July 8, 2013 • 56 mins
How did Microsoft get started? How were Microsoft and Apple closely tied together? How successful was Microsoft's IPO?
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Episode Transcript
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Speaker 1 (00:04):
Get in touch with technology with tech Stuff from Stuff
dot Com. Everyone, and welcome to tech Stuff. I'm Jonathan Strickland,
and and we're going to do another one of our
episodes where we start to focus on a company. This
will be at least a two partner because the company
has been around well since the mid seventies, so they're
(00:25):
kind of important. Yeah, it made some big contributions to
the world of tech as it turns out. We're talking
of course about Microsoft and UM. To really look at
the origins of Microsoft, we're gonna go back quite a bit,
back to nineteen fifty five when on October a certain
Bill Gates was born to a wealthy family in Washington, UM.
(00:47):
He came from a not so humble background. He actually
was born into a very well to do family, UM,
and that gave him certain advantages. He was able to
take advantage of a pretty pretty interesting education. He went
to Lakeside, which was a private school, and that's where
he met Paul Allen, who would also be become important
(01:09):
to this company. Yea Paul Allen who was two years
older than Bill Gates. So it was interesting that these
two struck up a friendship. They were separated by a
couple of years in age and in grade, but both
of them became fascinated with a machine at the school.
It's a teletype machine. And you may, oh, my, Drew,
geese have forgotten what these machines are like. Things changing,
(01:30):
so scory and everyone quick to forget. But teletype machine. Yeah. Essentially,
it was using telephone lines and you could send information
across and it would type out the information. And they
began to um kind of figure out ways of playing
with it and learning how it worked and manipulating it. Supposedly,
according to Wire, the pair exhausted the school's annual budget
(01:52):
for time on this computer within a matter of weeks,
and they soon started to um work with a with
a local computer contract center to um find software bugs
in exchange for extra time on the computers. Interesting, so
they like the computers so much that they would work
in orders for them to be able to continue to them.
(02:13):
In nineteen seventy two, according to the BBC, Gates used
the teletype machine to manipulate school schedules for a purpose
that I find incredibly creepy. It was to to try
to find the get the right girls a k a.
The girls that he thought were kind of pretty into
his classes with him. Yeah. Essentially, you know, he was
(02:33):
just anyone who had who was wanting certain classes. He
wanted to make sure that that the right mix of
people were in the classes. He was in the right
makes of people, being all the cute girls social engineer. Yeah,
little creepy, little creepy. However, in ninety three, he yeah,
he graduated, graduated, began to attend Harvard, and that's where
(02:56):
he met someone else who would become really important in
the Microsoft story, Mr Steve Balmer. They lived down the
hall from each other in the same dormitory. Right, So
then we move over into nineteen seventy four, moving right along,
and uh, that's when the magazine Popular Electronics published its
article about the Altair hundred. It was called the world's
(03:20):
first micro computer kit to rival commercial models. Um, and
yeah it was. It was talking about the Altaire and
Intel's U four zeroes Ero four chip. And yeah, this
was this was the dawning of the personal computer age.
The Altair was, of course a kit that you could
order and then build your own computer. Now, this was
(03:41):
incredibly early on, so micro computers at this point were
pretty primitive and there there wasn't a whole lot of
software that you can run on them, because, uh, up
until this point, computers were really pretty much only in
research facilities, in in large companies that needed databases. They weren't. Again,
you kind of had to rent time on them if
(04:02):
you're going to really use them on a personal level,
all right, and there wasn't much to do on a
personal level. I mean, these were really machines meant to
do calculations. There just weren't. I mean, it was not
like it's not like there's a lot of word processing
software even let alone games. Although of course anytime you
have a machine and you've got people and they are
(04:23):
smart and they are board, they will make games. Are
They're small things that are easy, too easy to program.
So right, So but the al tear comes out, and uh,
the company that made the al Tear mits m I
t S, invited readers to submit programming languages for the computer.
Now in early nine as in like the day or
(04:46):
two days after this this issue had hit the supposedly, um,
I think Paul Allen came like came like running down
the hall and was like, well check this out. Yeah,
he had he had the copy of the magazine, and
he said, let's do this, let's build a computer language
for the al tear, and we can we can be
the ones to to make history. And they, from at
(05:08):
least one account, the account that I read in the BBC,
they apparently told myths that they in fact had the
programming language before they had you know, built it. But not.
It's not to say that they didn't have the skills.
They certainly did. They just they just didn't have the
work done yet. But they pretty much committed themselves to it.
And then over the course of several hours, maybe a
(05:30):
couple of days, they built their computer language, which was
a variant of the Basic computer language, which has been
invented in the sixties, but this was the first one
for this particular chip set. Yes, they had actually been
playing with Basic way back in high school together, right,
So now they created a simulator of the al tear
on another machine, the deck PDP ten they had one.
(05:53):
They ended up creating an emulator for the al tear
so that they could actually test this programming language because
otherwise they have no way of knowing if it would
work or not. They didn't have access to an al tear,
so uh. They then submit this programming language to MITS
and uh, and it's met with some approval, so much
so that Paul Allen was made the VP and director
(06:15):
of software for the company. So I would say that
that was a rousing success. Yeah, yeah and uh. Also Bill,
Bill Gates and Paul Allen both moved to UM to
its headquarters in Albuquerque. Ye Albuquerque, which just makes me
think of weird all Yankovic. But anyway, or bugs Bunny
should have taken that left in Albuquerque. But so on.
(06:35):
On November twenty nine, Bill Gates sends a letter to
Paul Allen, and the letter contains a certain name in it.
It is micro dash Soft, which is the earliest known
written reference of the company name. Although they had been
talking about this for a while beforehand, according to most interviews,
but this was the first time, the first the earliest
(06:56):
written reference anyone has found. They had also tossed around
something like Gates and Allen, Inc. Or something like that.
Exciting stuff, you know. So they came up with this idea,
and by the end of the year, the partnership that
would eventually become Microsoft had earned sixteen thousand and five
dollars in revenue and had a grand total of three employees. Uh.
(07:20):
When you get to the next year nine, this is
a huge year in personal computers, a huge year that
people probably at the time could not have predicted would
turn out to be so instrumental in shaping what the
future of personal computing would be. This is the same
year that two other individuals, uh some some rather prankster
(07:44):
ish types, the Steve Steve Jobs and Steve West. They
they had decided to uh work together to build their
own personal computer. Now keep in mind, Gates and Allen
aren't building computers. They're building not not even not even
operating systems, right, not even Yeah, this is this is
before personal computers really had what we would call an
operating system. This is when you would put a uh
(08:06):
some you would hook it up to some form of media,
and then you would use a a ligne command to
run a program. But that's about it. There's it's it's
not so advanced as to call it an operating system.
So Steve Jobs and Steve Wozniak are designing their own computer,
which the first one was called the Apple One, which
(08:28):
didn't you know, they only made a few hundred of them,
as I recall, and the original price was six hundred
sixty six dollars and sixty six cents for the Apple one.
But they were they got to meet with Bill Gates
and Paul Allen. In fact, uh uh they were chatting
early at the Palo Alto Homebrew Computer Club about the
(08:51):
possibility of using programming languages. So and even at the
earliest days, Microsoft and Apple had a relationship. It wasn't
a formal relationship by that point, but they knew each other.
You know, people knew one another in these communities that
this homebrew club was. That was a big organization. I mean,
maybe not big, but but certainly a lot of people
who had become key players in the industry over the years.
(09:14):
Uh started out started out there, and for for a
large part it was it was hobbyists at the time,
but uh folks, folks like h like like Steve and
Bill where um much more business minded, I think than
than most other kids hanging out. Yeah. Yeah, they definitely
had a bigger picture in mind than just hey, this
is this is this is really this is a really
(09:34):
cool device. I want to see what else I can
do with it. Some some people were more than content
to just keep it a hobby, but others were seeing
the potential for this to be a game changer to
be in its own industry. Well. In March of ninet,
Bill Gates delivered the opening address at the first annual
World I'll Tear Computer Convention, which as far as I know,
(09:56):
is no longer happening. I've never been. Don't think that
I would wonder what it would look like if you
were to attend a World Altare computer convention in Paul
Allen resigned from midst that year in my ts that
year to work full time on the Microsoft project, and
on November twenty six, nineteen seventy six, Allen and Gates
(10:17):
trademarked the term Microsoft. They had since lost the hyphen. Yeah,
now it's just Microsoft, no hyphen, just one word. That's same.
Around that same time, Bill Gates officially drops out of Harvard.
He had been uh, he took a break for a
little while, then he went back, and at this point
he had decided that he wanted to concentrate Microsoft um.
(10:38):
Gates also writes an open letter to hobbyists where he
addresses the issue of software piracy. Now keep in mind,
this is the earliest days of personal computing, and already
there was this this interesting, interesting dichotomy. Okay, you had
people who wanted to have software freely available, which would
(10:58):
then encourage more people to get into the hobby and
more innovation. And then you had the people who are
developing software who are saying, in order for me, don't
let us make money, then we can't continue making cool
stuff for you to play with. So yeah, there's no
incentive for me to put in work if I'm not
getting any reward from it. I mean, I love this
as much as you guys do, but a guy has
(11:20):
got to eat. I dropped out of Harvard, so uh
so he wrote this open letter to to address these
problems of software piracy, which is it's kind of funny
because when you think about it, you know, we were
more than three decades later, and we still have the
same issues. It's now just on a larger scale scale.
Exactly that next year nine, Bill Gates becomes the president
(11:44):
and Paul Allen the vice president of Microsoft is now
an official company and before they were considered to be
general partners in this, and this was the first time
that that they delineated their their responsibilities within the come
right and Gates at this point owned more of Microsoft
than Alan. Actually that's true all the way through the history.
(12:06):
So Gates had a greater part of the ownership of
the company, and they begin with a license deal to Apple.
They were the ones who provided the Apple version of Basic,
called Microsoft apple Soft Basic. So that's interesting to me
too that the programming language for the Apple two computer
(12:29):
was in fact developed by Microsoft, because a lot of
people think then Microsoft and Apple have always had a
very contentious, yea acrimonious relationship, like they were constantly butting heads,
and that's not really true. In fact, there were a
lot of times throughout for a long time they were
they were really trying to help each other out. Yeah,
they were working together because when you think about it,
(12:49):
they're in two they were in two different businesses. Okay,
So you had Apple that was developing all of their
own hardware and software and Microsoft was just software. So
it wasn't like they were wret competition with one another.
Especially in those early days. They were all looking at
a burgeoning industry and saying, how can we make this grow? Yeah,
and everyone was trying to make money. By working together,
(13:11):
you can make more money yea. Um speaking about money. Uh.
In eight uh, Microsoft sales of Basic eighty eight alone
exceeded one million dollars, so incredible. The company itself has
been around essentially two years. Depending upon how you wanted
to find the actual company, you could say as many
(13:33):
as three, but it really that that first year it
was really a partnership and not an official company at all.
So they've already hit one million in revenue and sales.
This is this is phenomenal. They also developed a programming
language for another early personal computer that has there are
people who love this machine. One of the Commodore is right, yep,
(13:55):
the Commodore Personal Electronic Transactor or PET, the Commodore PET.
So yeah, they developed the basic programming language for that
as well. The next year, nineteen seventy nine, that's when
they made their big move literally from from Albuquerque back
up to Washington State. Yep. Now they weren't they weren't
(14:15):
in their current headquarters yet. That's they hadn't quite moved
that far. They went into Bellevue, which was actually not
very far from where Paul Allen and Bill Gates grew up,
and they formed the consumer Products division of Microsoft. This
was an idea to development market retail products and to
provide support for customers, and they actually started to develop
(14:36):
their own in house game. All right, Microsoft Adventure came
out of that. Yeah, people who remember Adventure remember it fondly.
It was I mean, by any measure of today's standards,
it's an incredibly primitive game. But at the time it
was one of those things that people just fell in
love with, but that they they invested in this, they
tried to develop it, and ultimately they decided that it
(14:58):
wasn't really performing up to their expectations, so they eventually
folded it back into the overall company. Right right, During
that year, they grew from thirteen to twenty eight employees.
So then and Basic was was doing really well. It
was kind of on the verge of becoming the standard
language for for micro computers. Right. I think it's funny
thirteen to twenty eight employees. You could say within that
(15:19):
year they more than double size from thirteen to eight. Uh,
humble beginnings. Now, if you move up to the next year,
to nineteen eighty, that's when Bill Gates makes a very
famous hire. He hires his old buddy from Harvard, Steve Balmer,
(15:40):
and Steve Balmber becomes Microsoft's first business manager. Steve Balmer
was the salesman. He was the guy who was known
as he He just he understands the sales aspect. He
could build these relationships between different companies. He can develop
them because you know, most of Microsoft's business was really
in partnering with their companies, not so much uh directing
(16:03):
business directly at the consumer, right right, Yes, since as
we said, they were just creating software at the time.
It was you know, all convincing other people to uh yeah,
let them develop programming languages for their platforms. Things like
you know, the stuff that you would see that Microsoft
had a hand in. Where that was the stuff that
would come when you bought the computer you were buying,
(16:24):
Like when you bought an Apple too and you started
programming stuff, you were using the Microsoft programming language. But
it wasn't like you bought a computer and then you
ran out to grab the Microsoft copy of whatever software
it was. It was all packaged together. So the business
relationships were key in those early years with Microsoft. Yeah. Um,
speaking of those business relationships, in July, they entered an
(16:47):
agreement for the upcoming IBM PC. The code name of
this project was Chess. Yeah. IBM has a history with
Chess uh, they would actually at this point it would
be a future with chess because IBM Suh IBM would
famously u show that a computer chess champion could defeat
(17:07):
the human grand chess champion. But at any rate, Yes,
this this this code name project was for the developing
software and operating system information for an upcoming personal computer
developed by IBM and and and again Microsoft at the
time was not was not creating operating systems. This was
(17:27):
really kind of one of the first that was out there. Um,
they a Gates and Bomber wound up buying something called
QUDS Quick and Dirty operating System for about fifty grand, right,
and they wound up a repackaging it or recoding recoding.
They essentially used that as think of it as using
that as the foundation to build their own operating system
(17:50):
on top of So we don't mean to say that
they just took They just weren't bought one thing and
then repackaged it and then sold it. They definitely did.
Microsoft did change that, but that was the basis of
that operating system. Just as you would say that there
are lots of different Linux distributions out there that take
the basic Linux and then create something on top of
(18:11):
it that makes it makes it more usable for a
certain part of the audience, right right, But they renamed
it disc operating System and licensed it to IBM for
eight grand um, which which sounds like a small amount,
and it was even at the time a relatively small amount,
but um. But they also had an agreement to earn
on top of any any PC sales that the system
(18:33):
went on too. In addition to that, they were even
more savvy because they retained the licensing rights so that
they could license that same operating system to other manufacturers. Now,
for those who aren't aware, when the IBM compatible computers
started coming out, that these were machines that were built
by other companies besides IBM that could run the same
(18:56):
sort of software because they were using a very similar
or identical chip set to the IBM PC. So that
meant that Microsoft, because they retained this licensing agreement that
they could license other manufacturers, could provide the operating system.
So that meant that suddenly you had all these different
machines from different manufacturers that could do essentially the same
thing as the IBM PC, but because they were offered
(19:18):
by someone else and they were using perhaps different materials,
sometimes the price would be significantly lower. This is what
would eventually one of the factors I should say that
would eventually lead IBM to pull out of the consumer
PC market, because once this train got set in motion,
it really was hard to derail it. It meant that
(19:40):
IBM had to compete essentially against itself. They had invented
the approach that they wanted to take, and then everyone
else could just copy it. Um Apple, by the way,
had a very similar situation for a while after Steve
Jobs was politely asked to leave or he left on
his own, depending upon whom you ask uh, and then
(20:00):
Apple did a very similar thing where they actually licensed
out the Apple designed to other manufacturers. When Jobs came back,
he put a stop to that. Technically, I think it
had already kind of stopped before he came back, but
he definitely um So anyway, this was one of those
things where it was a great move for Microsoft. Maybe
not such a great move for IBM PC, but it
meant that Microsoft had guaranteed yet more revenue down the
(20:23):
line by licensing this operating system to other manufacturers. They
also started to develop their own hardware in the form
of special microprocessors, circuit boards that could allow the computer
computers that have are based around one particular design to
run programs that were built for other types of computers. So,
in other words, it's kind of like an emulator. So
(20:45):
you know, like if you had an Apple To computer
and I had an IBM computer and I had this
program I wanted you to be able to use, you
couldn't use it on your Apple TO. The architecture is
totally different. It just wouldn't work. So what Microsoft was
starting to do was build up microchips or or actually
circuit boards that you could insert into a computer, put
it in one of the computer's expansion slots. Yeah, and so, uh,
(21:08):
it wasn't like it was a magic pill that would
work on every computer. They had only a few specific
ones that would allow one type of computer to run
one type of other software. So, but it was an
interesting move that they were getting into hardware. This was
their first time of really doing that. Otherwise they were
just concentrating on code. Now. Um, then that's when we
(21:29):
actually get launch of ms DOS Microsoft disc Operating System. Uh,
and that's introduced on the IBM PC. UM and that's
also when Microsoft got a visit from a certain Mr.
Steve Jobs, and he Steve Jobs, arrived at Microsoft to
give them an early look at what would be the
Macintosh computer. This is one The Macintosh computer does not
(21:54):
come out until nineteen four, so this is several years
in advance of the debut of this computer. And it
just shows really that the development cycle for these kinds
of devices can take several years sure, and also just
shows the strength of the relationship at that stage in
the game. But you know, it's you know, being being
willing to show something that secretive at that point, and uh,
(22:18):
it was. It was kind of fun I think, um uh.
People were referring it to it as a wonderful machine
and eventually there would be a funny little acronym about that.
But I'll get to that in a little bit later.
So that same year Microsoft incorporated, but was still a
privately held company. They did not have an initial public
offering yet, and Gates was became the president and chairman
(22:40):
and Alan became the executive vice president. And by the
end of the year, the revenues hit sixteen million dollars
and they had a hundred and twenty eight employees. Yeah,
that's that's a great number for a computer programmer, A
hundred twenty eight, because it's falling into the pattern there.
Um In the Microsoft developed something internally called the Microsoft
(23:03):
Local Area Network or MILAN, and that was to connect
all their in house development computers together. So this was
essentially a very early computer network that Microsoft was using.
There had been other computer networks before this one, obviously,
I mean our ponnet existed at this time, and that
was a network of networks that was the predecessor to
(23:24):
the Internet. But this is an early implementation of computer networks.
And uh and at that time, a man named James
Town became the president and CEO of Microsoft. Bill Bill
Gates hired him to kind of take over the operational
duties exactly. Yeah. And this is something that we would
see throughout Microsoft's history as well, is that Bill Gates
(23:46):
really wanted to concentrate on developing business, to develop actual product.
And as he became more and more of a personality
um within I mean not just within the company, but
but in terms of of marketing power, you know that
the day to day stuff has never really interested him
I think as much as right, and and it just
meant that it took away time from the stuff you
(24:09):
really like to do, like to work on projects and
to uh to lead teams to develop new products. So,
I mean, we understand why he was why he was
doing this, but it was kind of an interesting move
that he he hires someone else from outside the company
to become the president CEOO right right. That was also
the year that work on Windows originally began under the
(24:31):
code name Interface Manager. Yeah. So, uh, that might also
surprise you because everyone remembers that when the Macintosh debut
in four that that the graphics user interface was such
a huge leap from the old days. Now, granted again
again they had seen that this early, these early prototypes
of the mac and also remember that the graphics user
(24:55):
interface wasn't that new. As it turns out, Xerox had
been working on that for several years. Precisely to the
average computer or the potential computer customer, it was revolutionary.
So two comes and goes, we get up to three.
That's when they actually announced that they're working on the
(25:16):
graphics user interface. Uh. At that same year, Paul Allen
is diagnosed with Hodgkins disease, so he ends up stepping
back from working full time at Microsoft. Simultaneously, Jamestown resigned
as the CEO. Yeah, and uh, and so a new
president and CEO comes on for Microsoft. His name is
(25:37):
John Shirley, and he came from the Tandy Corporation. I
remember Tandy Computers me too. I I read that and
I was like, Tandy, It's been so long since I've
seen that name that it was kind of brought back memories. Um.
And that's when Bill Gates became the He was essentially
the chairman of the board and the and and an
executive vice president, which is an interesting common nation. And uh.
(26:01):
And that's the same year that Microsoft word for MS
DOS one point oh launched. So we get our first
example of Microsoft's land breaking amazing word processor that I
could not stand for the longest time, which is what
I'm looking at my show notes on right now. Now.
(26:21):
I love it. Well, I mean not not not for
MS DOS one point, you know. No, we we've actually
upgraded from MS DOS one point. In the office. We
now are on Windows three point one. Uh. That's a
that's a joke. We get that next year around around
three By the way, they were just lots of software
agreements going on with Apple. Um, they were they were
(26:42):
both kind of just just really continuing that relationship and
helping each other out, which again is funny considering the
way the Night four iconic commercial comes into play. Well.
Also in n three the company hit fifty million dollars
in revenues employees at that point, phenomenal growth within the company.
That's when the Macintosh launches, and of course the famous
(27:04):
commercial was very much UM trying to to get that
Orwellian feeling, the idea of Uh, the IBM computer is
very very uniform and design and there's no personality there
and it's supposed to strip away anything that's fun or that.
The Macintosh was this creative powerhouse that yeah, and it's
(27:25):
for the individual who has exactly it's supposed to be.
For the rainbow connection, the lovers, the dreamers and me. Uh,
this was not necessarily a shot across the bow at Microsoft.
This was a shot at IBM. Again, one of those
things where we think back and like, but didn't Apple
hate Microsoft because of that? You know, think about that commercial.
(27:46):
That commercial was really aimed at the way IBM was
doing business, not at or the way IBM was was portrayed.
You know that, and that this is that's a business
computer that's where business you know, this is something that's
for the creative individual. Um. So it really wasn't a
shot at Microsoft. Uh. And then that's you know, Microsoft
actually ended up taking a big role in developing software
(28:09):
for the Macintosh program. A lot of those early programs
on the Mac came from Microsoft. And the program that
Microsoft engaged in for developing software for the Macintosh was
called sand This is that cute acronym. I was talking
about Steve's amazing new device. Yeah. So, I mean everyone
(28:30):
at Microsoft thought that Steve jobs and and the work
that he was doing over an Apple was pretty cool. Yeah.
So yeah. One of the software projects was Microsoft Excel,
which was the spreadsheet program that later would come to
the PC. It actually hit the Mac first, or the Macintosh,
I should say it shouldn't call it a Mac because
it's different type of computer, right right. They started actually
(28:53):
all the way back in two m in on an
agreement with Apple to create that spreadsheet program that would
become Excel eventually business graphics and also a database structure.
So the relationships tight right now. And uh and and
they were not allowed that they the terms of the
agreement where to um reserve it for Apple for a
year before Microsoft could use it themselves. All right, So
(29:15):
we're picking back up and we're in nine now, that's
the year that Microsoft Windows ships on Nove So this is, uh,
this is really a graphical extension of MS DOSS. It's
not really a full graphics user interface operating system in
its own right. It's more like something that gets kind
of piggybacked onto the MS DOSS operating system. So it's
(29:39):
a little different from the future versions of Windows. Really,
you have to get to two Windows three point one
before we start seeing a Windows operating system that looks
familiar to someone who who uses it today, right, right.
This was a very very basic first attempt there, but
it was successful and the company revenues hit about a
hundred and forty million dollars. They had up to uh,
(30:01):
what was en employees, so just under a thousand. At
this point, Bill Gates was becoming a very public figure
at the time. He was he was being shown on
the cover of all kinds of magazines, UM and uh
marketing campaigns, calling calling Microsoft, you know, like trying to
be the IBM of software and getting getting the concept
of a computer on every desk and in every home
(30:23):
we're starting to come out. Yeah, it's funny too, because
if you start looking back at some of the predictions
that people, even people like Bill Gates had about how
many computers would be in the home within X number
of years, the amazing thing was their predictions at the
time seemed as ambitious. Everyone was thinking, that is just
it's insane, who would who would need that? And then
(30:45):
ten years down the road, you'd realize that they were
being incredibly conservative. That you know, people weren't taking into
account things like Moore's law, which states that not only
are computers getting more powerful over time because we're able
to fit more dis elements upon one square inch of silicon,
but also that the price goes down because the manufacturing
(31:06):
processes get more efficient and we end up learning better
ways to build computers. So with prices going down and
the complexity coming down because people are figuring out better
ways of designing operating systems, it was pretty natural for
people to want to adopt computers. I mean, a lot
of these were things that people kind of wanted, but
they were a little intimidated by, especially in the early days,
(31:27):
because they didn't have that hobbyist mentality. Sure, sure, and
so it wasn't until these uh the these these gooey systems,
they have system graphic interface, I have no problem with.
So with with all of this money that they were
making and with this this kind of outrageous number of employees,
they relocated to Redmond, which was just outside Seattle, and
(31:47):
this is in fact where Microsoft makes its headquarters today.
They do, of course have corporate locations in other parts
of the world, but that's their home bases. And red
from from did not mentioned that we had moved on
time waits for no man or Microsoft marches on. Yes
it does. And uh so. Microsoft then also that year
(32:10):
held its initial public offering, the I p O. Now, this,
of course is when a private company becomes a publicly
traded company, and so ownership is then spread out through shares.
You can buy shares in the company and that represents
a certain percentage of ownership of that company. It opened
at one dollar per share and by the end of
that day the stock price was at twenty eight dollars
(32:32):
per share, So it showed a high level of confidence
in the company and not bad at all. And they
raised about sixty one million dollars, which at the time
was the most money any tech company had raised in
an I p O. Uh. Since then, of course, that
that's changed when even when you factor in things like inflation,
it's still not hasn't held up. But at the time
(32:52):
it was incredibly impressive. Now, that year they also introduced
Microsoft Works, which had based sick word processing, spreadsheet database,
and other functions all kind of wrapped up together, and
they held the first International Conference on CD ROM technology. Yeah, yeah,
I mean, you know, I'm pretty sure that I still
(33:14):
had five and a quarter inch floppies on my Yeah,
that a three and a half inch disk drive to
me was the future, let alone a c D. Now,
of course, what we're talking about here is that a
lot of the if you aren't familiar with the computers
from back in the eighties all the way up into
the early nineties, they used magnetic storage media like discs,
(33:36):
discs that had uh, these these little they were called
floppy disks, not necessarily because they were floppy, but that
was to differentiate from the hard disk that you would
have part as integrated part of a computer, right right,
and and and part part of the floppy disks was
in fact a I mean, the disc itself would usually
be rigid for um safety purposes. But the film, but
the film inside was it was a film, a magnetic film, right,
(33:59):
and so they they the original ones, well, original ones
came up in like seven inch seven points something inches,
but approximately as big as my civic, but five and
a quarter was the standard by the time I was
getting into computers. That was what the Apple two used,
and then three and a half inch discs. It's funny
because as the size of the disc went down, the
(34:19):
capacity and that was one of those things that as
a kid before I understood anything about computers, just confused
the heck out of me, Like, how is it that
this can hold more chapters of my dad's book than
this one? Doesn't matter, let's erase it, um, because I
have saves I want to make. Uh. Well, the CD,
of course, was going to blow all of that all
the water. The optical drive had the capacity to hold
(34:41):
way more information and access it much more quickly than
magnetic did, but not for a good few years. Yeah,
And this was an early early discussion where Microsoft could
see that the writing was on the wall and that
that was going to be an important technology and they
wanted to get on the forefront of that. Un a
new marketing manager joins Microsoft, and she would become very
important in the life of the co founder of the company. Right,
(35:04):
this is this is Melinda French um and uh, Melinda
French and Bill Gates and first met at a Microsoft
press conference event in Manhattan that year and she began
to work for the company and uh, and we can
I'm imagining that the little hearts appeared over their heads.
Shortly thereafter m Microsoft launched Windows two point oh that year,
(35:24):
and we're still not quite to the level where it's
a version of Windows that most of us would recognize.
And they also announced that they would release Windows or
Microsoft Excel for Windows, so now we would get Excel.
It would no longer be exclusive to the Macintosh computer.
It would now also come to any PC that could
run Windows. And they also bought a company called Forethought Incorporated,
(35:48):
which developed a presentation software called power Point, so that
the if you've ever seen a power point presentation, you
know it's it's designed so that you create slides which
you can use their print as sheets of paper. You
could in the old days, print them as slides and
put them in a slide projector because I used to
do that I'm old, or you just use them on
(36:12):
your computer and you project them digitally for you know,
one of those typical presentations, usually standing up on a
stage and you have a lectern there and a little
clicker in your hand, and I've done this way too
many times. By the way, power Point they actually bought
the company that developed it, and they saw this as
an opportunity to kind of bring power Point into the
(36:33):
suite of productivity software that they had been developing in
house since their early days. So all that word processing
and spreadsheet they were saying, you know, this is a
good business for us to be in. It's it's more
and more offices in the United States and around the
world are starting to incorporate computers into their everyday experiences.
And if we're the ones who are creating the software
(36:54):
that allows them to get business done, we will do
crazy amounts of business. And it turned out to be really,
really true. Um, so they were jumping ahead on that one,
and they also became that they turned Forethought Incorporated from
an acquired company into a full division within Microsoft called
the Graphics Business Unit. That's also when they launched Microsoft Bookshelf,
(37:19):
which was a cd ROM, which again very early for
cd ROMs, and the cd ROM had ten reference works
on the disk, and this was the first real general
purpose application on cd ROM for PC users. Not that
many people could really take advantage of it at this time,
you know, just like any new technology. When CD ROMs
first hit the scene, it was expensive and it was
(37:41):
hard to find. I remember that it took me quite
a while just to get a CD player, much less
a CD ROM for my computer. So this is definitely
early days for that. But again, they wanted to be
on that bleeding edge of this technology. That next year,
that's when that little love Eve relationship between Apple and
(38:01):
Microsoft turns a little set work. Yeah, that was when
Apple filed a lawsuit against Microsoft. Um, they were they
were basically saying that Windows looked and felt too much
like um, like Apple's own graphics Centerface. Yeah, and which
which really kind of Apple had soared stolen from Xerox. Yeah.
That that that Xerox alto PC that we were talking about,
um small Talk being the graphics Centerface operating system that
(38:24):
they were using. Any time. A lot of people credit
the Macintosh for inventing the graphics user interface and the mouse,
which both of those actually came out of work at
Xerox and other research laboratories. But McIntosh was the first computer,
the personal computer to make it popular. Yeah, it was
the first commercially successful computer that used it. They really
(38:45):
designed it well. So I mean not to take anything
away from Apple, because they were able to make something
that appealed to consumers. Uh. Now they're saying that that
Microsoft essentially was copying them, and you know, pointing out, Hey,
Steve Jobs came over and showed you what we were
working on, and then you suddenly come up with a
graphics user interface. What's going on? Except they were doing
(39:07):
it in legally. So it probably wasn't as flippant as that.
The lawsuit would last six years and eventually the court
would rule against Apple and say that Microsoft did not
there wasn't enough evidence that Microsoft had actually copied Apple's approach,
and so this this would eventually turn out to be
(39:28):
a fruitless effort on the part of Apple. And it
was not the only time that Apple and Microsoft would clash, obviously,
certainly not. Also, Microsoft became the world's largest PC software
company based on sales, so they were doing pretty good. Yeah,
they were not not too shabby. Business is booming. In nine,
(39:48):
they released Microsoft Office one point oh, both on standard
discs and on CD rum. Uh so Microsoft Office at
one point oh. This again is the beginning of the
productive any software suite that many of us are familiar with.
I've been using some version of Microsoft Office for what year?
(40:09):
Is it? Probably fifteen years now? Um? Maybe maybe more
than that. Actually, way longer than that now that I
think about it. But it was one lotus for a
long time. Did I use word perfect as my word
processing program of choice for ages on purpose? Well, I
(40:30):
preferred it. I knew that you if you wanted to
bowl the word, you hit F eight. Um. And and
so anyway, this the suite would become incredibly important to Microsoft.
It becomes one of their flagship products. If you think
about Microsoft as far as the software side, their flagship products,
I would argue are Windows and Office. Those are the
(40:52):
two big ones. Lots of other stuff obviously, but those
are the two I think that are kind of the
cornerstone for what Microsoft's offtware is all about. Absolutely. And
also this was this was one of their big moves
in in in bundling software products together, which would become
very important and kind of legally contentious Yes later on
(41:13):
Yes nineteen, Microsoft then ships Windows three point oh. So
here's the version of Windows that starts to look more
like the stuff that we're used to. And within two
weeks of launching Windows three point oh, the company has
sold a hundred thousand copies. Now, that probably doesn't sound
like a lot to you, but keep in mind this
is before computer adoption has really grown that large. Not
(41:37):
everyone has an IBM compatible computer, uh, and those who
do not everyone has an IBM compatible computer capable of
running Windows three point oh. This was one of those
things that I found, uh initially off putting by graphics
user interfaces. I was. I was brought up learning DOSS,
so I used DOSS all the time. I did not
(41:58):
like the idea of a graphics user interface, not because
I thought that this was going to be, you know,
dumbing down my experience, but rather that I thought, why
would I want to dedicate so many of my computer's
resources to running an operating system when I'm perfectly capable
of doing this on my own. Yeah, I just want
to be able to play my games. But then more
and more of my games became Windows games, not DOSS games,
(42:21):
and eventually I was forced to become one of the
herd of sheep. Now, I say that all mostly in jest.
At the time, I was very bitter about it. These days,
I mean, if you were to put me in front
of a DOS computer now, I'd be lost. Ye. Not
that I was ever particularly found in DOSS. I I
never I never really used it myself. I would just
(42:43):
you would. All you would hear from me, Lauren, from
my desk is where's the start button? Yeah, that's kind
of the only thing I would be able to say
over and over and cry. I'd cry too. Um, But
at any rate, three point oh launches sell hoppies. Only
fifteen of households back in even had a computer according
(43:05):
to the Bureau of Labor Statistics, so not that many
people have computers, so a hundred thousand copies is a
significant number. Microsoft decides at that point that they will
focus exclusively on developing Windows, rather than supporting both Windows
and further versions of DOSS also known as OS two. Now,
this is not great news for IBM. They were not
(43:28):
terribly happy with this. But Microsoft said, you know, we
see where the future is. The future is going to
be in this graphic user interface. UM. As more and
more people adopt these computers, they're going to want something
that's that's more accessible than a blinking cursor where they
have to figure out what code they need to type
in in order to get stuff done. So they said,
this is what we're gonna do. We're gonna just completely
(43:49):
focus on developing the Windows opbring system. That same year,
John Shirley retired as president and CEO and he was
replaced by Michael R. Hollman. For Yeah, which is interesting, right,
I mean you're going from Tandy, which was another you
know that was at least within the industry, to Boeing,
which you could argue was you know, related to but
(44:09):
outside the industry of computers. However, of course, keeping in
mind this is for the person who's doing the administrative,
the the corporate oversight of the day to day workings
of a company, not actually talking about share. Yeah, so
keeping that in mind, it makes more sense. Um. Now
at that point, uh, it had been fifteen years since
(44:31):
the company had been founded, So fifteen years after the
founding of the company, they were in a pretty secure
place financially. They had had a very successful I p
O and revenue was at a staggering one point one
eight billion dollars. They were the first software company to
get over a billion dollars in revenue a year. This
(44:54):
was also the year that the FTC, the Federal Trade Commission,
began kind of poking into um some antitrust kind of
kind of issues, right, So they didn't they didn't launch
an official investigation yet. I just thought, Hey, that sounds
kind of like Microsoft might be muscling out some competition,
Like you were saying, Lauren, this idea of bundling software.
(45:16):
I mean, it makes sense from someone who wants to
have a lot of uh utility in their software and
have cross utility, right, and especially if you've already I'm
like many of the programs and the Microsoft Office Suite,
a lot of the base coding is is the same
UM and and it's and it's built up, you know,
just in different ways. Well, especially when you get later
(45:36):
on into office where you want to do something like
embed a chart that you create an Excel into a
power Point spreadsheet, but you don't want to just copy
and paste a picture and you want it to be functional, yeah,
kind of like a living chart. So that way, let's
say that as it gets closer to your time to
present whatever the presentation is, that your numbers get updated. Well,
(45:58):
instead of having to go in and UH and copy
that picture again and then paste it back into a
new version of the presentation. If if your systems are connected,
then what you can do is go into the Excel
sheet where you generated the image in the first place
and change the numbers there and it updates. Right. Yeah,
so now great, that is later on. That's not the
(46:18):
earliest version of Microsoft Office. Yeah. And and in these
days that the FTC was really looking at, UM, the
relationship that IBM and Microsoft had and UH and the
way that DOS was being propagated across all IBM computers
at the time. Right, It's it's one of these things
where they start wondering if there's maybe some anti competitive
practices being put in place, so that would become a
(46:43):
more important part of Microsoft's history. Shortly thereafter, UH in
ninety two, that's when Forbes proclaims that Bill Gates is
the richest man in America for the first time, at
six point three billion dollars in net worth. UH. Bill
Gates would end up being richest man in America several
times UM over the next several years and uh, it
(47:07):
would flip flop back and forth between other people, and
eventually he becomes the richest man in the world a
couple of times too, so pretty phenomenal. Mike Hallman at
that point leaves Microsoft. Uh you know, remember he had
just joined as the president back in two he leaves.
So at that point the company does something interesting. Rather
(47:29):
than a point a new president, they created what they
called the Office of the President, which was held by
three executives. Three executives would be the people manning the
Office of the President. So it's almost like a triumbrit.
It's a tribunal. Uh you have what brutus? Uh you
have uh? Uh no, no, it was so the officer
(47:52):
of the President was held by three executives. In those
first three were Steve Balmer, so, uh he had stuck
with the company all this time and now was the
worldwide state else in support guy, and that's the part
that he oversaw. As part of the Office of the President.
You also had Frank Goddet, who oversaw worldwide operations of
the company, and Mike Maples who saw oversaw the worldwide
(48:15):
products for the company. All three of them, as the
Office of the President reported directly to Bill Gates and
that same year Microsoft's stock split. And a stock split
is when the value of a company keeps on growing
but they want to be able to have It's it's
kind of complicated, but the idea is that you have
(48:35):
when you first have the the I p O. You
have a certain amount of stock, certain number of shares
that are available, right, and each share is worth a
certain amount. And when you multiply those two numbers together
the number of shares times the value of the share,
that kind of gives you a valuation of the company. Uh.
If a company's value continues to increase, you may consider
splitting up that stock so that instead of the stock
(48:57):
being incredibly expensive, you have decrease the value of individual stocks. However,
in order to compensate your shareholders, you give them more stock,
So it could be this would be the first in
a series of several splits. So essentially, what it means
is it allows the company to increase in value without
stock price getting so high that no one wants to
(49:18):
buy or sell it. Uh, I'm drastically oversimplifying. So all
of my my business majors out there who are screaming
at me, maya culpa. But and for those of you
who aren't the liberal arts majors, I'm sorry. Uh So anyway, Um,
the stock split showed that this was a company that
(49:38):
was going to continue to grow in value, or at
least that was the that was the hope, as it
turns out, hope that was well placed. And Bill Gates
that year received an award from the President of the
United States, George Bush Yes, the first George Bush Yes,
and that award was the National Medal of Technology for
Technological Achievement in Technology and Tech. I may added a
(50:00):
couple of there there were two technologies in the metal
of Technology for technological Achievement, which I think is already
so uh you know, it's it's self referential. Uh. In
n three, they released the Windows in T platform, which
was an enterprise software. Enterprise of course means companies. When
(50:20):
you talk about enterprise software, you're talking about software is
specifically designed for other corporations as opposed to individuals. So
that's what Windows in T was, and it's kind of
a client server solution. Um. And then at that that
same year, IBM saw Microsoft overtake it in corporate value.
So the company Microsoft becomes more valuable from a sheer
(50:45):
numbers perspective than IBM. That's amazing. The the huge company
for which Microsoft got its most of its early revenue
apart from you know, the early early days with Apple,
is now worth less than the actual software company. That's
pretty phenomenal. That was that was on the slightly less
(51:06):
awesome route. The investigation that the FTC had sort of
begun got passed over to the Department of Justice, which
basically meant that it was getting it was getting serious. Yeah,
now now it's gone from I wonder if those people
are up to no good to those people are probably
up to no good, and we're going to look into
it much more seriously. This would not be the only
(51:26):
time that Microsoft would deal with these sort of things.
One of the one of the issues you get when
you get really, really successful in your industry is sometimes
you might, through your certain practices, discourage other people from
entering that industry, whether you mean to or not. That
can be seen as anti competitive, and that can get
(51:46):
the government governments from around the world really on your case.
Because again the United States, we're talking about the U
S specifically here, but they are not the only entity
that has looked into fire. We will get into that
a little bit more later on. That's the same year.
Also three is when company introduced Microsoft in Carter. It's
a multimedia encyclopedia on CD. Did you ever see the
(52:09):
Incarda I owned in CARTERA I owned in Carta as well.
I remember everyone owning card I think there anyone I
think you were required to own in Carta like there
were there were a couple. If you owned a computer
that was running Windows, you are essentially required to own
in CARTERA and possibly four hundred and seventy three A
(52:29):
O L discs. I had approximately that many. So yeah,
I just get sent in the mail all the time.
I used to make costumes out of them. It was great.
But it seems, I mean in Carda seems like the
incredible future to me. That was That was one of
those early things that I remember, I mean not not
you know, one of those original things that I remember
thinking like, like, these computer things are really here and
(52:49):
they're really doing something interesting. Yeah. That keep in mind
in Carter this is before we as Plebeian people have
access to the Internet. We didn't have Wikipedia. There was
no Worldwide Web at this point, so or at least
roll by web was so young in n that hardly
anyone knew about it. Technically, there was a worldwide web
(53:10):
because Tim berners Lee had actually invented the first web page,
but everyone had a O L discs And yeah, I
can remember. I think the first time I saw a
web page was maybe maybe late ninety three or early
ninety four. It was when I was in college dating
myself here. I was in college, and I remember seeing
(53:31):
someone navigating using something called a web browser to navigate
a web page, and I took a look at and
it took a really long time for it to load up,
and it was pretty primitive graphics, and I thought, I'll
never take off and I'll just use my tail knit program.
Speaking of dating yourself, people who were dating at the time,
I got interesting segue. Bill and Melinda got married. Yep,
(53:59):
that was there was obviously a very important time for
for the two of them, and they have created together
not only an amazing family but also a phenomenal philanthropic
organization that we'll talk about in our next episode. Before
we get to that, however, I did want to mention
that was the year that Microsoft agreed to a federal
(54:23):
consent decree, which was the outcome of this entire FTC
Department of Justice investigation at the time. And what they
were doing was they had been uh entering into these
license agreements in which in which PC makers had been
agreeing to pay a licensing fee for DOSS with each
(54:45):
model of a computer ship, even if that particular computer
did not contain UM interesting. So that was and and
and the federal government was like that, that's not cool, guys,
could you knock that off? So so, so so that was
and and that was kind of the first thing. And
this would come back in a minute, um, well, more
(55:06):
like in several days, because we're going to take a
break here, ladies and gentlemen. This is gonna be the
end of part one of the Microsoft story because we
have so much more to say and we don't want
to have a two and a half hour long episode
about it. So we're gonna take a quick break here
for us and slightly longer one for you. And uh,
if you guys have any suggestions for things that we
(55:27):
should cover on future episodes of Tech Stuff, whether it's
a company, a type of technology, type of software, personality
in tech, or you just want to hear us take
yet another film and deconstruct it in our eyes of
tech and science. Let us know. Write us. Our email
address is tech stuff at Discovery dot com, or get
in touch with us on Twitter or Facebook. You can
(55:49):
find us there with the handle tech stuff. Hs W
and Lauren and I will talk to you again really soon.
For more on this and thousands of other topic is
it how stuff works dot com
Get in touch with technology with tech Stuff from Stuff
dot Com. Everyone, and welcome to tech Stuff. I'm Jonathan Strickland,
and and we're going to do another one of our
episodes where we start to focus on a company. This
will be at least a two partner because the company
has been around well since the mid seventies, so they're
(00:25):
kind of important. Yeah, it made some big contributions to
the world of tech as it turns out. We're talking
of course about Microsoft and UM. To really look at
the origins of Microsoft, we're gonna go back quite a bit,
back to nineteen fifty five when on October a certain
Bill Gates was born to a wealthy family in Washington, UM.
(00:47):
He came from a not so humble background. He actually
was born into a very well to do family, UM,
and that gave him certain advantages. He was able to
take advantage of a pretty pretty interesting education. He went
to Lakeside, which was a private school, and that's where
he met Paul Allen, who would also be become important
(01:09):
to this company. Yea Paul Allen who was two years
older than Bill Gates. So it was interesting that these
two struck up a friendship. They were separated by a
couple of years in age and in grade, but both
of them became fascinated with a machine at the school.
It's a teletype machine. And you may, oh, my, Drew,
geese have forgotten what these machines are like. Things changing,
(01:30):
so scory and everyone quick to forget. But teletype machine. Yeah. Essentially,
it was using telephone lines and you could send information
across and it would type out the information. And they
began to um kind of figure out ways of playing
with it and learning how it worked and manipulating it. Supposedly,
according to Wire, the pair exhausted the school's annual budget
(01:52):
for time on this computer within a matter of weeks,
and they soon started to um work with a with
a local computer contract center to um find software bugs
in exchange for extra time on the computers. Interesting, so
they like the computers so much that they would work
in orders for them to be able to continue to them.
(02:13):
In nineteen seventy two, according to the BBC, Gates used
the teletype machine to manipulate school schedules for a purpose
that I find incredibly creepy. It was to to try
to find the get the right girls a k a.
The girls that he thought were kind of pretty into
his classes with him. Yeah. Essentially, you know, he was
(02:33):
just anyone who had who was wanting certain classes. He
wanted to make sure that that the right mix of
people were in the classes. He was in the right
makes of people, being all the cute girls social engineer. Yeah,
little creepy, little creepy. However, in ninety three, he yeah,
he graduated, graduated, began to attend Harvard, and that's where
(02:56):
he met someone else who would become really important in
the Microsoft story, Mr Steve Balmer. They lived down the
hall from each other in the same dormitory. Right, So
then we move over into nineteen seventy four, moving right along,
and uh, that's when the magazine Popular Electronics published its
article about the Altair hundred. It was called the world's
(03:20):
first micro computer kit to rival commercial models. Um, and
yeah it was. It was talking about the Altaire and
Intel's U four zeroes Ero four chip. And yeah, this
was this was the dawning of the personal computer age.
The Altair was, of course a kit that you could
order and then build your own computer. Now, this was
(03:41):
incredibly early on, so micro computers at this point were
pretty primitive and there there wasn't a whole lot of
software that you can run on them, because, uh, up
until this point, computers were really pretty much only in
research facilities, in in large companies that needed databases. They weren't. Again,
you kind of had to rent time on them if
(04:02):
you're going to really use them on a personal level,
all right, and there wasn't much to do on a
personal level. I mean, these were really machines meant to
do calculations. There just weren't. I mean, it was not
like it's not like there's a lot of word processing
software even let alone games. Although of course anytime you
have a machine and you've got people and they are
(04:23):
smart and they are board, they will make games. Are
They're small things that are easy, too easy to program.
So right, So but the al tear comes out, and uh,
the company that made the al Tear mits m I
t S, invited readers to submit programming languages for the computer.
Now in early nine as in like the day or
(04:46):
two days after this this issue had hit the supposedly, um,
I think Paul Allen came like came like running down
the hall and was like, well check this out. Yeah,
he had he had the copy of the magazine, and
he said, let's do this, let's build a computer language
for the al tear, and we can we can be
the ones to to make history. And they, from at
(05:08):
least one account, the account that I read in the BBC,
they apparently told myths that they in fact had the
programming language before they had you know, built it. But not.
It's not to say that they didn't have the skills.
They certainly did. They just they just didn't have the
work done yet. But they pretty much committed themselves to it.
And then over the course of several hours, maybe a
(05:30):
couple of days, they built their computer language, which was
a variant of the Basic computer language, which has been
invented in the sixties, but this was the first one
for this particular chip set. Yes, they had actually been
playing with Basic way back in high school together, right,
So now they created a simulator of the al tear
on another machine, the deck PDP ten they had one.
(05:53):
They ended up creating an emulator for the al tear
so that they could actually test this programming language because
otherwise they have no way of knowing if it would
work or not. They didn't have access to an al tear,
so uh. They then submit this programming language to MITS
and uh, and it's met with some approval, so much
so that Paul Allen was made the VP and director
(06:15):
of software for the company. So I would say that
that was a rousing success. Yeah, yeah and uh. Also Bill,
Bill Gates and Paul Allen both moved to UM to
its headquarters in Albuquerque. Ye Albuquerque, which just makes me
think of weird all Yankovic. But anyway, or bugs Bunny
should have taken that left in Albuquerque. But so on.
(06:35):
On November twenty nine, Bill Gates sends a letter to
Paul Allen, and the letter contains a certain name in it.
It is micro dash Soft, which is the earliest known
written reference of the company name. Although they had been
talking about this for a while beforehand, according to most interviews,
but this was the first time, the first the earliest
(06:56):
written reference anyone has found. They had also tossed around
something like Gates and Allen, Inc. Or something like that.
Exciting stuff, you know. So they came up with this idea,
and by the end of the year, the partnership that
would eventually become Microsoft had earned sixteen thousand and five
dollars in revenue and had a grand total of three employees. Uh.
(07:20):
When you get to the next year nine, this is
a huge year in personal computers, a huge year that
people probably at the time could not have predicted would
turn out to be so instrumental in shaping what the
future of personal computing would be. This is the same
year that two other individuals, uh some some rather prankster
(07:44):
ish types, the Steve Steve Jobs and Steve West. They
they had decided to uh work together to build their
own personal computer. Now keep in mind, Gates and Allen
aren't building computers. They're building not not even not even
operating systems, right, not even Yeah, this is this is
before personal computers really had what we would call an
operating system. This is when you would put a uh
(08:06):
some you would hook it up to some form of media,
and then you would use a a ligne command to
run a program. But that's about it. There's it's it's
not so advanced as to call it an operating system.
So Steve Jobs and Steve Wozniak are designing their own computer,
which the first one was called the Apple One, which
(08:28):
didn't you know, they only made a few hundred of them,
as I recall, and the original price was six hundred
sixty six dollars and sixty six cents for the Apple one.
But they were they got to meet with Bill Gates
and Paul Allen. In fact, uh uh they were chatting
early at the Palo Alto Homebrew Computer Club about the
(08:51):
possibility of using programming languages. So and even at the
earliest days, Microsoft and Apple had a relationship. It wasn't
a formal relationship by that point, but they knew each other.
You know, people knew one another in these communities that
this homebrew club was. That was a big organization. I mean,
maybe not big, but but certainly a lot of people
who had become key players in the industry over the years.
(09:14):
Uh started out started out there, and for for a
large part it was it was hobbyists at the time,
but uh folks, folks like h like like Steve and
Bill where um much more business minded, I think than
than most other kids hanging out. Yeah. Yeah, they definitely
had a bigger picture in mind than just hey, this
is this is this is really this is a really
(09:34):
cool device. I want to see what else I can
do with it. Some some people were more than content
to just keep it a hobby, but others were seeing
the potential for this to be a game changer to
be in its own industry. Well. In March of ninet,
Bill Gates delivered the opening address at the first annual
World I'll Tear Computer Convention, which as far as I know,
(09:56):
is no longer happening. I've never been. Don't think that
I would wonder what it would look like if you
were to attend a World Altare computer convention in Paul
Allen resigned from midst that year in my ts that
year to work full time on the Microsoft project, and
on November twenty six, nineteen seventy six, Allen and Gates
(10:17):
trademarked the term Microsoft. They had since lost the hyphen. Yeah,
now it's just Microsoft, no hyphen, just one word. That's same.
Around that same time, Bill Gates officially drops out of Harvard.
He had been uh, he took a break for a
little while, then he went back, and at this point
he had decided that he wanted to concentrate Microsoft um.
(10:38):
Gates also writes an open letter to hobbyists where he
addresses the issue of software piracy. Now keep in mind,
this is the earliest days of personal computing, and already
there was this this interesting, interesting dichotomy. Okay, you had
people who wanted to have software freely available, which would
(10:58):
then encourage more people to get into the hobby and
more innovation. And then you had the people who are
developing software who are saying, in order for me, don't
let us make money, then we can't continue making cool
stuff for you to play with. So yeah, there's no
incentive for me to put in work if I'm not
getting any reward from it. I mean, I love this
as much as you guys do, but a guy has
(11:20):
got to eat. I dropped out of Harvard, so uh
so he wrote this open letter to to address these
problems of software piracy, which is it's kind of funny
because when you think about it, you know, we were
more than three decades later, and we still have the
same issues. It's now just on a larger scale scale.
Exactly that next year nine, Bill Gates becomes the president
(11:44):
and Paul Allen the vice president of Microsoft is now
an official company and before they were considered to be
general partners in this, and this was the first time
that that they delineated their their responsibilities within the come
right and Gates at this point owned more of Microsoft
than Alan. Actually that's true all the way through the history.
(12:06):
So Gates had a greater part of the ownership of
the company, and they begin with a license deal to Apple.
They were the ones who provided the Apple version of Basic,
called Microsoft apple Soft Basic. So that's interesting to me
too that the programming language for the Apple two computer
(12:29):
was in fact developed by Microsoft, because a lot of
people think then Microsoft and Apple have always had a
very contentious, yea acrimonious relationship, like they were constantly butting heads,
and that's not really true. In fact, there were a
lot of times throughout for a long time they were
they were really trying to help each other out. Yeah,
they were working together because when you think about it,
(12:49):
they're in two they were in two different businesses. Okay,
So you had Apple that was developing all of their
own hardware and software and Microsoft was just software. So
it wasn't like they were wret competition with one another.
Especially in those early days. They were all looking at
a burgeoning industry and saying, how can we make this grow? Yeah,
and everyone was trying to make money. By working together,
(13:11):
you can make more money yea. Um speaking about money. Uh.
In eight uh, Microsoft sales of Basic eighty eight alone
exceeded one million dollars, so incredible. The company itself has
been around essentially two years. Depending upon how you wanted
to find the actual company, you could say as many
(13:33):
as three, but it really that that first year it
was really a partnership and not an official company at all.
So they've already hit one million in revenue and sales.
This is this is phenomenal. They also developed a programming
language for another early personal computer that has there are
people who love this machine. One of the Commodore is right, yep,
(13:55):
the Commodore Personal Electronic Transactor or PET, the Commodore PET.
So yeah, they developed the basic programming language for that
as well. The next year, nineteen seventy nine, that's when
they made their big move literally from from Albuquerque back
up to Washington State. Yep. Now they weren't they weren't
(14:15):
in their current headquarters yet. That's they hadn't quite moved
that far. They went into Bellevue, which was actually not
very far from where Paul Allen and Bill Gates grew up,
and they formed the consumer Products division of Microsoft. This
was an idea to development market retail products and to
provide support for customers, and they actually started to develop
(14:36):
their own in house game. All right, Microsoft Adventure came
out of that. Yeah, people who remember Adventure remember it fondly.
It was I mean, by any measure of today's standards,
it's an incredibly primitive game. But at the time it
was one of those things that people just fell in
love with, but that they they invested in this, they
tried to develop it, and ultimately they decided that it
(14:58):
wasn't really performing up to their expectations, so they eventually
folded it back into the overall company. Right right, During
that year, they grew from thirteen to twenty eight employees.
So then and Basic was was doing really well. It
was kind of on the verge of becoming the standard
language for for micro computers. Right. I think it's funny
thirteen to twenty eight employees. You could say within that
(15:19):
year they more than double size from thirteen to eight. Uh,
humble beginnings. Now, if you move up to the next year,
to nineteen eighty, that's when Bill Gates makes a very
famous hire. He hires his old buddy from Harvard, Steve Balmer,
(15:40):
and Steve Balmber becomes Microsoft's first business manager. Steve Balmer
was the salesman. He was the guy who was known
as he He just he understands the sales aspect. He
could build these relationships between different companies. He can develop
them because you know, most of Microsoft's business was really
in partnering with their companies, not so much uh directing
(16:03):
business directly at the consumer, right right, Yes, since as
we said, they were just creating software at the time.
It was you know, all convincing other people to uh yeah,
let them develop programming languages for their platforms. Things like
you know, the stuff that you would see that Microsoft
had a hand in. Where that was the stuff that
would come when you bought the computer you were buying,
(16:24):
Like when you bought an Apple too and you started
programming stuff, you were using the Microsoft programming language. But
it wasn't like you bought a computer and then you
ran out to grab the Microsoft copy of whatever software
it was. It was all packaged together. So the business
relationships were key in those early years with Microsoft. Yeah. Um,
speaking of those business relationships, in July, they entered an
(16:47):
agreement for the upcoming IBM PC. The code name of
this project was Chess. Yeah. IBM has a history with
Chess uh, they would actually at this point it would
be a future with chess because IBM Suh IBM would
famously u show that a computer chess champion could defeat
(17:07):
the human grand chess champion. But at any rate, Yes,
this this this code name project was for the developing
software and operating system information for an upcoming personal computer
developed by IBM and and and again Microsoft at the
time was not was not creating operating systems. This was
(17:27):
really kind of one of the first that was out there. Um,
they a Gates and Bomber wound up buying something called
QUDS Quick and Dirty operating System for about fifty grand, right,
and they wound up a repackaging it or recoding recoding.
They essentially used that as think of it as using
that as the foundation to build their own operating system
(17:50):
on top of So we don't mean to say that
they just took They just weren't bought one thing and
then repackaged it and then sold it. They definitely did.
Microsoft did change that, but that was the basis of
that operating system. Just as you would say that there
are lots of different Linux distributions out there that take
the basic Linux and then create something on top of
(18:11):
it that makes it makes it more usable for a
certain part of the audience, right right, But they renamed
it disc operating System and licensed it to IBM for
eight grand um, which which sounds like a small amount,
and it was even at the time a relatively small amount,
but um. But they also had an agreement to earn
on top of any any PC sales that the system
(18:33):
went on too. In addition to that, they were even
more savvy because they retained the licensing rights so that
they could license that same operating system to other manufacturers. Now,
for those who aren't aware, when the IBM compatible computers
started coming out, that these were machines that were built
by other companies besides IBM that could run the same
(18:56):
sort of software because they were using a very similar
or identical chip set to the IBM PC. So that
meant that Microsoft, because they retained this licensing agreement that
they could license other manufacturers, could provide the operating system.
So that meant that suddenly you had all these different
machines from different manufacturers that could do essentially the same
thing as the IBM PC, but because they were offered
(19:18):
by someone else and they were using perhaps different materials,
sometimes the price would be significantly lower. This is what
would eventually one of the factors I should say that
would eventually lead IBM to pull out of the consumer
PC market, because once this train got set in motion,
it really was hard to derail it. It meant that
(19:40):
IBM had to compete essentially against itself. They had invented
the approach that they wanted to take, and then everyone
else could just copy it. Um Apple, by the way,
had a very similar situation for a while after Steve
Jobs was politely asked to leave or he left on
his own, depending upon whom you ask uh, and then
(20:00):
Apple did a very similar thing where they actually licensed
out the Apple designed to other manufacturers. When Jobs came back,
he put a stop to that. Technically, I think it
had already kind of stopped before he came back, but
he definitely um So anyway, this was one of those
things where it was a great move for Microsoft. Maybe
not such a great move for IBM PC, but it
meant that Microsoft had guaranteed yet more revenue down the
(20:23):
line by licensing this operating system to other manufacturers. They
also started to develop their own hardware in the form
of special microprocessors, circuit boards that could allow the computer
computers that have are based around one particular design to
run programs that were built for other types of computers. So,
in other words, it's kind of like an emulator. So
(20:45):
you know, like if you had an Apple To computer
and I had an IBM computer and I had this
program I wanted you to be able to use, you
couldn't use it on your Apple TO. The architecture is
totally different. It just wouldn't work. So what Microsoft was
starting to do was build up microchips or or actually
circuit boards that you could insert into a computer, put
it in one of the computer's expansion slots. Yeah, and so, uh,
(21:08):
it wasn't like it was a magic pill that would
work on every computer. They had only a few specific
ones that would allow one type of computer to run
one type of other software. So, but it was an
interesting move that they were getting into hardware. This was
their first time of really doing that. Otherwise they were
just concentrating on code. Now. Um, then that's when we
(21:29):
actually get launch of ms DOS Microsoft disc Operating System. Uh,
and that's introduced on the IBM PC. UM and that's
also when Microsoft got a visit from a certain Mr.
Steve Jobs, and he Steve Jobs, arrived at Microsoft to
give them an early look at what would be the
Macintosh computer. This is one The Macintosh computer does not
(21:54):
come out until nineteen four, so this is several years
in advance of the debut of this computer. And it
just shows really that the development cycle for these kinds
of devices can take several years sure, and also just
shows the strength of the relationship at that stage in
the game. But you know, it's you know, being being
willing to show something that secretive at that point, and uh,
(22:18):
it was. It was kind of fun I think, um uh.
People were referring it to it as a wonderful machine
and eventually there would be a funny little acronym about that.
But I'll get to that in a little bit later.
So that same year Microsoft incorporated, but was still a
privately held company. They did not have an initial public
offering yet, and Gates was became the president and chairman
(22:40):
and Alan became the executive vice president. And by the
end of the year, the revenues hit sixteen million dollars
and they had a hundred and twenty eight employees. Yeah,
that's that's a great number for a computer programmer, A
hundred twenty eight, because it's falling into the pattern there.
Um In the Microsoft developed something internally called the Microsoft
(23:03):
Local Area Network or MILAN, and that was to connect
all their in house development computers together. So this was
essentially a very early computer network that Microsoft was using.
There had been other computer networks before this one, obviously,
I mean our ponnet existed at this time, and that
was a network of networks that was the predecessor to
(23:24):
the Internet. But this is an early implementation of computer networks.
And uh and at that time, a man named James
Town became the president and CEO of Microsoft. Bill Bill
Gates hired him to kind of take over the operational
duties exactly. Yeah. And this is something that we would
see throughout Microsoft's history as well, is that Bill Gates
(23:46):
really wanted to concentrate on developing business, to develop actual product.
And as he became more and more of a personality
um within I mean not just within the company, but
but in terms of of marketing power, you know that
the day to day stuff has never really interested him
I think as much as right, and and it just
meant that it took away time from the stuff you
(24:09):
really like to do, like to work on projects and
to uh to lead teams to develop new products. So,
I mean, we understand why he was why he was
doing this, but it was kind of an interesting move
that he he hires someone else from outside the company
to become the president CEOO right right. That was also
the year that work on Windows originally began under the
(24:31):
code name Interface Manager. Yeah. So, uh, that might also
surprise you because everyone remembers that when the Macintosh debut
in four that that the graphics user interface was such
a huge leap from the old days. Now, granted again
again they had seen that this early, these early prototypes
of the mac and also remember that the graphics user
(24:55):
interface wasn't that new. As it turns out, Xerox had
been working on that for several years. Precisely to the
average computer or the potential computer customer, it was revolutionary.
So two comes and goes, we get up to three.
That's when they actually announced that they're working on the
(25:16):
graphics user interface. Uh. At that same year, Paul Allen
is diagnosed with Hodgkins disease, so he ends up stepping
back from working full time at Microsoft. Simultaneously, Jamestown resigned
as the CEO. Yeah, and uh, and so a new
president and CEO comes on for Microsoft. His name is
(25:37):
John Shirley, and he came from the Tandy Corporation. I
remember Tandy Computers me too. I I read that and
I was like, Tandy, It's been so long since I've
seen that name that it was kind of brought back memories. Um.
And that's when Bill Gates became the He was essentially
the chairman of the board and the and and an
executive vice president, which is an interesting common nation. And uh.
(26:01):
And that's the same year that Microsoft word for MS
DOS one point oh launched. So we get our first
example of Microsoft's land breaking amazing word processor that I
could not stand for the longest time, which is what
I'm looking at my show notes on right now. Now.
(26:21):
I love it. Well, I mean not not not for
MS DOS one point, you know. No, we we've actually
upgraded from MS DOS one point. In the office. We
now are on Windows three point one. Uh. That's a
that's a joke. We get that next year around around
three By the way, they were just lots of software
agreements going on with Apple. Um, they were they were
(26:42):
both kind of just just really continuing that relationship and
helping each other out, which again is funny considering the
way the Night four iconic commercial comes into play. Well.
Also in n three the company hit fifty million dollars
in revenues employees at that point, phenomenal growth within the company.
That's when the Macintosh launches, and of course the famous
(27:04):
commercial was very much UM trying to to get that
Orwellian feeling, the idea of Uh, the IBM computer is
very very uniform and design and there's no personality there
and it's supposed to strip away anything that's fun or that.
The Macintosh was this creative powerhouse that yeah, and it's
(27:25):
for the individual who has exactly it's supposed to be.
For the rainbow connection, the lovers, the dreamers and me. Uh,
this was not necessarily a shot across the bow at Microsoft.
This was a shot at IBM. Again, one of those
things where we think back and like, but didn't Apple
hate Microsoft because of that? You know, think about that commercial.
(27:46):
That commercial was really aimed at the way IBM was
doing business, not at or the way IBM was was portrayed.
You know that, and that this is that's a business
computer that's where business you know, this is something that's
for the creative individual. Um. So it really wasn't a
shot at Microsoft. Uh. And then that's you know, Microsoft
actually ended up taking a big role in developing software
(28:09):
for the Macintosh program. A lot of those early programs
on the Mac came from Microsoft. And the program that
Microsoft engaged in for developing software for the Macintosh was
called sand This is that cute acronym. I was talking
about Steve's amazing new device. Yeah. So, I mean everyone
(28:30):
at Microsoft thought that Steve jobs and and the work
that he was doing over an Apple was pretty cool. Yeah.
So yeah. One of the software projects was Microsoft Excel,
which was the spreadsheet program that later would come to
the PC. It actually hit the Mac first, or the Macintosh,
I should say it shouldn't call it a Mac because
it's different type of computer, right right. They started actually
(28:53):
all the way back in two m in on an
agreement with Apple to create that spreadsheet program that would
become Excel eventually business graphics and also a database structure.
So the relationships tight right now. And uh and and
they were not allowed that they the terms of the
agreement where to um reserve it for Apple for a
year before Microsoft could use it themselves. All right, So
(29:15):
we're picking back up and we're in nine now, that's
the year that Microsoft Windows ships on Nove So this is, uh,
this is really a graphical extension of MS DOSS. It's
not really a full graphics user interface operating system in
its own right. It's more like something that gets kind
of piggybacked onto the MS DOSS operating system. So it's
(29:39):
a little different from the future versions of Windows. Really,
you have to get to two Windows three point one
before we start seeing a Windows operating system that looks
familiar to someone who who uses it today, right, right.
This was a very very basic first attempt there, but
it was successful and the company revenues hit about a
hundred and forty million dollars. They had up to uh,
(30:01):
what was en employees, so just under a thousand. At
this point, Bill Gates was becoming a very public figure
at the time. He was he was being shown on
the cover of all kinds of magazines, UM and uh
marketing campaigns, calling calling Microsoft, you know, like trying to
be the IBM of software and getting getting the concept
of a computer on every desk and in every home
(30:23):
we're starting to come out. Yeah, it's funny too, because
if you start looking back at some of the predictions
that people, even people like Bill Gates had about how
many computers would be in the home within X number
of years, the amazing thing was their predictions at the
time seemed as ambitious. Everyone was thinking, that is just
it's insane, who would who would need that? And then
(30:45):
ten years down the road, you'd realize that they were
being incredibly conservative. That you know, people weren't taking into
account things like Moore's law, which states that not only
are computers getting more powerful over time because we're able
to fit more dis elements upon one square inch of silicon,
but also that the price goes down because the manufacturing
(31:06):
processes get more efficient and we end up learning better
ways to build computers. So with prices going down and
the complexity coming down because people are figuring out better
ways of designing operating systems, it was pretty natural for
people to want to adopt computers. I mean, a lot
of these were things that people kind of wanted, but
they were a little intimidated by, especially in the early days,
(31:27):
because they didn't have that hobbyist mentality. Sure, sure, and
so it wasn't until these uh the these these gooey systems,
they have system graphic interface, I have no problem with.
So with with all of this money that they were
making and with this this kind of outrageous number of employees,
they relocated to Redmond, which was just outside Seattle, and
(31:47):
this is in fact where Microsoft makes its headquarters today.
They do, of course have corporate locations in other parts
of the world, but that's their home bases. And red
from from did not mentioned that we had moved on
time waits for no man or Microsoft marches on. Yes
it does. And uh so. Microsoft then also that year
(32:10):
held its initial public offering, the I p O. Now, this,
of course is when a private company becomes a publicly
traded company, and so ownership is then spread out through shares.
You can buy shares in the company and that represents
a certain percentage of ownership of that company. It opened
at one dollar per share and by the end of
that day the stock price was at twenty eight dollars
(32:32):
per share, So it showed a high level of confidence
in the company and not bad at all. And they
raised about sixty one million dollars, which at the time
was the most money any tech company had raised in
an I p O. Uh. Since then, of course, that
that's changed when even when you factor in things like inflation,
it's still not hasn't held up. But at the time
(32:52):
it was incredibly impressive. Now, that year they also introduced
Microsoft Works, which had based sick word processing, spreadsheet database,
and other functions all kind of wrapped up together, and
they held the first International Conference on CD ROM technology. Yeah, yeah,
I mean, you know, I'm pretty sure that I still
(33:14):
had five and a quarter inch floppies on my Yeah,
that a three and a half inch disk drive to
me was the future, let alone a c D. Now,
of course, what we're talking about here is that a
lot of the if you aren't familiar with the computers
from back in the eighties all the way up into
the early nineties, they used magnetic storage media like discs,
(33:36):
discs that had uh, these these little they were called
floppy disks, not necessarily because they were floppy, but that
was to differentiate from the hard disk that you would
have part as integrated part of a computer, right right,
and and and part part of the floppy disks was
in fact a I mean, the disc itself would usually
be rigid for um safety purposes. But the film, but
the film inside was it was a film, a magnetic film, right,
(33:59):
and so they they the original ones, well, original ones
came up in like seven inch seven points something inches,
but approximately as big as my civic, but five and
a quarter was the standard by the time I was
getting into computers. That was what the Apple two used,
and then three and a half inch discs. It's funny
because as the size of the disc went down, the
(34:19):
capacity and that was one of those things that as
a kid before I understood anything about computers, just confused
the heck out of me, Like, how is it that
this can hold more chapters of my dad's book than
this one? Doesn't matter, let's erase it, um, because I
have saves I want to make. Uh. Well, the CD,
of course, was going to blow all of that all
the water. The optical drive had the capacity to hold
(34:41):
way more information and access it much more quickly than
magnetic did, but not for a good few years. Yeah,
And this was an early early discussion where Microsoft could
see that the writing was on the wall and that
that was going to be an important technology and they
wanted to get on the forefront of that. Un a
new marketing manager joins Microsoft, and she would become very
important in the life of the co founder of the company. Right,
(35:04):
this is this is Melinda French um and uh, Melinda
French and Bill Gates and first met at a Microsoft
press conference event in Manhattan that year and she began
to work for the company and uh, and we can
I'm imagining that the little hearts appeared over their heads.
Shortly thereafter m Microsoft launched Windows two point oh that year,
(35:24):
and we're still not quite to the level where it's
a version of Windows that most of us would recognize.
And they also announced that they would release Windows or
Microsoft Excel for Windows, so now we would get Excel.
It would no longer be exclusive to the Macintosh computer.
It would now also come to any PC that could
run Windows. And they also bought a company called Forethought Incorporated,
(35:48):
which developed a presentation software called power Point, so that
the if you've ever seen a power point presentation, you
know it's it's designed so that you create slides which
you can use their print as sheets of paper. You
could in the old days, print them as slides and
put them in a slide projector because I used to
do that I'm old, or you just use them on
(36:12):
your computer and you project them digitally for you know,
one of those typical presentations, usually standing up on a
stage and you have a lectern there and a little
clicker in your hand, and I've done this way too
many times. By the way, power Point they actually bought
the company that developed it, and they saw this as
an opportunity to kind of bring power Point into the
(36:33):
suite of productivity software that they had been developing in
house since their early days. So all that word processing
and spreadsheet they were saying, you know, this is a
good business for us to be in. It's it's more
and more offices in the United States and around the
world are starting to incorporate computers into their everyday experiences.
And if we're the ones who are creating the software
(36:54):
that allows them to get business done, we will do
crazy amounts of business. And it turned out to be really,
really true. Um, so they were jumping ahead on that one,
and they also became that they turned Forethought Incorporated from
an acquired company into a full division within Microsoft called
the Graphics Business Unit. That's also when they launched Microsoft Bookshelf,
(37:19):
which was a cd ROM, which again very early for
cd ROMs, and the cd ROM had ten reference works
on the disk, and this was the first real general
purpose application on cd ROM for PC users. Not that
many people could really take advantage of it at this time,
you know, just like any new technology. When CD ROMs
first hit the scene, it was expensive and it was
(37:41):
hard to find. I remember that it took me quite
a while just to get a CD player, much less
a CD ROM for my computer. So this is definitely
early days for that. But again, they wanted to be
on that bleeding edge of this technology. That next year,
that's when that little love Eve relationship between Apple and
(38:01):
Microsoft turns a little set work. Yeah, that was when
Apple filed a lawsuit against Microsoft. Um, they were they
were basically saying that Windows looked and felt too much
like um, like Apple's own graphics Centerface. Yeah, and which
which really kind of Apple had soared stolen from Xerox. Yeah.
That that that Xerox alto PC that we were talking about,
um small Talk being the graphics Centerface operating system that
(38:24):
they were using. Any time. A lot of people credit
the Macintosh for inventing the graphics user interface and the mouse,
which both of those actually came out of work at
Xerox and other research laboratories. But McIntosh was the first computer,
the personal computer to make it popular. Yeah, it was
the first commercially successful computer that used it. They really
(38:45):
designed it well. So I mean not to take anything
away from Apple, because they were able to make something
that appealed to consumers. Uh. Now they're saying that that
Microsoft essentially was copying them, and you know, pointing out, Hey,
Steve Jobs came over and showed you what we were
working on, and then you suddenly come up with a
graphics user interface. What's going on? Except they were doing
(39:07):
it in legally. So it probably wasn't as flippant as that.
The lawsuit would last six years and eventually the court
would rule against Apple and say that Microsoft did not
there wasn't enough evidence that Microsoft had actually copied Apple's approach,
and so this this would eventually turn out to be
(39:28):
a fruitless effort on the part of Apple. And it
was not the only time that Apple and Microsoft would clash, obviously,
certainly not. Also, Microsoft became the world's largest PC software
company based on sales, so they were doing pretty good. Yeah,
they were not not too shabby. Business is booming. In nine,
(39:48):
they released Microsoft Office one point oh, both on standard
discs and on CD rum. Uh so Microsoft Office at
one point oh. This again is the beginning of the
productive any software suite that many of us are familiar with.
I've been using some version of Microsoft Office for what year?
(40:09):
Is it? Probably fifteen years now? Um? Maybe maybe more
than that. Actually, way longer than that now that I
think about it. But it was one lotus for a
long time. Did I use word perfect as my word
processing program of choice for ages on purpose? Well, I
(40:30):
preferred it. I knew that you if you wanted to
bowl the word, you hit F eight. Um. And and
so anyway, this the suite would become incredibly important to Microsoft.
It becomes one of their flagship products. If you think
about Microsoft as far as the software side, their flagship products,
I would argue are Windows and Office. Those are the
(40:52):
two big ones. Lots of other stuff obviously, but those
are the two I think that are kind of the
cornerstone for what Microsoft's offtware is all about. Absolutely. And
also this was this was one of their big moves
in in in bundling software products together, which would become
very important and kind of legally contentious Yes later on
(41:13):
Yes nineteen, Microsoft then ships Windows three point oh. So
here's the version of Windows that starts to look more
like the stuff that we're used to. And within two
weeks of launching Windows three point oh, the company has
sold a hundred thousand copies. Now, that probably doesn't sound
like a lot to you, but keep in mind this
is before computer adoption has really grown that large. Not
(41:37):
everyone has an IBM compatible computer, uh, and those who
do not everyone has an IBM compatible computer capable of
running Windows three point oh. This was one of those
things that I found, uh initially off putting by graphics
user interfaces. I was. I was brought up learning DOSS,
so I used DOSS all the time. I did not
(41:58):
like the idea of a graphics user interface, not because
I thought that this was going to be, you know,
dumbing down my experience, but rather that I thought, why
would I want to dedicate so many of my computer's
resources to running an operating system when I'm perfectly capable
of doing this on my own. Yeah, I just want
to be able to play my games. But then more
and more of my games became Windows games, not DOSS games,
(42:21):
and eventually I was forced to become one of the
herd of sheep. Now, I say that all mostly in jest.
At the time, I was very bitter about it. These days,
I mean, if you were to put me in front
of a DOS computer now, I'd be lost. Ye. Not
that I was ever particularly found in DOSS. I I
never I never really used it myself. I would just
(42:43):
you would. All you would hear from me, Lauren, from
my desk is where's the start button? Yeah, that's kind
of the only thing I would be able to say
over and over and cry. I'd cry too. Um, But
at any rate, three point oh launches sell hoppies. Only
fifteen of households back in even had a computer according
(43:05):
to the Bureau of Labor Statistics, so not that many
people have computers, so a hundred thousand copies is a
significant number. Microsoft decides at that point that they will
focus exclusively on developing Windows, rather than supporting both Windows
and further versions of DOSS also known as OS two. Now,
this is not great news for IBM. They were not
(43:28):
terribly happy with this. But Microsoft said, you know, we
see where the future is. The future is going to
be in this graphic user interface. UM. As more and
more people adopt these computers, they're going to want something
that's that's more accessible than a blinking cursor where they
have to figure out what code they need to type
in in order to get stuff done. So they said,
this is what we're gonna do. We're gonna just completely
(43:49):
focus on developing the Windows opbring system. That same year,
John Shirley retired as president and CEO and he was
replaced by Michael R. Hollman. For Yeah, which is interesting, right,
I mean you're going from Tandy, which was another you
know that was at least within the industry, to Boeing,
which you could argue was you know, related to but
(44:09):
outside the industry of computers. However, of course, keeping in
mind this is for the person who's doing the administrative,
the the corporate oversight of the day to day workings
of a company, not actually talking about share. Yeah, so
keeping that in mind, it makes more sense. Um. Now
at that point, uh, it had been fifteen years since
(44:31):
the company had been founded, So fifteen years after the
founding of the company, they were in a pretty secure
place financially. They had had a very successful I p
O and revenue was at a staggering one point one
eight billion dollars. They were the first software company to
get over a billion dollars in revenue a year. This
(44:54):
was also the year that the FTC, the Federal Trade Commission,
began kind of poking into um some antitrust kind of
kind of issues, right, So they didn't they didn't launch
an official investigation yet. I just thought, Hey, that sounds
kind of like Microsoft might be muscling out some competition,
Like you were saying, Lauren, this idea of bundling software.
(45:16):
I mean, it makes sense from someone who wants to
have a lot of uh utility in their software and
have cross utility, right, and especially if you've already I'm
like many of the programs and the Microsoft Office Suite,
a lot of the base coding is is the same
UM and and it's and it's built up, you know,
just in different ways. Well, especially when you get later
(45:36):
on into office where you want to do something like
embed a chart that you create an Excel into a
power Point spreadsheet, but you don't want to just copy
and paste a picture and you want it to be functional, yeah,
kind of like a living chart. So that way, let's
say that as it gets closer to your time to
present whatever the presentation is, that your numbers get updated. Well,
(45:58):
instead of having to go in and UH and copy
that picture again and then paste it back into a
new version of the presentation. If if your systems are connected,
then what you can do is go into the Excel
sheet where you generated the image in the first place
and change the numbers there and it updates. Right. Yeah,
so now great, that is later on. That's not the
(46:18):
earliest version of Microsoft Office. Yeah. And and in these
days that the FTC was really looking at, UM, the
relationship that IBM and Microsoft had and UH and the
way that DOS was being propagated across all IBM computers
at the time. Right, It's it's one of these things
where they start wondering if there's maybe some anti competitive
practices being put in place, so that would become a
(46:43):
more important part of Microsoft's history. Shortly thereafter, UH in
ninety two, that's when Forbes proclaims that Bill Gates is
the richest man in America for the first time, at
six point three billion dollars in net worth. UH. Bill
Gates would end up being richest man in America several
times UM over the next several years and uh, it
(47:07):
would flip flop back and forth between other people, and
eventually he becomes the richest man in the world a
couple of times too, so pretty phenomenal. Mike Hallman at
that point leaves Microsoft. Uh you know, remember he had
just joined as the president back in two he leaves.
So at that point the company does something interesting. Rather
(47:29):
than a point a new president, they created what they
called the Office of the President, which was held by
three executives. Three executives would be the people manning the
Office of the President. So it's almost like a triumbrit.
It's a tribunal. Uh you have what brutus? Uh you
have uh? Uh no, no, it was so the officer
(47:52):
of the President was held by three executives. In those
first three were Steve Balmer, so, uh he had stuck
with the company all this time and now was the
worldwide state else in support guy, and that's the part
that he oversaw. As part of the Office of the President.
You also had Frank Goddet, who oversaw worldwide operations of
the company, and Mike Maples who saw oversaw the worldwide
(48:15):
products for the company. All three of them, as the
Office of the President reported directly to Bill Gates and
that same year Microsoft's stock split. And a stock split
is when the value of a company keeps on growing
but they want to be able to have It's it's
kind of complicated, but the idea is that you have
(48:35):
when you first have the the I p O. You
have a certain amount of stock, certain number of shares
that are available, right, and each share is worth a
certain amount. And when you multiply those two numbers together
the number of shares times the value of the share,
that kind of gives you a valuation of the company. Uh.
If a company's value continues to increase, you may consider
splitting up that stock so that instead of the stock
(48:57):
being incredibly expensive, you have decrease the value of individual stocks. However,
in order to compensate your shareholders, you give them more stock,
So it could be this would be the first in
a series of several splits. So essentially, what it means
is it allows the company to increase in value without
stock price getting so high that no one wants to
(49:18):
buy or sell it. Uh, I'm drastically oversimplifying. So all
of my my business majors out there who are screaming
at me, maya culpa. But and for those of you
who aren't the liberal arts majors, I'm sorry. Uh So anyway, Um,
the stock split showed that this was a company that
(49:38):
was going to continue to grow in value, or at
least that was the that was the hope, as it
turns out, hope that was well placed. And Bill Gates
that year received an award from the President of the
United States, George Bush Yes, the first George Bush Yes,
and that award was the National Medal of Technology for
Technological Achievement in Technology and Tech. I may added a
(50:00):
couple of there there were two technologies in the metal
of Technology for technological Achievement, which I think is already
so uh you know, it's it's self referential. Uh. In
n three, they released the Windows in T platform, which
was an enterprise software. Enterprise of course means companies. When
(50:20):
you talk about enterprise software, you're talking about software is
specifically designed for other corporations as opposed to individuals. So
that's what Windows in T was, and it's kind of
a client server solution. Um. And then at that that
same year, IBM saw Microsoft overtake it in corporate value.
So the company Microsoft becomes more valuable from a sheer
(50:45):
numbers perspective than IBM. That's amazing. The the huge company
for which Microsoft got its most of its early revenue
apart from you know, the early early days with Apple,
is now worth less than the actual software company. That's
pretty phenomenal. That was that was on the slightly less
(51:06):
awesome route. The investigation that the FTC had sort of
begun got passed over to the Department of Justice, which
basically meant that it was getting it was getting serious. Yeah,
now now it's gone from I wonder if those people
are up to no good to those people are probably
up to no good, and we're going to look into
it much more seriously. This would not be the only
(51:26):
time that Microsoft would deal with these sort of things.
One of the one of the issues you get when
you get really, really successful in your industry is sometimes
you might, through your certain practices, discourage other people from
entering that industry, whether you mean to or not. That
can be seen as anti competitive, and that can get
(51:46):
the government governments from around the world really on your case.
Because again the United States, we're talking about the U
S specifically here, but they are not the only entity
that has looked into fire. We will get into that
a little bit more later on. That's the same year.
Also three is when company introduced Microsoft in Carter. It's
a multimedia encyclopedia on CD. Did you ever see the
(52:09):
Incarda I owned in CARTERA I owned in Carta as well.
I remember everyone owning card I think there anyone I
think you were required to own in Carta like there
were there were a couple. If you owned a computer
that was running Windows, you are essentially required to own
in CARTERA and possibly four hundred and seventy three A
(52:29):
O L discs. I had approximately that many. So yeah,
I just get sent in the mail all the time.
I used to make costumes out of them. It was great.
But it seems, I mean in Carda seems like the
incredible future to me. That was That was one of
those early things that I remember, I mean not not
you know, one of those original things that I remember
thinking like, like, these computer things are really here and
(52:49):
they're really doing something interesting. Yeah. That keep in mind
in Carter this is before we as Plebeian people have
access to the Internet. We didn't have Wikipedia. There was
no Worldwide Web at this point, so or at least
roll by web was so young in n that hardly
anyone knew about it. Technically, there was a worldwide web
(53:10):
because Tim berners Lee had actually invented the first web page,
but everyone had a O L discs And yeah, I
can remember. I think the first time I saw a
web page was maybe maybe late ninety three or early
ninety four. It was when I was in college dating
myself here. I was in college, and I remember seeing
(53:31):
someone navigating using something called a web browser to navigate
a web page, and I took a look at and
it took a really long time for it to load up,
and it was pretty primitive graphics, and I thought, I'll
never take off and I'll just use my tail knit program.
Speaking of dating yourself, people who were dating at the time,
I got interesting segue. Bill and Melinda got married. Yep,
(53:59):
that was there was obviously a very important time for
for the two of them, and they have created together
not only an amazing family but also a phenomenal philanthropic
organization that we'll talk about in our next episode. Before
we get to that, however, I did want to mention
that was the year that Microsoft agreed to a federal
(54:23):
consent decree, which was the outcome of this entire FTC
Department of Justice investigation at the time. And what they
were doing was they had been uh entering into these
license agreements in which in which PC makers had been
agreeing to pay a licensing fee for DOSS with each
(54:45):
model of a computer ship, even if that particular computer
did not contain UM interesting. So that was and and
and the federal government was like that, that's not cool, guys,
could you knock that off? So so, so so that was
and and that was kind of the first thing. And
this would come back in a minute, um, well, more
(55:06):
like in several days, because we're going to take a
break here, ladies and gentlemen. This is gonna be the
end of part one of the Microsoft story because we
have so much more to say and we don't want
to have a two and a half hour long episode
about it. So we're gonna take a quick break here
for us and slightly longer one for you. And uh,
if you guys have any suggestions for things that we
(55:27):
should cover on future episodes of Tech Stuff, whether it's
a company, a type of technology, type of software, personality
in tech, or you just want to hear us take
yet another film and deconstruct it in our eyes of
tech and science. Let us know. Write us. Our email
address is tech stuff at Discovery dot com, or get
in touch with us on Twitter or Facebook. You can
(55:49):
find us there with the handle tech stuff. Hs W
and Lauren and I will talk to you again really soon.
For more on this and thousands of other topic is
it how stuff works dot com
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