РефератыИностранный языкMiMicrosoft Corporation Essay Research Paper Microsoft CorporationTABLE

Microsoft Corporation Essay Research Paper Microsoft CorporationTABLE

Microsoft Corporation Essay, Research Paper


Microsoft Corporation


TABLE OF CONTENTS


MICROSOFT HISTORY 1


EARLY INFLUENCES 2


FIRST BUSINESS VENTURE 3


EDUCATION ATTEMPT 3


THE MOTIVATIONAL SIDE OF FEAR 4


A JAPANESE CONNECTION 5


IBM INFLUENCE 5


SURVIVAL OF THE FITTEST 6


A CRUCIAL DEAL 6


COMPETITION ERRORS 7


BIRTH OF WINDOWS 7


MISSION STATEMENT AND ANALYSIS 8


INDUSTRY AND COMPETITVE ANALYSIS 9


DOMINANT ECONOMIC CHARACTERISTICS 9


Market Differentiation 9


Pace of technological change 10


Advances to the Printed Word 11


DRIVING FORCES 12


The Internet 13


The Information Highway 14


KEY SUCESS FACTORS 14


Microsoft History


Historians categorize blocks of time with the discovery of certain raw materials


that humans utilized. The Bronze Age and the Iron Age were two periods in human


history that proved through the discovery of artifacts that humans learned to


harness these raw materials ingeniously. The Industrial Revolution of the late


nineteenth century brought the discoveries of the Bronze and Iron Ages to new


heights, and the advent of the locomotive, automobiles, cargo ships and


airplanes were the most evident by-products of such raw materials. Use of these


by-products from the earth’s raw materials dramatically changed the world of


business and trade. With the subsequent invention of wire communications (i.e.,


tapping out Morse code and speaking over telephone lines), business and trade


grew exponentially. Wireless communications via the inventions of radio,


television, and motion pictures contributed greatly to the advances of the


Industrial Revolution. The need to find better ways of doing business to keep


the marketplace fresh and innovative has driven the human race toward the brink


of a new eraCthe Information Age. Unlike more tangible qualities of prior ages,


the Information Age offers less defined qualities. At the heart of this new age


is the advent of the personal home computer. Pumping life into this otherwise


material home appliance is software that incorporates the necessary commands to


access information stored within the computer’s memory. The company that


offered the world its first software manufacturing company was Microsoft


Corporation (MSFT on the NASDAQ exchange). At the helm of this young, innovative


company are William Gates and Paul Allen, a pair of former high school chums who


envisioned a world of home computer technology years before such a dream became


even remotely possible.


Early Influences


Their story begins at Lakeside High, a private high school in Seattle,


Washington. The Mothers’ Club at Lakeside decided to purchase a computer


terminal for the kids with proceeds from bake sales and rummage sales. Students


at Lakeside became enthralled with this new toy. True to their innate curiosity,


Gates and Allen began to dabble farther into the workings of the computer; Gates,


for example, wrote his first computer program at the age of thirteenCa version


of Tic, Tac, Toe. Because the computer terminal was so slow, one game of Tic,


Tac, Toe took up most of a lunch break; if played on paper, a full 30 seconds


might have been required. Despite the simplicity of the program, it spawned the


creative genius in both young men to tackle more challenging programs in the


years ahead. Because the Mothers’ Club was unable to afford continued use of


computer time at $40 per hour, they decided to make it students’ responsibility


to purchase their own computer time. Most students complied by getting jobs


outside school. Gates and Allen became programmers in the summers for


compensation of computer time and $5000 in cash. In his 1995 book The Road


Ahead, Gates describes the mainframe computers of the early >70’s as A. . .


temperamental monsters that resided in climate-controlled cocoons . . .


connected by phone lines to clackety teletype terminals. . . .@ (11) He went


on to explain that a personal home computer called the DPD-8 was actually


available from Digital Equipment Corporation. According to Gates it was A. . .


an $18,000 personal computer which occupied a rack two feet square and six feet


high and had about as much computing capacity as a wristwatch does today . . .


Despite its limitations, it inspired us to indulge in the dream that one day


millions of individuals could possess their own computers.@ (11-12)


In the summer of 1973, Paul Allen, who knew more about computer hardware than


Bill Gates, shared an article with Gates buried on page 143 in Electronics


Magazine. The article described the invention of the 8008 micro-processor chip


by a young company called Intel. Paul was surprised to receive the technical


manual for the chip in the mail simply upon request. Immediately, he went to


work analyzing its capabilities. Due to the lack of transistors, the 8008 chip


was very limited in its use, but Allen discovered despite the limitations, the


chip was good for repetitive tasks and mathematical data.


First Business Venture


When Paul Allen entered college at Pullman, Washington, a town on the east side


of the state, sixteen-year-old Bill Gates traveled frequently by bus to visit


him. On these long trips across the state, Gates wrote a program that


facilitated the reading of traffic information gathered by municipalities


through a device set up on the side of certain intersections. A long, rubber


tube stretched across the road from one of these devices, and each time a


vehicle ran over the tube a punch was made in the roll of paper within the


device. People deciphered this crude data by visually inspecting the punch


holes and annotating the results. Gates’ program relieved humans from such a


tedious task, using the technology of the 8008 chip instead. With this program


Gates and Allen launched their first company, Traf-O-Data. The two programmers


were full of enthusiasm for the success of their new company; most communities,


however, were reluctant to purchase from two kids: consequently, their fledgling


company enjoyedonly marginal sales.


Education Attempt


Gates attended Harvard College in 1973 while Allen secured a job in Boston,


Massachusetts as a programmer for Honeywell. In 1974 Intel announced the advent


of the 8080 chip that boasted 2,700 more tran-sistors than its predecessor.


Because of the disappointment they experienced in the hardware side of computing


through dismal success in Traf-O-Data, Gates and Allen focused on new


opportunities in the software side of computers. With a vision of millions of


computers owned by individuals, the pair banked on competition between Japanese


and American companies for control of the computer hardware market. With this


in mind, and with the introduction of the 8080 microprocessor chip (and


inevitable successors to the chip), Gates and Allen determined that their future


lay in developing software for these computers.


The Motivational Side of Fear


During a cold, New England morning outside a newsstand in Harvard Square during


one of his frequent visits to Bill Gates, Paul Allen picked up a copy of the


January issue of Popular Electronics magazine. The cover photo pictured a small


computer kit called the Altair 8800. It sold for a mere $397, and had 4,000


characters of memory . Panic struck Gates: A>Oh no! It’s happening without us!


People are going to go write real software for this chip.’ I was sure it would


happen sooner than later, and I wanted to be involved form the beginning. The


chance to get in on the first stages of the PC revolution seemed the opportunity


of a lifetime, and I seized it.@ (Gates, 16).


Driven by fear of someone writing software for the Altair 8800 personal computer


before his own software was complete, Gates scrambled feverishly in his Harvard


College dormitory forgoing a decent night’s rest. Five weeks later, a version


of BASIC became the impetus for Athe world’s first microcomputer software


company . . . In time we named it >Microsoft.’@ (Gates, 17)


In the spring of 1975, Allen quit his job with Honeywell; Gates decided to take


an indefinite leave of absence from college (never intending to forgo a degree).


Both young men planned to dive into the world of the computer software business


at its very beginning stages. Allen was twenty-two years young and Gates was


only nineteen. They set up operations in Albuquerque, New Mexico because the


city was home to MITS, creator of the first inexpensive personal computer to be


offered to the general pubicCthe Altair 8800 .


Microsoft provided BASIC language because it allowed a format for computer users


to write their own programs instead of having to rely on scarce, packaged


software. Immediately, the MITS Altair 8800 faced strong competition from


computer makers such as Apple, Commodore, and Radio Shack who entered the


personal computer market in 1977. The strategy at Microsoft was to convince


computer manufacturers to buy licenses to Abundle@ Microsoft software with their


computers. Royalties would then be paid to Microsoft on each computer sale.


Aside from the antics of early software piraters and lack of government laws


preventing such activities, this strategy of selling licenses for the use of


their software worked well for Microsoft.


A Japanese Connection


By 1979 half of Microsoft’s business came from Japan. This was due in large


part to Asweat equity@ of one man in particular. His name is Kazuhito (Kay)


Nishi. Kay telephoned Gates in 1978 after discovering Microsoft in a newspaper


article. Both Gates and Nishi were only twenty-two at the time and shared many


similarities despite cultural and language differences. They met shortly after


the phone call at an electronics con-vention in southern California. Without


attorneys, they signed a 12 page contract which gave Nishi exclusive


distribution rights to Microsoft’s BASIC language in East Asia. Eventually,


their original expectation of $15 million was realized ten-fold through sales as


a result of that contract.


Microsoft moved from Albuquerque, New Mexico to its present home in Redmond,


Washington in 1979 with most of its twelve employees. According to Gates, the


mission of Microsoft was Ato write and supply software for most personal


computers without getting directly involved in making or selling computer


hardware.@ (44) The programming team adapted programs to each machine and were


Avery responsive to all the hardware manufacturers . . . we wanted choosing


Microsoft software to be a no brainer . . . along the way, Microsoft BASIC


became an industry standard.,@ Gates was quoted. (44)


IBM Influence


By 1980, International Business Machines (IBM) enjoyed an 80% market share of


large computer hardware, but only marginal success with the smaller personal


computer (PC) market. The Apple II computer appeared poised to takle the


business market, thanks in part to a popular spreadsheet program called VisiCalc.


Based on Apple’s success, IBM decided to enter the PC market. In the summer of


1980, two emissaries from IBM met with Gates to discuss IBM’s plans for a full-


market assault, with components already available off-the-shelf. IBM’s plan was


to utilize Intel’s microprocessor chip and to use Microsoft’s programming


expertise, rather than create its own software. As a result of this meeting,


Microsoft hired Tim Paterson, from a Seattle, Washington firm, who became


responsible for creating the Disc Operating System (DOS) for IBM compatible


computers.


Survival of the Fittest


The first IBM PCs hit the market in August of 1981 with a choice of three


operating systems: Microsoft’s DOS, UCSD-Pascal, and CP/M86. Gates realized


that only one operating system could survive, just as only one video cassette


recorder survived their market previously (VHS beat out Beta Max). Gates


developed a three-part plan to come out on top of the competition: < make


Microsoft DOS the best product of the three < help other software companies


write MS-DOS based software < ensure MS-DOS to be inexpensive.


A Crucial Deal


With these objectives in mind, Gates offered IBM an attractive deal. Microsoft


would allow IBM to use DOS (called IBM- or PC-DOS to distinguish itself from


the nearly identical MS-DOS) for a low one-time fee for as many PC’s IBM could


sell. This deal gave IBM the incentive to push DOS, rather than the other two


oper-ating systems, whose manufacturers received royalties for each PC sale with


their respective operating systems installed. Hence, IBM sold UCSD Pascal P-


system for $450 and CP/M-86 for $175 while DOS was offered at only $60.


Gates’s strategy worked as he stated:


AOur goal was not to make money directly from IBM, but to profit from licensing


MS-DOS to computer companies that wanted to offer machines more or less


compatible with the IBM PC. IBM could use our software for free, but it did not


have an exclusive license or control of future enhancements. This put Microsoft


in the business of licensing a software platform to the PC industry. AConsumers


bought the IBM PC with confidence . . each new customer . . . added to the IBM


PC’s strength as a potential de facto standard for the industry. . . . A. . .


the availability of software and hardware add-ons sold PCs at a far greater rate


than IBM had antici-patedCby a factor of millions,@ which meant Abillions of


dollars for IBM.@ (Gates, 49-50)


Competition Errors


After three years of competition blitzing, all competing standards for personal


computers had disap-peared with the exception of Apple’s Apple II and Macintosh.


AHewlett Packard, DEC, Texas Instruments, and Xerox, despite their technologies,


reputations, and customer bases, failed in the PC market in the early 1980s


because their machines weren’t compatible and didn’t offer significant enough


improvements over the IBM architecture.@ (Gates 50) Only Commodore Corporation


fared well through the eighties in the PC market, due substantially to lower


cost of models 64 and 128, and the superb graphics of the Commodore Amiga, still


used today by some commercial movie studios.


Gates defends IBM against certain revisionist historians who conclude A. . . IBM


made a mistake working with Intel and Microsoft to create its PC. They argue


that IBM should have kept the PC architecture proprietary, and that Intel and


Microsoft somehow got the better of IBM. But the revisionists are missing the


point. IBM became the central force in the PC industry precisely because it was


able to harness an incredible amount of innovative talent and entrepreneurial


energy and use it to promote its open architecture. IBM set the standards.@


(Gates, 50)


Birth of W

indows


Because of the character-based commands that users of DOS needed to type into


the computer from a keyboard peripheral, Gates saw the potential of losing


Microsoft’s leading software position if it stayed with the MS-DOS format.


Researchers at Xerox’s Palo Alto, CA Research Center studied human-computer


interaction and found that computer users could more easily instruct the


computer if users were allowed to point to commands, via a device called a


Amouse,@ as opposed to typing commands, via a QWERTY keyboard. According to


Gates, AXerox did a poor job of taking commercial advantage of this


groundbreaking idea, because its machines were expensive and didn’t use standard


microprocessors. Getting great research to translate into products that sell is


still a big problem for many companies.@ (53)


The process of using pictures CiconsCto command a computer, rather than typed


characters, is called graphical technology. The screen which molds graphical


technology into the character-based operating system format is called a


Graphical User Interface (GUI). In 1983, Microsoft announced its version of a


GUI called Windows7. The Apple Lisa and Xerox Star were GUIs already available


to consumers, but both, in Gates’ view, A. . . were expensive, limited in


capability, and built on proprietary hardware architectures.@ (53) This meant


that other hardware companies could not license the operating systems to build


compatible systems. The same was true for software companies, and this hindered


the creation of new applications for the Star and Lisa GUIs by outside companies.


MISSION STATEMENT AND ANALYSIS


At Microsoft, our long held vision of a computer on every desk and in


every home continues to be the core of everything we do. We are committed to


the belief that software is the tool that empowers people both at work and at


home. Since our company was founded in 1975, our charter has been to deliver on


this vision of the power of personal computing.


As the world’s leading software provider, we strive to continually


produce innovative products that meet the evolving needs of our customers. Our


ectensive commitment to research and development is coupled with dedicated


responsiveness to customer feedback. This allows us to explore future


technological advancements, while assuring that our customers today receive the


highest quality software products.


A good mission statement attempts to answer some key questions about the


company and the industry. These questions are Who are we?, What business are we


in?, and Where are we headed? In Microsoft’s mission statement they tell who


they are, as well as what there business is. They stess their goals and where


they are headed very well. My biggest problem with this mission statement is


the fact that Microsoft is to worried about being on top and will do what ever


is necessary.


INDUSTRY AND COMPETITVE ANALYSIS


Dominant Economic Characteristics


Market Differentiation


The first popular graphical platform came to market in 1984 with Apple’s


Macintosh. It was an instant success as the GUI platform of Macintosh


eliminated the need for obscure character commands. Gates worked closely with


Steve Jobs, who was the leader of the Macintosh team, in order to create


Microsoft’s competing GUI version of the Mac called Windows. The major


difference that Microsoft held over Apple was its willingness to allow other


software developers open access to the Windows format. Apple restricted its GUI


to Macintosh computers only. That difference helped to elevate Microsoft


eventually to the software industry leaderCbar none.


Gates devotes pages of explanations of why such a Agreat company@ as IBM failed


in its attempts to finally create its own software operating system. He


apologetically cites the specific decisions that IBM made with the development


of its OS/2 operating system. His reason for the disappointing results of IBM’s


attempts are chiefly due to the fact that graphical computing could have found


mainstream success if IBM had been more cooperation with Microsoft in developing


a general application of GUI software to be used with existing hardware rather


than insisting on developing a whole new application.


When Microsoft went public in 1986, Gates offered IBM 30% of MSFT stock in


order that IBM could share in the fortune, be it good or bad, of Microsoft. IBM


declined. This was Microsoft’s attempt at keeping IBM close to Microsoft as IBM


was instrumental in the success of Microsoft.


Despite not seeing eye to eye with IBM in the development of Windows, Gates saw


the GUI application as the progressive alternative to DOS and continued to


create improvements on the existing applications. In the weeks prior to the


release of Windows 3.17, May 1990, Gates A. . . tried to reach an agreement with


IBM for it to license Windows to use on its personal computers. We told IBM we


thought that although OS/2 would work out over time, for the moment Windows was


going to be a success and OS/2 would find its niche slowly.@ (62) IBM again


refused to cooperate with Microsoft insisting total dedication to the


development of OS/2 which was eventually doomed to an ignominious future. AIBM


has proven conclusively through the years that it has no idea of how to create


or market software. Examples are Displaywrite word processing; the PC Jr, IBM


Personal Typing System, and the PS-1, all with proprietary software; OS/2as


mentioned above, and feeble attempts at networking. Now, with the purchase of


Lotus, the software giant should request last rites.@] According to Gates, AIf


IBM and Microsoft had found a way to work together, thousands of people-


yearsCthe best years of some of the best employees at both companiesCwould not


have been wasted. If OS/2 and Windows had been compatible, graphical computing


would have become mainstream years sooner.@ (62)


Pace of technological change


In its twentieth fiscal year (July 1BJune 30) since incorporation, Microsoft


leads the software industry with revenues of $5,937,000,000 as of June 30, 1995 .


It is the unequaled standard bearer for software manufactures and with its


release of Windows 957, a total graphical operating system, should remain at the


top for years to come.


Despite its current position, Microsoft is still faced with new challenges as


with the progression of any high-tech industry. The most recent challenges


facing Microsoft are its applications to the Internet and its commitment to the


development of the information super highway.


In 1989 the U.S. Government decided to cease funding its 1960s project ARPANET


and allow the project to be succeeded by the commercial equivalent AInternet.@


In its beginning stages, the Internet picked up where ARPANET left off. Its


primary function was to provide electronic communications, or e-mail, solely


between computer science projects and engineering projects. Its popularity


increased as it became commercially available to PC users. To fully appreciate


the significance of e-mail and the transmission of electronic data consider the


evolution of the printed language.


Advances to the Printed Word


When Johann Gutenberg introduced the printing press to Europe in 1450, the


method of copying the printed word was revolutionized. Before the advent of the


printing press there was an estimated 30,000 books available on the earth, most


were hand written by monks. Although it took two years to complete the movable


type for Gutenberg’s Bible, once completed, multiple copies could be made rather


quickly. Almost 500 years later, Chester Carlson, frustrated by the length of


time involved in preparing patent applications, set out to invent an easier way


to duplicate information in small quantities. What resulted was a process he


called Axerography@ when he patented it in 1940. In 1959, Carlson aligned with


Xerox Corporation as a means of manufacturing and distributing AXerox@ copying


machines. Xerox projected sales of perhaps 3000 units. Much to their surprise,


they placed orders for 200,000 units, and one year later reported nearly 50


million copies a month were being processed. By 1986, that figure increased to


200 billion copies per month and has steadily increased ever since. The advent


of xerography allowed small groups to participate in the capabilities of a


printing press for a fraction of the cost and in a fraction of the time a


conventional printer would take.


The market size for the computer industry is very large, this past year


it totaled $238.7 billion dollars. It is expected to rise considerably in the


next few years.


The competitive scope for the computer industry globally is very strong,


microsoft is worldwide. The Japenese are very big competitors, but Microsoft is


to powerful to compete with.


Ease of entry is very hard, the computer industry is a costly industry


to enter. To compete with large companies you would need millions of dollars to


even consider getting started. One could start a small computer business


focusing on one area without the cost being overly expensive. An example would


be if you wanted to focus one the accounting industry you need not worry about


anything else. The life of the product depends totally on your needs, as well


as the increases in technolgy. Microsoft comes out with new products all the


time, but you don’t necessarly need to buy them. Sometimes a computer program


can lasts companies for years. It is very difficult to enter the computer


industry due to the large capital requirements and the rapid technological


changes, so either backward or forward intergration would be very difficult.


Driving Forces


There are several driving forces in the computer industry.


1) Increased efficiency due to economies of scale


2) Change in the industry growth rate


3) Product innovation due to the rapid increases in technological


advancements


4) The need to be the first to develop the new program


The newest driving force for the computer industry was the internet or


super highway. The following describes both along with the advantages they


brought.


The Internet


The Internet offers even more advantages than Xeroxed copiers where information


can be accessed and/or distributed to all interested parties (with a PC) via the


electronic transmission of data. As defined by Gates, the Internet is Aa group


of computers connected together, using standard >protocols’ (descriptions of


technologies) to exchange information.@ (94) Electronic massages are sent via


phone lines from one computer to another and stored in the electronic Amailbox@


of the another computer until the message is Adown-loaded@ by the user.


Another advantage to the Internet is AWeb browsing@ on the World Wide Web (.www)


or simply AWeb.@ Server companies offer graphical pages of information to be


accessed by subscribers of their service. From the Ahome@ page of a topic, one


can activate subsequent hyperlinks for further information on given topics by


clicking the mouse device of most PCs.


Although Gates admits that Microsoft was surprised at the commercial success of


the Internet, he has begun work on software applications to make the Internet


easier to access for PC owners with limited computer knowledge. Some people may


confuse the subscriptions to companies on the Internet, such as CompuServe,


Prodigy, and America On-line with the creation of the information super highway,


but according to Gates, the Internet is simply a Aprecursor to the information


highway.@ (90) Comparing the information highway with the Internet is like


comparing a country lane with the Eisenhower Highway System. Even that analogy


would not do justice to the information highway as it will look in twenty or


more years. The limitations of the Internet must first be expanded before


anything resembling the actual information highway exists. One challenge that


Micro-soft and other companies have is to convince the phone companies and cable


companies to replace the coaxial lines that serve homes and businesses with


fiber optic cables. Fiber optics will expand the bandwidth necessary for the


immense amount of information sent on the highway.


Two technologies currently in the works toward this transformation of trunk


lines are DSVD and ISDN. Digital simultaneous voice data can be used with


existing phone lines, but does not provide a sufficient bandwidth to handle


video transmissions; hence, new lines must be laid for this application to reach


full capacity. Even with the current integrated services digital network


technologyCwhich incorporates a wider bandwidth but requires the laying of new


linesCthe clarity of full motion picture images still leaves much to be desired.


Add-in cards which upgrade the PC Ato support ISDN costs $500 in 1995, but the


price should drop to less than $200 over the next few years. The line costs


vary by location but are generally about $50 per month in the United States. I


expect this will drop to less than $20, not much more than a regular phone


connection.@ (Gates, 101)


The Information Highway


Once more and more PC owners hook up to the Internet with ISDN lines, the


groundwork for further progress towards the information highway will be laid.


The information highway was coined by then-Senator Al Gore Awhose father


sponsored the 1956 Federal Aid Highway Act@ (Gates, 5) during the Eisenhower


Administration. According to Gates, this terminology is flawed. It connotes


the following of routes with distance between two points. It implies traveling


from one place to another when the actual information highway will be free of


such limitations. Some people also confuse the information highway with a


massive government project which, Gates feels, A. . . would be a massive mistake


for most countries . . . .@ (6) Just as Microsoft’s mission in 1975 was Aa


computer on every desk and in every home,@ (Gates, 14) so it is with Microsoft


progressing towards A. . . >information at your fingertips’ which extols a


benefit rather than the network itself.@ (Gates, 6)


Key sucess factors


1) The high degree of expertise and product innovation


2) Being able to stay on the cutting edge of technology


3) Companies need to have a low degree of glitches in there programs


4) A very strong customer support system (user friendly)


5) Must be able to meet the customer needs


The computer industry is a strong leader in technology. To compete you


must stay one step ahead of the rest. Microsoft has proven how devoted they are


to computer program developing by always being one step ahead of the rest. When


one is dealing with the computer industry it is very important to have


kniowledgable employees working for you.

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