Microsoft
Microsoft Corporation is an American multinational technology company founded on April 4, 1975, by Bill Gates and Paul Allen in Albuquerque, New Mexico, to develop and market software for microcomputers, and now headquartered in Redmond, Washington, where it produces operating systems, productivity software, cloud computing services, and consumer electronics.[1][2] The company achieved dominance in personal computing through its Windows operating system, which captured over 90% of the market for Intel-compatible PC operating systems by the late 1990s, enabling widespread adoption of graphical user interfaces and application ecosystems.[3] This market position facilitated the bundling of Internet Explorer, prompting the landmark United States v. Microsoft antitrust case (1998–2001), in which federal courts determined the firm violated Sections 1 and 2 of the Sherman Act by unlawfully maintaining monopoly power and stifling competition in web browsing software.[3][4] Under CEOs including Steve Ballmer and Satya Nadella, Microsoft expanded into enterprise software with the Office suite, cloud infrastructure via Azure—which became a leading platform—and gaming through Xbox, contributing to fiscal year 2025 revenue of $281.7 billion across segments like Intelligent Cloud ($135 billion) and Productivity and Business Processes.[5] Innovations in AI, such as integrations with OpenAI models, have driven recent growth, positioning the company as a pivotal player in enterprise digital transformation, though it has faced ongoing regulatory scrutiny over acquisitions and data practices.[5][2]History
1975–1985: Founding and initial software development
Bill Gates and Paul Allen, childhood friends who had programmed computers together since attending Lakeside School in Seattle, identified an opportunity upon reading about the Altair 8800 microcomputer in the January 1975 issue of Popular Electronics.[6][7] While Gates was studying at Harvard University and Allen worked at Honeywell in Boston, they developed a BASIC interpreter for the Intel 8080 microprocessor powering the Altair, using a simulator on a PDP-10 minicomputer since they lacked access to the actual hardware.[8][9] The pair contacted Micro Instrumentation and Telemetry Systems (MITS), the Altair's manufacturer, and secured a demonstration opportunity in Albuquerque, New Mexico, where their untested code ran successfully on an Altair emulator, leading to a licensing deal.[7] On April 4, 1975, Gates and Allen founded Microsoft (initially styled "Micro-Soft") as a partnership in Albuquerque to develop and sell the Altair BASIC interpreter, with Gates handling business and Allen focusing on technical aspects; the product launched in July 1975 with versions offering 4 KB and 8 KB memory options.[10][11] Microsoft's early revenue came from licensing BASIC to MITS and, as personal computers proliferated, to other manufacturers including Apple, Commodore, and Tandy for their respective machines, establishing the company as a key provider of interpreted BASIC implementations.[12] By 1977, Microsoft released a standard Floating Point BASIC and began expanding into compiled languages, introducing FORTRAN for microcomputers that year.[13] In 1976, Gates published "An Open Letter to Hobbyists" in the Homebrew Computer Club Newsletter, arguing against unauthorized copying of software and asserting that it undermined developers' ability to produce quality programs, a stance that crystallized Microsoft's view of software as a proprietary product rather than a free good.[14] The company dropped the hyphen from its name in 1976 and hired its first employees, growing to support ports of BASIC across platforms.[10] In 1978, Microsoft released COBOL-80, targeting business applications on minicomputers and early PCs.[13] Relocating to Bellevue, Washington, on January 1, 1979, to be closer to their roots and talent pool, Microsoft introduced Multiplan, a spreadsheet program for 8-bit systems.[14] In 1980, IBM approached Microsoft to supply languages for its forthcoming personal computer; lacking an operating system, Gates and Allen licensed 86-DOS (derived from CP/M) from Seattle Computer Products for $75,000, modifying it into MS-DOS.[14] Microsoft retained rights to license MS-DOS to other manufacturers, a non-exclusive arrangement with IBM that proved pivotal. On August 12, 1981, IBM launched the IBM PC with PC-DOS 1.0 (IBM's version of MS-DOS), and Microsoft began marketing MS-DOS separately, fueling rapid growth as PC clones adopted it.[15][14] Allen departed in February 1983 following a Hodgkin's lymphoma diagnosis, selling most of his stake to Gates.[14] Microsoft incorporated as a public company? No, went public 1986, but incorporated earlier; actually, remained partnership until 1981 incorporation? But focus software. In November 1983, Microsoft announced Windows, an extension of MS-DOS providing graphical interface elements inspired by Apple's Macintosh. Windows 1.0 shipped on November 20, 1985, supporting multitasking of applications and featuring a tiled windowing system, though it required MS-DOS underneath and faced initial skepticism for its performance.[15][14]1986–1994: Public offering, MS-DOS dominance, and early Windows
Microsoft conducted its initial public offering on March 13, 1986, issuing shares at $21 each on the NASDAQ, with the price rising to $25.13 by the close of trading and approximately 2.5 million shares exchanged that day.[16] The IPO valued the company at around $520 million and provided capital for expansion amid surging demand for MS-DOS, which powered the burgeoning IBM PC compatible market.[17] Bill Gates retained majority control post-IPO, holding about 45% of shares, while the offering diluted ownership but fueled rapid hiring and development investments.[16] MS-DOS solidified its dominance as the de facto standard for personal computers during this period, running on over 80% of PCs by the late 1980s due to its licensing model with IBM and compatible clone manufacturers, which prioritized low-cost adaptability over proprietary lock-in.[18] Successive versions, such as MS-DOS 3.3 in 1987 supporting larger hard drives and 4.0 in 1988 introducing EMS memory management, addressed hardware evolution while maintaining backward compatibility, entrenching its position against alternatives like DR-DOS.[19] Quarterly revenues reflected this trajectory, climbing from $50.5 million in Q1 FY1987 to $486.9 million by Q1 FY1992, driven primarily by OS royalties comprising over 50% of income.[20] In parallel, Microsoft advanced its graphical user interface efforts with Windows, releasing version 2.0 on December 9, 1987, which introduced overlapping windows, enhanced keyboard shortcuts, and ports of Excel from Macintosh, though it remained a shell over MS-DOS with limited adoption due to hardware requirements and competition from Apple's GUI.[21] A brief partnership with IBM, announced in April 1987, aimed to co-develop OS/2 as a more advanced 16-bit OS with multitasking, but tensions arose over control and direction, culminating in Microsoft's withdrawal by 1990 to prioritize Windows.[22] The pivotal shift occurred with Windows 3.0, launched May 22, 1990, featuring a revamped interface with Program Manager, File Manager, and improved memory management via virtual memory, selling over 2 million copies in its first three months and 10 million within two years by leveraging 386 processor capabilities.[23] Windows 3.1 followed on April 6, 1992, adding TrueType fonts, 32-bit file access for faster disk operations, drag-and-drop functionality, and Minesweeper, further boosting sales to 3 million units in the first two months while reducing reliance on MS-DOS commands.[24] By 1994, Windows held significant traction, with annual revenues exceeding $4.6 billion and employee count surpassing 15,000, underscoring the transition from DOS-centric to GUI-driven ecosystems amid growing antitrust scrutiny over bundling practices.[25]1995–2006: Internet expansion, Windows 95/XP, Xbox launch, and antitrust scrutiny
Microsoft released Windows 95 on August 24, 1995, introducing features such as the Start menu, taskbar, and 32-bit multitasking on a consumer-friendly interface built atop MS-DOS, which sold 7 million copies within its first five weeks and reached 40 million units in the following year.[26][27] Concurrently, the company expanded into internet services by launching MSN as an online portal and service on the same date, positioning it as a competitor to America Online, while bundling an early version of Internet Explorer 1.0 in the optional Microsoft Plus! expansion pack for Windows 95.[28] Internet Explorer evolved rapidly, with version 3.0 released in August 1996 featuring improved standards compliance and integration with Windows, enabling Microsoft to challenge Netscape Navigator's dominance in the browser market through free distribution and technical enhancements like ActiveX controls.[29] This internet push included strategic acquisitions, such as Hotmail in December 1997 for $400 million, which Microsoft rebranded as MSN Hotmail to bolster its webmail offerings and user base exceeding 8.5 million accounts at the time.[30] However, Microsoft's practice of tightly integrating Internet Explorer with Windows—making removal difficult and tying browser choice to OS licensing—drew antitrust allegations from the U.S. Department of Justice and 20 states, culminating in a lawsuit filed on May 18, 1998, accusing the company of illegally maintaining its operating system monopoly under Section 2 of the Sherman Act by stifling browser competition.[31] The trial, presided over by Judge Thomas Penfield Jackson, featured testimony from Microsoft executives like Bill Gates; in November 1999, Jackson issued findings of fact deeming Microsoft a monopolist that used its dominance to harm innovation, followed by June 2000 conclusions of law confirming violations and initially ordering a breakup into separate OS and applications entities.[3] The D.C. Circuit Court of Appeals in June 2001 upheld liability for monopoly maintenance and attempted monopolization but reversed the breakup remedy, criticizing Jackson's conduct and remanding for further proceedings, which led to a November 2001 settlement where Microsoft agreed to share application programming interfaces with competitors, allow PC makers greater flexibility in boot screens and software installation, and enable third-party software to integrate without restrictions, averting structural dissolution while imposing behavioral oversight until 2007.[4] Amid this scrutiny, Microsoft continued product development, releasing Windows XP to retail on October 25, 2001, which unified consumer and business lines with enhanced stability, Remote Assistance, and activation technology, achieving peak desktop market share exceeding 80% by 2007 due to its reliability and broad hardware compatibility.[32][33] Diversifying beyond software, Microsoft entered the video game console market with the original Xbox, launched on November 15, 2001, at $299, featuring a 733 MHz Intel CPU, NVIDIA GPU, and an integrated hard drive for media playback, directly competing against Sony's PlayStation 2 and Nintendo's GameCube by emphasizing online multiplayer via Xbox Live, which debuted in November 2002.[34] The Xbox sold over 24 million units lifetime, bolstered by exclusive titles like Halo: Combat Evolved, though it trailed the PS2's 155 million units amid higher manufacturing costs and a focus on North American markets initially.[34] By fiscal 2006, Microsoft's revenue had grown to $44.28 billion, an 11% increase from prior years, driven by Windows and Office licensing alongside emerging Xbox contributions, reflecting sustained dominance despite legal challenges.[35]2007–2013: Cloud inception with Azure, Windows Vista/7/8 challenges, and mobile pivots
In January 2007, Microsoft released Windows Vista to consumers, following years of development delays and feature bloat from its original "Longhorn" codename. The operating system introduced significant changes such as the Aero interface and enhanced security via User Account Control (UAC), but it encountered widespread criticism for sluggish performance on contemporary hardware, stringent system requirements that excluded many existing PCs, software compatibility issues, and frequent UAC prompts perceived as intrusive.[36][37] Vista's poor reception contributed to slowed PC market growth and prompted enterprise customers to extend Windows XP deployments, underscoring Microsoft's challenges in transitioning from the stable XP base.[37] Amid these desktop struggles, Microsoft initiated its cloud computing efforts, announcing Windows Azure on October 28, 2008, as a platform for developers to build and host applications without managing underlying infrastructure. The service, initially previewed as a technical preview, emphasized scalability and integration with Microsoft's ecosystem, positioning the company to compete with Amazon Web Services in infrastructure-as-a-service and platform-as-a-service offerings. Windows Azure achieved general availability on February 1, 2010, marking Microsoft's formal entry into public cloud computing and laying groundwork for future expansions in data storage, virtual machines, and hybrid cloud capabilities.[38][39] Windows 7, released to manufacturing on July 22, 2009, and generally available on October 22, addressed Vista's pain points by refining performance, reducing UAC interruptions, and restoring user familiarity while incorporating multitouch support and improved battery life for laptops. It achieved rapid adoption, with over 100 million copies sold within six months, and received acclaim for stability, helping Microsoft regain consumer and enterprise trust amid a recovering PC market.[40][41] By 2012, under CEO Steve Ballmer, Microsoft sought to unify its platforms for the mobile era, releasing Windows 8 on October 26 to retail channels with a Metro-style tile interface optimized for touch devices, aiming to bridge desktops, tablets, and phones. However, the removal of the Start button, forced full-screen apps on non-touch hardware, and divergence from traditional desktop workflows drew backlash from users and IT administrators, resulting in slower upgrade rates compared to Windows 7 and criticism for prioritizing mobile aesthetics over legacy productivity needs.[42][43] In tandem, Microsoft pivoted mobile strategy with Windows Phone 7 in October 2010, evolving to Windows Phone 8 in October 2012 to share a common kernel with Windows 8 for app ecosystem convergence. A pivotal alliance formed in February 2011 when Nokia selected Windows Phone as its primary smartphone platform, receiving exclusive branding rights and marketing support; this culminated in Microsoft's $7.2 billion acquisition of Nokia's Devices and Services division on September 3, 2013, to accelerate hardware integration and counter Android and iOS dominance, though market share remained under 4% globally.[44][45] Ballmer's July 2013 reorganization emphasized "devices and services," signaling a broader shift from software licensing to integrated hardware-software experiences.[46]2014–2020: Nadella's leadership shift to cloud, Windows 10, major acquisitions like LinkedIn and GitHub
Satya Nadella was appointed as Microsoft's third CEO on February 4, 2014, succeeding Steve Ballmer, with Bill Gates transitioning to technology advisor and John Thompson named as the new chairman of the board.[47] Nadella, previously executive vice president of the Cloud and Enterprise group, emphasized a shift toward a "mobile-first, cloud-first" strategy, prioritizing Azure cloud platform development and subscription-based services like Office 365 over traditional on-premises software licensing.[48] This pivot aimed to address Microsoft's lagging position in cloud computing relative to competitors like Amazon Web Services, fostering internal cultural changes including adoption of a "growth mindset" to encourage innovation and collaboration.[49] Under Nadella's leadership, Microsoft accelerated investment in Azure, which saw revenue growth exceeding 70% year-over-year in fiscal year 2020, driven by demand for hybrid cloud solutions and enterprise migrations.[50] Server products and cloud services revenue, including Azure, increased 25% to contribute significantly to overall company revenue, reflecting successful execution of the cloud-first strategy amid broader digital transformation trends.[50] Complementary efforts included reorganizing sales teams around cloud and subscription models, which boosted recurring revenue streams and positioned Microsoft as a leader in enterprise cloud infrastructure by 2020.[51] Microsoft released Windows 10 on July 29, 2015, as a free upgrade for Windows 7 and 8.1 users, introducing features such as the Cortana virtual assistant, Microsoft Edge browser, and a shift to continuous feature updates rather than infrequent major version releases.[52] This model aimed to improve security through regular patches and enhance user experience with universal apps across devices, achieving over 75 million devices upgraded within the first month of launch.[53] Key acquisitions bolstered Microsoft's ecosystem during this period. On June 13, 2016, Microsoft announced the $26.2 billion all-cash acquisition of LinkedIn, completed on December 8, 2016, to integrate professional networking with productivity tools like Office, enabling data synergies for enterprise solutions.[54] In June 4, 2018, Microsoft agreed to acquire GitHub for $7.5 billion in stock, finalized on October 26, 2018, enhancing developer tools and open-source engagement while aligning with Azure's platform for code hosting and collaboration.[55] These deals, Microsoft's largest to date, expanded its reach into social professional networks and software development communities, supporting the cloud-centric vision without diluting core competencies.[56]2021–present: AI acceleration via OpenAI partnership, Activision Blizzard acquisition, and Windows 11
Microsoft released Windows 11 on October 5, 2021, as the successor to Windows 10, introducing a redesigned user interface with a centered Start menu and taskbar, enhanced multitasking via Snap Layouts, and improved virtual desktop functionality.[57] The operating system required devices to meet stricter hardware specifications, including TPM 2.0 support and compatible 64-bit processors, which limited upgrades for some older PCs and drew criticism for excluding users with capable but non-compliant hardware.[57] Windows 11 adopted an annual feature update cycle, with version 22H2 in September 2022 adding File Explorer tabs and improved touch controls, version 23H2 in October 2023 integrating more Android app support via the Microsoft Store, and version 24H2 in 2024 enhancing AI capabilities such as live captions and voice access.[57] By September 30, 2025, version 25H2 was released, focusing on performance optimizations and further AI tooling like advanced File Explorer search powered by Copilot.[58] In January 18, 2022, Microsoft announced its intent to acquire Activision Blizzard for $68.7 billion in an all-cash deal, aiming to bolster its gaming portfolio with franchises including Call of Duty, World of Warcraft, and Candy Crush.[59] The acquisition faced intense regulatory scrutiny, particularly from the U.S. Federal Trade Commission and the UK's Competition and Markets Authority (CMA), over concerns of reduced competition in cloud gaming and mobile markets; the CMA initially blocked the deal in April 2023 but cleared it in August 2023 after Microsoft agreed to a 10-year partnership with Ubisoft for Call of Duty distribution on rival platforms.[60] The transaction closed on October 13, 2023, marking Microsoft's largest acquisition to date and integrating Activision Blizzard's studios into Xbox Game Studios, with commitments to maintain multi-platform access for key titles to address antitrust issues.[61] By October 2024, one year post-closure, Microsoft reported the deal had expanded Game Pass subscribers and diversified revenue, though integration challenges persisted amid ongoing FTC litigation.[61] Parallel to these moves, Microsoft accelerated its AI strategy through deepened ties with OpenAI, building on a $1 billion investment in 2019 and an additional commitment in 2021 that granted exclusive cloud access to Azure for OpenAI's workloads.[62] In January 2023, Microsoft announced a multiyear, multibillion-dollar investment—reportedly up to $10 billion—to advance OpenAI's supercomputing infrastructure on Azure, enabling rapid scaling of models like GPT-4.[63] This partnership fueled product integrations, including the February 2023 launch of Bing Chat (powered by GPT models) and the November 2023 introduction of Microsoft Copilot, an AI assistant embedded across Windows, Office, and Edge for tasks like code generation and document summarization.[63] Under CEO Satya Nadella, Microsoft repositioned Azure as an AI hyperscaler, investing heavily in data centers and custom silicon like the Azure Maia chip, with AI contributing to revenue growth amid a 2023-2025 surge in demand for generative tools.[64] By 2025, the partnership evolved amid tensions, including OpenAI's diversification to providers like Oracle and CoreWeave, expiration of Microsoft's exclusive distribution rights in December 2024, and a January 2025 agreement reaffirming Azure commitments while allowing OpenAI greater model distribution flexibility.[65][66] Nadella emphasized AI's role in enterprise productivity, announcing a $4 billion investment in AI skills training via the Microsoft Elevate initiative targeting 20 million people over two years as of October 2025.[67]Products and services
Operating systems and client software
Microsoft's entry into operating systems began with MS-DOS, a command-line disk operating system initially developed for the IBM PC and compatible personal computers. MS-DOS version 1.0 was released in 1981, following Microsoft's acquisition and adaptation of 86-DOS from Seattle Computer Products earlier that year.[68][69] The system provided basic file management, program execution, and hardware abstraction for early x86-based machines, evolving through versions up to MS-DOS 6.22 in 1994, which included features like disk compression and undelete utilities.[69] In 1985, Microsoft introduced Windows 1.0, the first version of its graphical operating environment, designed as an extension atop MS-DOS to enable multitasking and a mouse-driven interface with tiled windows and icons.[70] Subsequent releases, such as Windows 2.0 in 1987 and Windows 3.0 in 1990, improved usability with overlapping windows, better memory management, and enhanced graphics support, achieving widespread adoption on consumer PCs.[71] Windows 3.1, released in 1992, added TrueType fonts and multimedia extensions, solidifying its role in the pre-internet PC era.[71] The mid-1990s marked a shift to more integrated systems with Windows 95, launched on August 24, 1995, which replaced pure reliance on MS-DOS with a 32-bit hybrid kernel, introducing the Start menu, taskbar, and plug-and-play hardware support.[72] This was followed by consumer-oriented versions like Windows 98 (1998) and Windows Me (2000), while the parallel Windows NT lineage—starting with NT 3.1 in 1993—provided enterprise-grade stability and security, eventually merging into unified client editions with Windows XP in October 2001.[72] XP, with its Luna interface and improved stability, dominated for over a decade, powering billions of devices until its retirement in 2014.[71] Later iterations addressed security, mobility, and integration challenges: Windows Vista (2007) introduced Aero Glass effects but faced performance criticism; Windows 7 (2009) refined it for broader acceptance; Windows 8 (2012) emphasized touch interfaces amid tablet shifts, though it drew backlash for removing the Start button; and Windows 10 (July 2015) adopted a perpetual update model with Cortana and universal apps.[71] Windows 11, released on October 5, 2021, shifted to centered taskbars, rounded corners, and stricter hardware requirements like TPM 2.0 for enhanced security, alongside Snap Layouts and AI features via Copilot.[73] As of September 2025, Windows 11 holds about 49% of the desktop Windows version market share, with Windows 10 at 41%, reflecting ongoing transitions amid Windows 10's end-of-support on October 14, 2025.[74][73] Client software integral to these operating systems includes bundled utilities like File Explorer for navigation, the modern Microsoft Edge browser—Chromium-based since January 2020 and default since Windows 10's 2015 launch—and Windows Media Player, evolved from its 1991 origins as a basic audio/video handler to support streaming and formats like WMA.[71] These components enhance core OS functionality for end-user tasks, though Edge's development addressed Internet Explorer's prior compatibility issues and antitrust concerns from the 1990s.[71] Microsoft's client OS ecosystem maintains dominance in desktop computing, powering over 70% of global PCs as of 2025, driven by compatibility, enterprise inertia, and backward support despite competition from macOS and Linux.[74]Productivity and enterprise applications
Microsoft's productivity and enterprise applications primarily encompass the Microsoft 365 suite, which evolved from the original Microsoft Office launched in 1990 as a bundled set of productivity tools including Word, Excel, and PowerPoint.[1] This suite expanded over decades to include desktop, web, and mobile versions, transitioning to a subscription model with Microsoft 365 in 2011, rebranded from Office 365, emphasizing cloud-based access and continuous updates.[75] By fiscal year 2025, the Productivity and Business Processes segment, driven largely by Microsoft 365 commercial products and services, generated $77.8 billion in revenue, reflecting 14% growth from the prior year due to increased adoption of cloud services and licensing.[76] [77] Core components of Microsoft 365 for enterprise include applications such as Word for document creation, Excel for data analysis and spreadsheets, PowerPoint for presentations, and Outlook for email and calendar management, all integrated with collaboration features like real-time co-editing and AI-assisted tools such as Copilot for content generation.[78] The platform holds approximately 30% of the global cloud-based office suite market as of early 2025, trailing Google Workspace but leading in enterprise deployments due to its interoperability with Windows and Azure ecosystems.[79] Microsoft Teams, integrated into Microsoft 365 since its 2017 launch as a successor to Skype for Business and Office Communicator, facilitates video conferencing, chat, file sharing, and workflow automation, reaching 320 million daily active users by 2024 with sustained growth into 2025.[80] [81] In enterprise applications, Microsoft Dynamics 365, introduced in November 2016 as a unified CRM and ERP platform, combines sales, customer service, finance, and operations modules with AI-driven insights for business process automation and analytics.[82] Evolving from earlier Dynamics products like Dynamics CRM (launched 2003) and Great Plains, it integrates seamlessly with Microsoft 365 and Power Platform for custom app development, targeting sectors such as retail, manufacturing, and finance to streamline operations and customer engagement.[83] Additional tools like SharePoint for document management and Viva for employee engagement further support enterprise knowledge sharing and analytics, contributing to the segment's dominance in business process software where empirical adoption data shows higher retention in hybrid work environments compared to standalone alternatives.[84]Cloud computing and infrastructure
Microsoft Azure, Microsoft's primary cloud computing platform, offers a suite of infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) capabilities, including virtual machines, storage, databases, analytics, artificial intelligence tools, and networking services.[85] [86] Launched initially as Windows Azure, the platform became generally available on February 1, 2010, following its announcement on October 28, 2008, and evolved with the addition of infrastructure services in 2014 alongside its rebranding to Microsoft Azure.[39] [38] [87] Azure's infrastructure comprises over 400 data centers across more than 70 regions worldwide, exceeding the regional footprint of competitors and enabling low-latency access, data residency compliance, and high availability through features like availability zones and sovereign clouds.[88] [89] Recent expansions include new regions in Malaysia and Indonesia launched in 2025, supporting growing demand in Asia.[90] Key services emphasize hybrid cloud integration with on-premises systems via Azure Arc, scalable compute options like Azure Virtual Machines and Kubernetes Service (AKS), and AI/ML workloads powered by Azure Machine Learning, alongside secure storage solutions such as Azure Blob Storage and Cosmos DB for global distribution.[85] [91] In fiscal year 2025, Azure generated over $75 billion in annual revenue, reflecting 34% year-over-year growth driven by demand for AI and cloud workloads.[92] [5] This positioned Azure with approximately 20% of the global cloud infrastructure market share as of mid-2025, trailing Amazon Web Services (30%) but ahead of Google Cloud (13%), with quarterly revenues around $19.8 billion and sustained 33% growth amid broader cloud spending exceeding $400 billion annually.[93] [94] [95] Azure's strengths include seamless interoperability with Microsoft 365 and Windows Server ecosystems, enabling enterprises to migrate legacy applications while leveraging built-in security features like Azure Sentinel for threat detection and compliance tools for regulations such as GDPR.[85]Gaming and entertainment platforms
Microsoft entered the video game console market with the launch of the original Xbox on November 15, 2001, positioning it as a competitor to Sony's PlayStation 2 and Nintendo's GameCube by emphasizing powerful hardware, online capabilities, and exclusive titles like Halo: Combat Evolved.[96] The console featured an 733 MHz Intel Pentium III processor and NVIDIA graphics, but sold approximately 24 million units before being discontinued in 2006, incurring hardware losses estimated at $4 billion due to high manufacturing costs and aggressive pricing to gain market share.[96][34] The Xbox 360, released on November 22, 2005, marked a turnaround with improved hardware including a triple-core PowerPC processor and ATI graphics, achieving over 84 million units sold worldwide through features like backward compatibility and a robust library of games such as Gears of War.[96][34] Xbox Live, introduced alongside the original Xbox on November 15, 2002, evolved into a comprehensive online service under the Xbox 360 era, enabling multiplayer gaming, achievements, and digital distribution, which helped Microsoft capture a leading position in console online ecosystems.[97] Subsequent platforms included the Xbox One, launched November 22, 2013, which initially focused on multimedia entertainment with integration of Kinect motion sensing and apps for streaming services, though it faced criticism for weaker exclusive games compared to rivals and sold around 58 million units by 2020.[96][34] The current generation, Xbox Series X and Series S, debuted on November 10, 2020, offering 4K gaming, ray tracing, and quick resume features, with the Series S targeting budget-conscious players via digital-only, lower-resolution play.[96] Xbox Game Pass, introduced in June 2017 as a subscription service providing access to a rotating library of games for a monthly fee, expanded under Xbox Game Studios to include day-one releases of first-party titles and, via Xbox Cloud Gaming (formerly Project xCloud), enables streaming of console games to PCs, mobile devices, and smart TVs without dedicated hardware.[98][99] By 2025, the service continues to add high-profile games monthly, such as The Outer Worlds 2 and PowerWash Simulator 2 in October, alongside cloud-enabled multiplayer support requiring Xbox Game Pass Ultimate.[100][99] Microsoft has bolstered its gaming platforms through strategic acquisitions, including Rare in 2002 for legacy franchises like Banjo-Kazooie, Mojang in 2014 for $2.5 billion to integrate Minecraft, ZeniMax Media (including Bethesda) in March 2021 for $7.5 billion adding titles like The Elder Scrolls, and Activision Blizzard in October 2023 for $68.7 billion, incorporating Call of Duty and World of Warcraft into Xbox ecosystems while committing to multi-platform availability for certain assets amid regulatory scrutiny.[101][102] These moves consolidated over 20 studios under Xbox Game Studios by 2023, enhancing content for Game Pass and cloud services, though integration challenges and exclusivity debates persist due to antitrust concessions.[103][101]Artificial intelligence and emerging technologies
Microsoft's artificial intelligence initiatives gained momentum following CEO Satya Nadella's emphasis on AI as a core strategic priority, particularly through a multi-phase partnership with OpenAI initiated in 2019. The collaboration began with a $1 billion investment to support OpenAI's transition to a hybrid nonprofit-profit model, enabling Microsoft exclusive access to OpenAI's models for integration into Azure cloud services. Subsequent investments, including a multibillion-dollar commitment announced in January 2023, brought the total to approximately $13 billion by 2025, granting Microsoft rights to 49% of OpenAI's profits until recouping the investment plus returns. This partnership evolved in January 2025 to include bidirectional revenue sharing, aiming to accelerate AI development while addressing competitive tensions, though reports of growing rifts emerged amid antitrust scrutiny and differing visions for AI governance.[63][104][65][105] Central to Microsoft's AI offerings is Copilot, a generative AI assistant powered by large language models like those from OpenAI, integrated across Microsoft 365 applications, Windows, Edge browser, and other products. Launched in 2023, Copilot assists users with tasks such as drafting emails in Outlook, analyzing data in Excel, summarizing meetings in Teams, and generating images or code, with features like Copilot Notebooks for content organization and AI-generated summaries. By October 2025, updates expanded capabilities to include Copilot Search for combining AI answers with web results, voice-activated web actions in Edge's "AI browser" mode, and deeper integrations with third-party services like Google for collaboration. Microsoft positions Copilot as a productivity tool for enterprises and individuals, available via subscription models, though its adoption has raised concerns over data privacy and potential biases in underlying datasets.[106][107][108] Azure AI services form the backbone of Microsoft's cloud-based AI infrastructure, offering pre-built APIs and customizable models for developers to deploy applications in areas like computer vision, speech recognition, natural language processing, and anomaly detection. Key components include Azure OpenAI Service for accessing advanced models, Azure AI Vision for image analysis, Azure AI Speech for transcription and synthesis, and Content Safety for moderating harmful outputs. These services support scalable AI workloads, with pricing based on usage metrics such as transactions or tokens processed, and are designed for enterprise integration without requiring extensive machine learning expertise. Microsoft's own research has highlighted limitations in AI benchmarks, noting that high scores on medical diagnostics or reasoning tasks often fail to predict real-world performance due to data contamination, over-reliance on pattern matching, and brittleness under stress tests—issues observed in models like GPT-5. CEO Nadella has emphasized evaluating AI by economic value creation rather than benchmark hacking, acknowledging in 2025 that current systems generate limited tangible productivity gains despite hype around superintelligence.[109][110][111][112] In emerging technologies, Microsoft advances mixed reality through HoloLens headsets, which overlay digital holograms on the physical world for applications in manufacturing, healthcare, and training, with recent AI enhancements via custom chips to process spatial data efficiently. The company has invested over 170 quantum computing patent families since 2011, focusing on topological qubits for fault-tolerant systems, and operates Azure Quantum for hybrid classical-quantum workloads in partnership with firms like Quantinuum. In 2025, designated the International Year of Quantum Science, Microsoft urged organizations to adopt quantum-safe cryptography to counter threats from advancing quantum hardware, though practical scalable quantum advantage remains elusive. These efforts underscore Microsoft's push toward hardware-software convergence, tempered by warnings of AI-induced reputational risks from flawed algorithms or biased training data.[113][114][115][116]Hardware devices
Microsoft's involvement in hardware began with peripherals in the early 1980s, starting with the Microsoft Mouse released in 1983, which was the company's first input device and bundled with early versions of Microsoft Word. This was followed by the introduction of the first ergonomic mouse in 1993 and the Natural Keyboard in 1994, aimed at reducing repetitive strain injuries through curved designs.[117] The IntelliMouse, launched in 1996, featured an optical sensor and scroll wheel, innovations that influenced industry standards for precision pointing and navigation.[118] Microsoft expanded its peripheral lineup with gaming-focused devices like the SideWinder series in 1996, but by 2023, it discontinued most consumer mice and keyboards, licensing designs to Incase for continued production.[119][120] In 2001, Microsoft entered the video game console market with the original Xbox, launched on November 15, 2001, as its first major foray into dedicated gaming hardware powered by a customized Intel Pentium III processor and NVIDIA GPU.[96] The Xbox 360 followed on November 22, 2005, introducing high-definition gaming and online services via Xbox Live, though it faced hardware reliability issues with the "Red Ring of Death" affecting millions of units.[96] Subsequent releases included the Xbox One on November 22, 2013, emphasizing multimedia integration, and the Xbox Series X and Series S on November 10, 2020, focusing on 4K gaming, ray tracing, and backward compatibility with over 600 Xbox One titles.[96] Accessories like the Kinect motion sensor, bundled with Xbox 360 in 2010 and later Xbox One, enabled gesture-based control but saw declining adoption after 2017.[34] The Surface family of devices marked Microsoft's push into personal computing hardware, with the line unveiled on June 18, 2012, and the initial Surface RT tablet shipping on October 26, 2012, featuring an ARM-based processor and 10.6-inch touchscreen.[1] Early models faced criticism for limited app compatibility and performance, but the shift to Intel-powered Surface Pro hybrids in 2013 improved versatility as laptop replacements.[121] The lineup expanded to include Surface Laptop in 2017, Surface Go budget tablets in 2018, and foldable dual-screen concepts like Surface Neo (canceled in 2021), with recent models such as Surface Pro 11th edition released June 18, 2024, incorporating AI features via Snapdragon X processors.[122] By fiscal year 2024, Surface revenue exceeded $5 billion annually, reflecting growth from initial struggles.[1] Microsoft also ventured into mobile hardware through the 2014 acquisition of Nokia's devices division, producing Lumia smartphones running Windows Phone until the unit's divestiture in 2016 amid low market share. In mixed reality, the HoloLens development edition launched on March 30, 2016, as a self-contained holographic headset using Windows Holographic for AR applications in enterprise settings like manufacturing and healthcare.[123] HoloLens 2, released February 24, 2019, improved field of view and hand-tracking, but production ceased in October 2024 with ongoing software support.[124] These efforts positioned Microsoft as a hardware innovator, though profitability has varied, with Xbox hardware often sold at a loss subsidized by software and services.[121]Corporate affairs
Leadership and governance
Satya Nadella has served as Microsoft's chief executive officer since February 4, 2014, succeeding Steve Ballmer, and was appointed chairman of the board in June 2021.[125] Prior to his CEO role, Nadella held positions including executive vice president of the Cloud and Enterprise group and president of the Server and Tools Business. Under his leadership, Microsoft shifted strategic emphasis toward cloud computing and artificial intelligence, contributing to significant revenue growth, with fiscal year 2025 compensation reported at $96.5 million, primarily from stock awards tied to performance metrics.[126] In October 2025, Nadella restructured executive responsibilities by elevating Judson Althoff to CEO of the commercial business, focusing Nadella more on strategic oversight.[127] Microsoft's CEO history began with co-founder Bill Gates, who led the company from its inception in 1975 until January 13, 2000, when he transitioned to chief software architect and handed CEO duties to Steve Ballmer. Ballmer, a Microsoft employee since 1980 and the company's 30th hire, served as CEO until August 2013, overseeing expansion into enterprise software and Xbox but facing criticism for underinvesting in mobile technologies during the smartphone era. Gates remained involved as chairman until 2014 and board member until March 2020.[128] The board of directors, responsible for oversight of strategy, risk management, and executive compensation, consists of 11 members as of 2025, including Nadella as chairman and a majority of independent directors such as Catherine MacGregor, CEO of Engie S.A.[129] [130] The board operates through four standing committees—audit, compensation, governance and nominating, and regulatory and public policy—to discharge responsibilities delegated by the full board.[129] Directors are elected annually by majority vote in uncontested elections, and shareholders holding 15% of outstanding shares can call special meetings.[131] Microsoft's corporate governance framework emphasizes board independence, shareholder engagement, and transparency, with policies including separation of CEO and board chair roles when appropriate, though Nadella holds both positions.[132] The framework, outlined in bylaws, guidelines, and charters, supports accountability through annual evaluations and alignment of executive pay with long-term shareholder value, as evidenced by performance-based equity grants.[133] This structure has facilitated responsive decision-making amid regulatory scrutiny and technological shifts, though critics argue concentrated leadership power under Nadella limits diverse perspectives.[134]Financial performance and ownership
Microsoft's revenue for fiscal year 2024, ending June 30, 2024, reached $245.1 billion, marking a 16% increase from $211.9 billion in fiscal year 2023, primarily driven by growth in cloud services and productivity software.[135] Net income for the same period rose to $88.1 billion, a 22% year-over-year gain, reflecting improved operating margins from 40% to 42% amid cost efficiencies and higher-margin Azure revenue.[135] [136] Operating income increased 24% to over $109 billion, underscoring the shift toward high-margin recurring cloud subscriptions over legacy on-premises licensing.[135] In the first quarter of fiscal year 2025, ending September 30, 2024, revenue grew 16% to $65.6 billion, with Microsoft Cloud revenue at $38.9 billion, up 21% year-over-year, fueled by Azure's 33% growth including 12 percentage points from AI workloads.[137] [138] Net income for the quarter was approximately $24.7 billion, a 11% increase, though margins faced pressure from elevated AI infrastructure investments.[139] The company's market capitalization hovered around $3.89 trillion as of October 2025, supported by a stock price reaching an all-time high closing value of $534.76 on August 4, 2025, amid investor optimism over AI-driven earnings potential.[140] [141]| Fiscal Year | Revenue ($B) | Net Income ($B) | Revenue Growth (%) |
|---|---|---|---|
| FY2023 | 211.9 | 72.4 | 7 |
| FY2024 | 245.1 | 88.1 | 16 |
Subsidiaries, acquisitions, and divestitures
Microsoft operates a portfolio of subsidiaries primarily derived from strategic acquisitions, including LinkedIn Corporation (acquired in 2016), GitHub, Inc. (acquired in 2018), and Activision Blizzard (acquired in 2023).[146][101] Other notable subsidiaries encompass gaming studios such as Bethesda Softworks and ZeniMax Media (acquired in 2020 for $7.5 billion), as well as Mojang Studios (acquired in 2014 for $2.5 billion to support Minecraft development).[147] These entities function semi-autonomously under Microsoft's oversight, contributing to segments like professional networking, developer tools, and interactive entertainment.[146] The company's acquisition activity dates to 1987 with the purchase of Forethought for $14 million, which enabled the development of PowerPoint, and has since encompassed over 225 deals to expand into adjacent technologies.[148] Early efforts targeted internet services, such as Hotmail in 1997 for an undisclosed sum, while later phases emphasized advertising (aQuantive for $6.3 billion in 2007) and communications (Skype for $8.5 billion in 2011).[101] Under CEO Satya Nadella since 2014, acquisitions have prioritized cloud integration, data analytics, and gaming, with GitHub enhancing developer ecosystems for $7.5 billion in October 2018 and Nuance Communications bolstering AI-driven speech recognition for $19.7 billion in April 2021.[149] The largest transaction, Activision Blizzard for $68.7 billion completed in October 2023, secured franchises like Call of Duty to fortify Xbox Game Pass subscriptions amid competition from Sony and Nintendo.[150]| Date | Company | Deal Value | Strategic Focus |
|---|---|---|---|
| December 2016 | $26.2 billion | Professional networking and enterprise data integration[146] | |
| September 2020 | ZeniMax Media | $7.5 billion | Gaming assets including Bethesda and id Software[147] |
| October 2023 | Activision Blizzard | $68.7 billion | Video game content for cloud and console platforms[150] |
| April 2021 | Nuance Communications | $19.7 billion | Healthcare AI and voice technologies[147] |