Microsoft hit the trillion-dollar mark on 25th April 2019 for the very first time, making it the third technology giant to reach the symbolic milestone after Apple and Amazon. The company accomplished revenue of $30.6 billion (an increase of 14 %from the previous year quarter) and a net income of $8.8 billion (an increase of 19 %). Microsoft shares climbed over $130.50, at the end of trading on 24th April pushing the company’s market cap over $1 trillion. From DOS to Azure: How did Microsoft become one of the most valuable companies on earth?
How did it all start?
In the days of typewriters, the idea of having a computer on every desk was made up of science fiction. But Microsoft co-founders Bill Gates and Paul Allen had the vision about changing the world. They set up Microsoft in 1975 and shortly afterward, IBM approached Microsoft about a project which was condemned as ‘Chess’. In response to this, Microsoft created a new operating system which was essentially the brains of the computer, which made the hardware work in sync with the software. It was named Microsoft Disk Operating System – MS-DOS as we popularly know it. However, DOS was still alien to a lot of consumers.
To make things simpler for the users, Microsoft introduced its first graphical user interface, Windows 1.0, in 1985. Compared to DOS, it was a revelation, as instead of typing commands, users navigated using a mouse to point and click on applications and navigate through directories. Windows introduced many functionalities of the modern-day operating systems, including drop-down menus, scroll bars, icons, and dialogue boxes
Windows continued to evolve, and in 1988 made Microsoft the world’s largest PC software company based on sales. Windows 3.0 (1990) and 3.1 (1992) sold 10 million copies in their first two years, which was the highest number for sales of any Windows version to date. Microsoft quickly became a household name.
Satya Nadella’s Leadership
In 2014 Satya Nadella replaced Steve Ballmer as the CEO of Microsoft. Windows was the proprietary Microsoft operating system that everyone associated Microsoft with and also the foundation for the majority of the company’s success under Bill Gates and Steve Ballmer. When Satya Nadella made his first public appearance as the new CEO of the company in 2014, he did something very unexpected for a leader of the software giant. He did not mention Windows rather he focused on the vision “The world is about cloud first, mobile first”.
Since that point, Satya Nadella has delivered. Microsoft has emerged as a major provider of cloud computing services, especially for big businesses, challenging Amazon Web Service in the rapidly growing cloud infrastructure market. Along with the focus on cloud Microsoft has also collaborated with the open-source development community, bringing a few of its software to the Linux operating system. During Steve Ballmer’s 14-year long run, Microsoft’s stock mostly went sideways. But since Nadella took over, the share price has almost tripled.
Along with focusing strictly on organic growth, Nadella has also focussed on strategic acquisitions. Microsoft spent $26.2 billion for LinkedIn in 2016 and acquired code-sharing service GitHub for $7.5 billion.
Microsoft Azure drives growth
“Leading organizations of every size in every industry trust the Microsoft cloud. We are accelerating our innovation across the cloud and edge so our customers can build the digital capability increasingly required to compete and grow,” said Microsoft CEO Satya Nadella.
Microsoft’s stock has been soaring up, thanks to its cloud growth. The software maker has been pushing its cloud products in the last few years, and the company is aiming to catch up to Amazon’s AWS dominance. Azure is currently behind Amazon for its cloud services, and ahead of Google’s offerings. Microsoft’s latest earnings also revealed that the three main buckets the company splits its businesses up have been increasingly contributing towards the growth of the company. The earning breakdown for the products and services were roughly:
Office, LinkedIn, & Dynamics contributed $10.2 billion in revenue
Azure cloud, server products, & enterprise services contributed $9.7 billion in revenue
Windows, Xbox, & Surface contributed $10.7 billion in revenue
Future of Microsoft
Microsoft has taken a strategic shift and has moved the fundamental core of Windows operating systems to the cloud service. This indicates the long-term future of Windows being a cloud subscription service for the people who really need to use it, rather than using it for interests. Bill Gates figured out how to put a computer on every desk and in every home, and now the company is ready to grow and tackle the future ahead. It’s not the old and trusted Windows operating system that will get Microsoft to reach new heights in the industry.
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