Microsoft Corporation
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Microsoft Corporation
Company History
Founded 1975 in Redmond, Washington
Last reviewed: 2026-06-03 · By Swet Parvadiya
Microsoft Corporation was founded in 1975 by Bill Gates and Paul Allen to write BASIC interpreters for the Altair 8800 microcomputer. Microsoft Corporation was founded in 1975 in Albuquerque, New Mexico (later relocated to Redmond, Washington) by Bill Gates and Paul Allen to write programming languages for early microcomputers. Paul Allen spotted the Altair 8800 on the cover of Popular Electronics in January 1975 and practically ran to find Bill Gates. MITS licensed Altair BASIC, and Microsoft (originally "Micro-Soft") was born.
Gates' infamous 1976 "Open Letter to Hobbyists" was a twenty-one-year-old yelling into the void that his work deserved to be paid for.
Bill Gates co-founded Microsoft in 1975 and served as CEO until 2000, remaining a central strategic figure as chairman and later technology adviser. His most important contribution was recognizing that software could be licensed repeatedly across hardware ecosystems. The IBM PC operating-system deal showed that instinct: Microsoft supplied IBM while retaining rights that let MS-DOS spread through the wider PC market. Gates also drove the company's intense focus on Windows, Office, developer platforms, and enterprise licensing. He was famously demanding, deeply involved in product reviews, and willing to use Microsoft's platform power aggressively, which helped build the company and also contributed to antitrust scrutiny. After stepping back from day-to-day leadership, Gates shifted much of his attention to philanthropy through the Bill & Melinda Gates Foundation, while his Microsoft legacy remained embedded in the company's licensing DNA. The modern subscription and cloud model is different in delivery, but it still reflects Gates' core insight: control the software layer that customers build around.
Paul Allen co-founded Microsoft and was crucial to its earliest technical and strategic decisions. He helped develop Altair BASIC, gave the company its original name, and participated in the operating-system opportunity that led to MS-DOS. Allen left active management in the early 1980s after being diagnosed with Hodgkin lymphoma, though he remained a major shareholder for many years. After Microsoft, he became an investor, philanthropist, sports-team owner, and backer of science, space, music, artificial intelligence, and cultural institutions through Vulcan Inc. His lasting influence on Microsoft is easy to understate because he exited daily operations early, but the company might not have existed without his ability to see the Altair as a commercial signal rather than a hobbyist curiosity. Allen represented the imaginative technical side of Microsoft's founding: the belief that small computers would become general-purpose tools if software could make them useful.
Microsoft acquired LinkedIn to integrate professional networking data into its enterprise ecosystem. The goal was to enhance customer relationship management, recruitment tools, professional advertising, and sales intelligence. It also gave Microsoft a major professional identity graph outside Windows and Office.
Microsoft acquired GitHub to rebuild trust with developers, strengthen its open-source posture, and place itself closer to the software development workflow. The acquisition also created a natural bridge between code repositories, developer tools, GitHub Enterprise, GitHub Actions, Copilot, and Azure.
Microsoft acquired Nuance to deepen its position in healthcare AI, speech recognition, clinical documentation, and conversational intelligence. The deal gave Microsoft specialized industry software that could run on Azure and support healthcare workflows.
Microsoft acquired ZeniMax Media, parent of Bethesda Softworks, to expand its first-party gaming portfolio. The deal added franchises such as The Elder Scrolls, Fallout, Doom, and other content that could strengthen Xbox and Game Pass.
Microsoft acquired Activision Blizzard to gain major gaming franchises, mobile exposure through King, and a larger content base for Xbox, PC, Game Pass, and cloud gaming. The strategic logic was to reduce dependence on console cycles and strengthen Microsoft's position in interactive entertainment.
Microsoft was founded on April 4, 1975, in Albuquerque, New Mexico, by Bill Gates and Paul Allen. The two had been childhood friends in Seattle who shared a passion for programming. The founding was inspired by the Altair 8800 microcomputer, which appeared on the cover of Popular Electronics in January 1975. Paul Allen spotted the issue and persuaded Gates that the era of personal computing had arrived. They pitched MITS (Micro Instrumentation and Telemetry Systems), the Altair manufacturer, on writing a BASIC interpreter for the machine — developing the software before they even had access to the actual hardware. Allen flew to Albuquerque to demo the finished interpreter on a real Altair for the first time, and it worked. MITS licensed Altair BASIC, and 'Micro-Soft' (later stylized as Microsoft) was born. The company relocated to Bellevue, Washington in 1979, then to its permanent headquarters in Redmond, Washington, where it has been based ever since.
The 1981 IBM deal is widely regarded as the most consequential contract in technology history. IBM was building a secret personal computer and needed an operating system quickly. Microsoft did not have one but licensed 86-DOS (nicknamed 'QDOS' for Quick and Dirty Operating System) from Seattle Computer Products for $50,000 and provided it to IBM as PC-DOS. The critical negotiating point — often cited as Gates' masterstroke — was that Microsoft retained the right to license the same operating system to other PC manufacturers as MS-DOS. IBM agreed because they underestimated the importance of software and believed the PC would be a minor product line. Within three years, dozens of companies were shipping 'IBM-compatible' PCs, every one requiring an MS-DOS license. Microsoft collected a royalty on each machine sold without manufacturing any hardware. By 1984, Microsoft's revenue had exceeded $100 million. The IBM deal effectively handed Microsoft a royalty stream on the entire PC industry — a monopoly position it would hold for two decades.
Windows 1.0, launched in November 1985, was commercially underwhelming — a graphical shell running on top of MS-DOS that was criticized as slow and limited. It sold poorly and faced ridicule from critics. Windows 2.0 (1987) improved slightly but still struggled. The real breakthrough came with Windows 3.0 in May 1990, which offered a dramatically improved graphical interface, better multitasking, and ran well on the 80386 processor. It sold 10 million copies within two years. Windows 3.1 (1992) refined the platform further. The cultural watershed was Windows 95, launched on August 24, 1995 — accompanied by a $300 million marketing campaign featuring the Rolling Stones' 'Start Me Up.' People lined up at midnight at retail stores to buy an operating system. Windows 95 introduced the Start menu, taskbar, and the concept of plug-and-play hardware, and sold 7 million copies in its first five weeks. Windows XP (2001) and Windows 7 (2009) cemented Windows as the near-universal operating environment for personal computers globally, at its peak running on over 90% of the world's PCs.
In May 1998, the US Department of Justice, joined by 20 state attorneys general, filed an antitrust lawsuit against Microsoft. The core accusation was that Microsoft had used its Windows monopoly to suppress browser competition — specifically by bundling Internet Explorer with Windows at no cost to drive Netscape Navigator out of the market. Evidence introduced at trial included internal emails showing executives discussing 'cutting off Netscape's air supply.' In November 2000, Judge Thomas Penfield Jackson ruled that Microsoft had violated the Sherman Antitrust Act and ordered the company broken into two separate entities: one for operating systems and one for other software. Microsoft appealed, and in 2001 the breakup order was overturned. A settlement was reached requiring Microsoft to share its application programming interfaces with third-party companies. The case is credited with slowing Microsoft's growth during a crucial period — the late 1990s and early 2000s — during which the company missed the internet advertising revolution, the rise of Google, and the early social networking era. The decade of legal distraction is often cited as a significant factor in Microsoft's stagnation under Steve Ballmer.
Microsoft's physical and organizational scale mirrors its commercial growth. The company started with two founders in Albuquerque, New Mexico in 1975, operating out of a small office near the MITS facility. In 1979, Gates and Allen relocated the company to Bellevue, Washington, closer to family and the University of Washington's computer science talent pool. Microsoft moved to its permanent home in Redmond, Washington in 1986 — the same year it went public. The Redmond campus has since grown to over 500 acres housing more than 100 buildings. At the 1986 IPO, Microsoft had approximately 1,200 employees. By 2000, when Bill Gates stepped down as CEO, that number had grown to roughly 39,000. Steve Ballmer grew the headcount to approximately 99,000 by the time he left in 2014. Under Satya Nadella, the workforce expanded through organic hiring and major acquisitions — LinkedIn (2016), GitHub (2018), ZeniMax (2021), Nuance (2022), and Activision Blizzard (2023). As of FY2025, Microsoft employs approximately 228,000 people worldwide, generating approximately $1.24 million in revenue per employee — one of the highest productivity ratios among large-cap technology companies.