Microsoft at 41: Diversification, key to growth

Microsoft was founded by Bill Gates (now the richest man on the planet) and Paul Allen (40th on the Forbes Rich List) in April 1975. When Gates was just 15-years-old, he was caught hacking into a major corporation's computer and as a consequence he was forced to give up computing for an entire year.

Bill Gates (Getty Images)

As boys, Paul Allen and Bill Gates became friends, attending the same Seattle High School. Their friendship never wavered and they pooled their resources and knowledge to start what would one day become the biggest software company on Earth - Microsoft (From 'Microcomputer and Software').

Although now headquartered in Redmond, Washington, USA, the duo started the company in Albuquerque. New Mexico, the home of MITS, the company which developed the Altair 8800 PC for which they wrote a version of the BASIC programming language.

Their first foray was the MS-DOS (Disk Operating System) for computers, followed by Windows, which everyone could operate without essentially knowing any programming language. Today, Windows is in its 10th iteration and Microsoft has made it available free for all those who own legitimate copies of Windows 8 and 8.1.

Hardware

For at least three decades, Microsoft was solely a software provider (Windows, Internet Explorer and the highly popular Microsoft Office productivity suite that includes Word, Power Point, Excel, One Note, Outlook, Publisher), leaving the hardware side to companies such as HP, Dell, IBM and Compaq.

Since 2012, it is has ventured into hardware as well, making the highly acclaimed Surface tablet-cum-laptop computers and the huge 84-inch interactive whiteboard Surface Hub.

It is an end-to-end Microsoft solution, similar to the ones provided by its biggest competitor Apple, which never licensed its MAC OS operating system to outside companies.

Incidentally, Microsoft now makes all its software available for the Mac as well. Microsoft has also opened Apple-style physical stores.

Microsoft, which acquired Nokia's handset business for US$ 7 billion (though not the network infrastructure), is now making cellular handsets under the Microsoft brand and Lumia sub-brand.

The handsets are based on the Windows 10 platform, though it has a long way to go before catching up with Google's Android and Apple's iOS mobile operating systems. Microsoft is expected to ditch the Lumia sub-branding next year and opt for the Surface branding from next year.

Video games

Microsoft also owns Skype (which it acquired in 2011 for US$ 8.5 billion), the world's biggest free video chat service which has around 100 million people online at any given time, making audio and video calls and engaging in texting and file transfers.

Microsoft is the second biggest player in the video game console market with its XBOX platform, the first being Sony with its Playstation (PS) system. Plenty of third party games are available for the platform and Microsoft is keen to promote cross-console play with the PS4.

The company recently acquired Mojang, the creator of the popular Minecraft video game. Microsoft has also developed the Holo Lens, a Virtual Reality platform.

It is also the second biggest player in quite a different market - cloud computing. Microsoft's Azure is the second bigger cloud platform after Amazon Web Services.

Anyone can access its cloud services through the One Drive application. It has four other main internet products - the new Edge web browser embedded in Windows 10, Bing (search engine), Outlook (webmail and contacts) and MSN (search and news), though all these trail behind offerings from Google.

The four colours in the Microsoft logo represent Windows (blue), Office (red), Xbox (green), and Bing (yellow).

Microsoft is actively working on Artificial Intelligence Systems including chatbots. A Microsoft 'teen chatbot' named Tay recently went haywire on Twitter picking up racist slogans and references to drug use. Microsoft pulled the plug on the chatbot but vowed to continue further research.

The company, which has more than 118,000 employees worldwide, recorded revenues of US$ 94 billion in 2015 with a net income of US$ 12 billion. It is now headed by Satya Nadella.

Gates, who resigned as CEO in 2000 still functions as a tech advisor to the group. He is now better known for his work at the Bill and Melinda Gates Foundation which has a broad range of objectives from disease eradication to poverty elimination.

Microsoft is now the second most valuable company by market capitalisation in the world after arch-rival Apple. Microsoft was ranked number 1 in the list of the World's Best Multinational Workplaces by the Great Place to Work Institute in 2011.

The company aims to become more diversified in the coming years.

Next week: Nestle