Microsoft Corporation is the largest computer software producer in the world, headquartered in the Seattle, Washington suburb of Redmond. The company was founded in 1975 by Bill Gates and Paul Allen to develop and sell BASIC interpreters.
Desktop operating system monopoly
Microsoft's Windows product has a monopoly position in the desktop operating systems market, and since its bundling of the Internet Explorer web browser into its Windows operating system, a virtual monopoly in the Web browser market. Almost every PC sold has a copy of Microsoft Windows pre-installed. Microsoft has been convicted by a USA court for abusing its monopoly in the desktop operating systems market in the same country. (See Microsoft antitrust case for more details).
How Microsoft dominated the desktop software market
In 1983, Microsoft was able to leverage a contract with IBM to produce a BASIC for the IBM PC into a contract to provide an OS for the IBM PC. Microsoft then bought the rights to use Tim Patterson's Seattle DOS on the PC and released it via IBM as Microsoft DOS (MSDOS). MSDOS was very successful. Microsoft then developed a wide variety of software products including operating systems; language compilers and interpreters; word processors; spreadsheets; etc. Some were successful. Some weren't. Most have become the dominant software in their category. The best known products are Microsoft Windows, Microsoft Office and a series of server Operating Systems and Products generally referred to as NT although the product changed to Windows 2000, and then to the most recent release, Windows XP.
Microsoft also produces Microsoft Office for the Apple Macintosh, arguably the most important set of programs on the Mac. Microsoft also owns a small portion of Apple, having invested $400 million in the company in 1997; since then every new Macintosh ships with Internet Explorer as the default web browser.
Security
Some of Microsoft's products, particularly Outlook (a mail reader) and Internet Information Server (an HTTP server or webserver), and its operating systems, have received much criticism from computer security experts because they have been victims of so many worms, viruses and other exploits. The company has defended its products by arguing that as the largest software company, their products are subject to more attacks, which is true in some cases but certainly not in the case of IIS, since it holds only a minority share. Security experts believe the problem is due to fundamental design decisions that were made in favor of usability rather than security. Some usability experts dispute this, saying Microsoft software is weak on that front too. For a contrarian view that illustrates Microsoft's usablity advantages consult www.objectwatch.com and the book "Com+ and the Battle for the Middle Tier".
Recently the corporation seems to be taking security issues more seriously, but it remains to be seen how successful they will be at securing their software.
Hardware
Microsoft also has been involved in designing and selling hardware products where they deem it will expand their software business. An early example is the Microsoft Mouse which enabled a simple Xerox-Star, Apple-Macintosh input interface to the Windows operating system. Later models sport scrolling wheels, extra buttons, LED motion detectors and other features.
In late 2001, envying the multi-billion dollar game console market dominated by Sony and Nintendo, Microsoft released its own proprietary game console called XBox.
A relevant, critical novel is by Douglas Coupland, called Microserfs.
Microsoft .NET initiative
The .NET initiative is a major effort by Microsoft to ease the development of applications which use the internet as well as to facilitate installation problems often called DLL-hell (version conflicts of different components). See Common Language Infrastructure. Critics point out that not only are the terms ".net" and "CLI" in use to mean other things, but that Microsoft regularly overloads generic terms (e.g. "Windows", "Word", "DNS") to refer to its proprietary technology, and then attempts to control them using trademark law and patent law. They tend to view .NET as yet another Microsoft attempt to leverage its operating system monopoly into a similar monopoly on Internet applications.
Microsoft earnings inflation
Factors entirely apart from technology standards could ultimately undo Microsoft's monopoly. Accounting standards, in question for some years in the United States, do not require American publicly traded corporations to declare the expected costs of stock options on their earnings bottom line. Microsoft has taken unique advantage of this, to build a solid record of earnings increases even as its stock option payouts have ballooned: The Economist reported that 1998 earnings of US$5B had been dwarfed by stock option payouts of US$23B, and that the company had actually lost US$18B - none of which appeared on its formal books or earnings reports.
Accounting standards changes in the wake of the collapse of Enron stock and of Arthur Andersen may therefore have a serious impact on Microsoft's standing.
Outside Links:
- Microsoft web site: http://www.microsoft.com
- Microsoft Security Advisor: http://www.microsoft.com/security
- Microsoft Network (MSN): http://www.msn.com
- Allegations of Microsoft financial impropriety