer. Gates stepped back to let the company’s first business manager continue with his strategy. Through 2013 Ballmer laid the first stones of the company’s video game business with the launch of the Xbox game console, and of the cloud with the 2008 launch of Azure. It was in 2011 that Office made the leap to the cloud with Office 365, and the company too a further step in collaboration with the purchase of the Skype video calling tool. In Ballmer’s final years in charge the Surface line of tablets emerged.

Bill Gates and Steve Ballmer during a meeting in the 1990s.
Microsoft

In 2014 comes the Satya Nadella era, characterized by a hitherto unknown acceleration of the technology industry around the planet. It stands out for the consolidation of cloud business and video games while introducing new trends, such as AI. Along the way, Windows 10, the purchase of LinkedIn, GitHub, the launch of Teams, which became the fastest growing application for the company, and the strong investment in OpenAI, the creator of ChatGPT. His great achievement, perhaps, is to take Microsoft to a market value of $3 trillion dollars by 2024 thanks to this strategy. But it was in 2015 that he turns the technology around with a new corporate mission: “To empower every person and every organization on the planet to achieve more” through IT.

Today, Nadella leads a company of 228,000 employees spread across more than 190 countries.

Supplied Art (with Permission)

Paco Salcedo, head of the company’s Spanish subsidiary, says, “The most relevant learning in these 50 years is to have gone from believing we were a company ‘that knew everything’ to wanting to become a brand that ‘wants to learn everything’. And, if we look to the future, we believe that AI can enable the next billion jobs in all parts of the economy.”

A marathon journey

Reviewing this trajectory, Foundry consultant Fernando Maldonado says the company has adapted to change. “You have to know how to rise to disruptions in time,” he said, noting the company’s entry into the cybersecurity sector under the premise that “without protection there is nothing” when hardly anyone understood this need. Also, the company’s switch to embrace open source, even before its acquisition of GitHub. “At the beginning, open source was the enemy and, today, we can say that it also knew how to adapt. […] A lot of its software is already open source.”

“All this gives you an idea that it has always been able to react in time to macro-trends,” Maldonado said. Although, he added, the company has taken several hits, inevitable for a company that has been around for half a century, such as the flop of the Bing search engine. “If it hadn’t had any friction, we wouldn’t be talking about its achievements,” he says. “But it has worked on a very solid foundation with Office, which is the anchoring of all types of companies.”

Now, it remains to be seen how it fares in the still very young world of AI, with the billion-dollar investments it is making, although there is some slowdown in terms of data centers. In any case, says the analyst, “it is also making a very strong bet on the future”.

Nadella’s reflection regarding Microsoft’s anniversary is in line with the expert’s analysis: “I’ve found myself reflecting on how Microsoft has remained a consequential company decade after decade in an industry with no franchise value. And I realize that it’s because -time and time again, when tech paradigms have shifted- we have seized the opportunity to reinvent ourselves to stay relevant to our customers, our partners and our employees. And that’s what we are doing again today,” he said.