Early History of Microsoft Corporation

Today, Microsoft Corporation finds itself embroiled in antitrust lawsuits and actions by the federal government which threaten to force the company to divest some of its interests much as AT&T was forced into breaking up in the mid-1980s. Microsoft's operating system controls the largest share of personal computers in the world, and one of its founders, Bill Gates, is recognized as being either the wealthiest, or among the wealthiest individuals on earth. Yet the company, which is not even 30 years old, had humble beginnings. Gates lacks a college degree but has built the Microsoft empire using strategic marketing techniques, careful product positioning, and by reshaping the way that companies conduct business. While some have accused the company of "strong-arm" techniques in the marketplace, others have marveled at the way the company emerged from the chaos of the early microcomputer days to dominate the market in a way few other companies have done. This research examines the early years of Microsoft and suggests that the company's current strategies are born of the company's earliest corporate activities.

Paul Allen and Bill Gates began their business careers not with Microsoft, but with a company called Trafo-data formed during high school (Gates, 1996, p. 32). Trafo-data used an Intel 8008 chip (which cost $360) to build a system that monitored traffic patterns using a rubber hose stretched across a roadway. Although the system work

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nsed the operating system to IBM, which left Microsoft free to license it to other companies, as well ("History," 1998, p. 105). Software developers quickly saw that the IBM DOS environment offered a greater market potential than other operating systems (including CP/M, which also shipped with IBM's PC) and so wrote applications for this operating system. The result was exponential growth: developers wrote programs for the DOS operating system, which made more people interested in buying DOS machines, which encouraged additional development, and so on (Schlender, 1995, p.�73). Effects of the Breakup From their earliest days, Gates and Allen were able to identify market opportunities which were not being fully exploited by others. In the beginning, these opportunities included recognizing the potential of microcomputers to become more than just a machine for hobbyists, and to help drive the evolution of the microcomputer through their own efforts. Microsoft also learned that big companies also have significant resources which can be brought to bear in the competitive market. Just as Altair bundled BASIC with its systems, Microsoft would later bundle an Internet browser with its operating system. By the time that this happe

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