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Microsoft Corporation, an American multinational technology giant headquartered in Redmond, Washington, is renowned for its software and hardware products. Known for its Windows operating systems, Microsoft 365 productivity suite, Azure cloud computing platform, and Edge web browser, the company also boasts popular hardware products like Xbox video game consoles and the Microsoft Surface line of touchscreen computers. In 2022, Microsoft ranked 14th on the Fortune 500 list of the largest U.S. corporations by revenue and was declared the world's largest software maker by revenue according to Forbes Global 2000. Alongside Alphabet (Google's parent company), Amazon, Apple, and Meta (Facebook's parent company), Microsoft is considered one of the Big Five American information technology companies.

Founded by Bill Gates and Paul Allen on April 4, 1975, Microsoft initially aimed to develop and sell BASIC interpreters for the Altair 8800. Its rise to dominance in the personal computer operating system market started with MS-DOS in the mid-1980s, followed by Windows. The company's 1986 initial public offering (IPO) and subsequent stock price surge created three billionaires and an estimated 12,000 millionaires among its employees. Since the 1990s, Microsoft has diversified beyond the operating system market, making several major acquisitions, including Activision Blizzard for $68.7 billion in October 2023, LinkedIn for $26.2 billion in December 2016, and Skype Technologies for $8.5 billion in May 2011.

As of 2015, Microsoft holds a dominant market position in the IBM PC compatible operating system market and the office software suite market, though it has lost a significant portion of the overall operating system market to Android. The company produces a wide range of other software for desktops, laptops, tablets, gadgets, and servers, including Internet search (Bing), digital services (MSN), mixed reality (HoloLens), cloud computing (Azure), and software development (Visual Studio).

Steve Ballmer replaced Gates as CEO in 2000, outlining a "devices and services" strategy. This strategy involved Microsoft acquiring Danger Inc. in 2008, entering the personal computer production market with the launch of the Microsoft Surface line of tablet computers in June 2012, and establishing Microsoft Mobile through the acquisition of Nokia's devices and services division. Since Satya Nadella assumed the role of CEO in 2014, the company has scaled back on hardware, focusing instead on cloud computing. This shift contributed to the company's stock reaching its highest value since December 1999. Under Nadella's leadership, Microsoft has also significantly expanded its gaming business to support the Xbox brand, creating the Microsoft Gaming division in 2022 to oversee Xbox and its three publishing subsidiaries. As of 2024, Microsoft Gaming is the third-largest gaming company globally by revenue.

In 2018, Microsoft became the most valuable publicly traded company in the world, a position it has repeatedly traded with Apple since then. In April 2019, Microsoft achieved a trillion-dollar market cap, becoming the third U.S. public company to reach this valuation after Apple and Amazon. As of 2024, Microsoft holds the third-highest global brand valuation.

While Microsoft has been recognized for its achievements, it has also faced criticism for its monopolistic practices. The company's software has also been criticized for issues related to ease of use, robustness, and security.

Microsoft stands out as one of only two U.S.-based companies with a prime credit rating of AAA.

Microsoft's journey began in 1972 when childhood friends Bill Gates and Paul Allen, driven by their shared passion for computer programming, established Traf-O-Data, a company focused on selling rudimentary computers designed to analyze traffic data. While Gates pursued studies at Harvard University, Allen enrolled in computer science at Washington State University, later dropping out to work at Honeywell. A pivotal moment arrived in 1975 when the January issue of Popular Electronics featured the Altair 8800 microcomputer, sparking Allen's idea to develop a BASIC interpreter for the device. Gates, confidently claiming to have a working interpreter, secured a demonstration opportunity with MITS, the manufacturer of the Altair. Working diligently, Allen created a simulator for the Altair while Gates focused on the interpreter, successfully showcasing a fully functional product to MITS in March 1975. Impressed by their work, MITS agreed to distribute their interpreter under the name Altair BASIC. On April 4, 1975, Gates and Allen officially founded Microsoft, with Gates assuming the role of CEO, and the name "Micro-Soft" – a shortened form of "micro-computer software" – was suggested by Allen. In August 1977, Microsoft established its first international office, ASCII Microsoft, through an agreement with ASCII Magazine in Japan. The company's headquarters moved to Bellevue, Washington, in January 1979.

Microsoft's entry into the operating system (OS) market began in 1980 with their own version of Unix called Xenix. However, it was their development of MS-DOS that truly propelled them to the forefront of the industry. In November 1980, IBM awarded Microsoft a contract to provide a version of the CP/M OS for their upcoming IBM Personal Computer (IBM PC). To fulfill this agreement, Microsoft purchased a CP/M clone called 86-DOS from Seattle Computer Products and rebranded it as MS-DOS. Despite IBM rebranding it as IBM PC DOS, Microsoft retained ownership of MS-DOS, which became a crucial factor in their dominance of the PC operating systems market. The release of the IBM PC in August 1981 marked a significant milestone, but due to IBM's copyright on the IBM PC BIOS, other companies were required to reverse engineer it for non-IBM hardware to achieve compatibility. However, no such restrictions applied to operating systems, giving Microsoft a distinct advantage.

Expanding beyond operating systems, Microsoft introduced the Microsoft Mouse in 1983, further solidifying their presence in the technological landscape. The company also established a publishing division named Microsoft Press. In 1983, Paul Allen resigned from Microsoft after being diagnosed with Hodgkin's lymphoma. According to Allen's memoir, "Idea Man: A Memoir by the co-founder of Microsoft," Gates sought to dilute his share in the company during this time, believing Allen was not contributing enough. Following his departure from Microsoft, Allen focused on investing in various sectors including low-tech industries, sports teams, commercial real estate, neuroscience, private space flight, and more.

The period between 1985 and 1994 witnessed the rise of Windows and Office, shaping Microsoft's trajectory. Windows 1.0, released in November 1985, marked the beginning of the Windows operating system line. Despite initiating a joint development of OS/2 with IBM that same year, Microsoft launched Windows as a graphical extension for MS-DOS. This period also saw Microsoft relocating its headquarters and going public, leading to significant financial gains for employees. While Microsoft released its version of OS/2 to manufacturers in 1987, the company simultaneously developed Windows NT, based on the OS/2 code. The release of Windows NT in 1993, with its modular kernel and 32-bit API, facilitated a smoother transition from 16-bit Windows. This led to a deterioration of the OS/2 partnership with IBM.

In 1990, Microsoft introduced the Office suite, bundling applications like Word and Excel. The launch of Windows 3.0 in May 1992, with its enhanced user interface and protected mode capabilities for the Intel 386 processor, propelled both Office and Windows to dominance in their respective fields. By 1994, Microsoft's use of per-processor licensing practices, which levied royalties on computer manufacturers regardless of the operating system installed, attracted scrutiny from the Department of Justice's Antitrust Division. These licensing practices were deemed anti-competitive, as they effectively penalized manufacturers for using non-Microsoft operating systems.

In 1996, Microsoft released Windows CE, a version of the operating system meant for personal digital assistants and other tiny computers, shown here on the HP 300LX.

Following Bill Gates's internal "Internet Tidal Wave memo" on May 26, 1995, Microsoft began to redefine its offerings and expand its product line into computer networking and the World Wide Web. With a few exceptions of new companies, like Netscape, Microsoft was the only major and established company that acted fast enough to be a part of the World Wide Web practically from the start. Other companies like Borland, WordPerfect, Novell, IBM and Lotus, being much slower to adapt to the new situation, would give Microsoft market dominance.

The company released Windows 95 on August 24, 1995, featuring pre-emptive multitasking, a completely new user interface with a novel start button, and 32-bit compatibility; similar to NT, it provided the Win32 API.  Windows 95 came bundled with the online service MSN, which was at first intended to be a competitor to the Internet,[dubious – discuss] and (for OEMs) Internet Explorer, a Web browser. Internet Explorer has not bundled with the retail Windows 95 boxes, because the boxes were printed before the team finished the Web browser, and instead were included in the Windows 95 Plus! pack. Backed by a high-profile marketing campaign and what The New York Times called "the splashiest, most frenzied, most expensive introduction of a computer product in the industry's history," Windows 95 quickly became a success. Branching out into new markets in 1996, Microsoft and General Electric's NBC unit created a new 24/7 cable news channel, MSNBC. Microsoft created Windows CE 1.0, a new OS designed for devices with low memory and other constraints, such as personal digital assistants. In October 1997, the Justice Department filed a motion in the Federal District Court, stating that Microsoft violated an agreement signed in 1994 and asked the court to stop the bundling of Internet Explorer with Windows.

Microsoft released the first installment in the Xbox series of consoles in 2001. The Xbox, graphically powerful compared to its rivals, featured a standard PC's 733 MHz Intel Pentium III processor.

On January 13, 2000, Bill Gates handed over the CEO position to Steve Ballmer, an old college friend of Gates and employee of the company since 1980, while creating a new position for himself as Chief Software Architect. Various companies including Microsoft formed the Trusted Computing Platform Alliance in October 1999 to (among other things) increase security and protect intellectual property through identifying changes in hardware and software. Critics decried the alliance as a way to enforce indiscriminate restrictions over how consumers use software, and over how computers behave, and as a form of digital rights management: for example, the scenario where a computer is not only secured for its owner but also secured against its owner as well. On April 3, 2000, a judgment was handed down in the case of United States v. Microsoft Corp., calling the company an "abusive monopoly." Microsoft later settled with the U.S. Department of Justice in 2004.

On October 25, 2001, Microsoft released Windows XP, unifying the mainstream and NT lines of OS under the NT codebase. The company released the Xbox later that year, entering the video game console market dominated by Sony and Nintendo. In March 2004 the European Union brought antitrust legal action against the company, citing it abused its dominance with the Windows OS, resulting in a judgment of €497 million ($613 million) and requiring Microsoft to produce new versions of Windows XP without Windows Media Player: Windows XP Home Edition N and Windows XP Professional N. In November 2005, the company's second video game console, the Xbox 360, was released. There were two versions, a basic version for $299.99 and a deluxe version for $399.99.

Increasingly present in the hardware business following Xbox, Microsoft 2006 released the Zune series of digital media players, a successor of its previous software platform Portable Media Center. These expanded on previous hardware commitments from Microsoft following its original Microsoft Mouse in 1983; as of 2007 the company sold the best-selling wired keyboard (Natural Ergonomic Keyboard 4000), mouse (IntelliMouse), and desktop webcam (LifeCam) in the United States. That year the company also launched the Surface "digital table", later renamed PixelSense.

Microsoft's release of Windows Vista and Office 2007 in 2007 brought a wave of innovation, including new features, enhanced security, and a redesigned user interface. The success of these products contributed to record profits for the company. However, the European Union continued to impose fines on Microsoft due to concerns about its market practices, particularly its pricing strategies for key information. Despite these challenges, Microsoft continued to make significant investments in new technologies, such as multi-core computing and cloud computing, with the launch of Azure Services Platform.

Bill Gates retired from his role as Chief Software Architect in 2008, leaving a legacy of leadership and innovation. However, Microsoft continued to push forward, entering the retail market with the launch of its first Microsoft Store. The release of Windows 7 in 2009 aimed to improve upon the features and performance of its predecessor, Vista.

The rise of the smartphone industry presented a challenge for Microsoft, which struggled to compete with rivals like Apple and Google. In 2010, Microsoft revamped its mobile operating system, Windows Mobile, with the introduction of Windows Phone, featuring a minimalist user interface design. The company also formed a strategic alliance with Nokia to co-develop Windows Phone, further strengthening its position in the mobile market.

Microsoft further expanded its reach in 2011 by becoming a founding member of the Open Networking Foundation, supporting the development of Software-Defined Networking for cloud computing. The company also embarked on a rebranding initiative, incorporating the Metro design language across its products, services, and websites.

In 2011 and 2012, Microsoft made significant strides in the operating system and hardware markets. The release of Windows 8 targeted both PCs and tablet computers, and the company launched its first self-produced computer, the Surface. Additionally, Microsoft acquired the social network Yammer and launched the webmail service Outlook.com to compete with Gmail.

The year 2012 also saw Microsoft's entry into the news market with a new-look MSN. Windows 8 and the Surface were released to the public, followed by Windows Phone 8. Microsoft continued to expand its retail presence with the opening of several holiday stores across the U.S. to complement its existing Microsoft Stores.

Microsoft's commitment to innovation extended to its gaming platform, with the release of the Xbox One console in 2013, featuring an upgraded Kinect sensor with enhanced capabilities. The company also faced challenges in the market, with the poor performance of Windows 8 and the Surface tablet leading to a significant stock sell-off.

To address these challenges, Microsoft restructured its business into four new divisions: Operating systems, Apps, Cloud, and Devices. The company also made a major acquisition, purchasing Nokia's mobile unit for $7 billion. These moves signaled Microsoft's commitment to adapting to the changing market landscape and strengthening its position in key areas.

Microsoft underwent significant changes starting in 2014 with the appointment of Satya Nadella as CEO, succeeding Steve Ballmer. The company made strategic acquisitions, including Nokia Devices and Services, Mojang, and Hexadite, demonstrating a shift towards cloud computing, gaming, and security. In 2015, Microsoft released Windows 10 and the Surface Hub, marking its entry into the interactive whiteboard market. However, the company faced challenges in its mobile phone business, resulting in layoffs and financial losses.

In 2016, Microsoft merged its PC and Xbox divisions, focusing on Universal Windows Platform apps for gaming. The company also launched Microsoft Azure Information Protection to enhance data security and joined the Linux Foundation, signaling a change in its stance towards open-source software.

The following year, Microsoft introduced Intune for Education, a cloud-based application management service for schools, and released PowerShell Core 6.0 for macOS and Linux. The company also discontinued support for Windows Phone devices and transformed Windows 10 S into a mode within the Windows operating system.

2018 saw Microsoft embrace open-source further by releasing the source code for Windows File Manager and announcing Azure Sphere, a Linux-based operating system for IoT devices. The company also partnered with American intelligence agencies to develop cloud computing products and acquired GitHub, a popular code-sharing platform.

In September 2018, Microsoft discontinued Skype Classic and joined the Open Invention Network community. The company also provided the United States military with HoloLens headsets and introduced Azure Multi-Factor Authentication. Microsoft further contributed to open-source by releasing Project Mu, an open-source implementation of UEFI for Surface and Hyper-V products. The company also open-sourced Windows Forms and Windows Presentation Foundation, and transitioned its web browser, Microsoft Edge, to use Chromium backends.

In February 2019, Microsoft expanded its AccountGuard cybersecurity service to new European markets and faced employee protests over its involvement in a $480 million contract to develop virtual reality headsets for the U.S. Army.

Microsoft has been active in acquisitions and strategic partnerships, with a focus on cloud computing, AI, and gaming. In 2020, the company acquired Affirmed Networks and announced plans to close its Mixer service, while also exploring a potential acquisition of TikTok. Apple's restrictions on "remote desktop clients" hindered Microsoft's plans for xCloud on iOS devices. Later in the year, Microsoft acquired ZeniMax Media, the parent company of Bethesda Softworks, for $7.5 billion, solidifying its presence in the gaming industry. The company also secured an exclusive license to use OpenAI's GPT-3 language model and released the Xbox Series X and Xbox Series S consoles.

In 2021, Microsoft announced the acquisition of Nuance Communications for $16 billion and saw its valuation soar to nearly $2 trillion, driven by strong quarterly earnings and increased demand for cloud computing and gaming services during the pandemic. The company also unveiled Windows 11, acquired Takelessons and Clipchamp, and introduced end-to-end encryption for Microsoft Teams calls. Additionally, Microsoft acquired Ally.io, a software service focused on OKR management.

Early 2022 saw Microsoft make a major acquisition by purchasing Activision Blizzard for $68.7 billion, adding popular franchises like Call of Duty, Warcraft, and Diablo to its portfolio. The deal aimed to strengthen Microsoft's presence in the metaverse, competing with Meta Platforms in this burgeoning sector. The acquisition also marked the appointment of Phil Spencer as CEO of the newly established Microsoft Gaming division.

Microsoft continued its strategic investments in 2022 by signing a 10-year deal with the London Stock Exchange and announcing plans to lay off 10,000 employees. The company also made a multi-billion dollar investment in OpenAI, the developer of ChatGPT. In 2023, Microsoft announced the development of two custom-designed computing chips, Maia and Cobalt, and welcomed Sam Altman and Greg Brockman to lead a new advanced AI research team. The company also became the most valued publicly traded company and introduced a subscription offering of AI for small businesses through Copilot Pro.

In 2024, Microsoft continued its global expansion with significant investments in AI and cloud infrastructure. The company invested $1.5 billion in the Emirati AI firm G42, $1.7 billion in developing AI and cloud infrastructure in Indonesia, and $3.3 billion in building an AI hub in southeast Wisconsin. Despite these investments, Microsoft announced layoffs in its mixed reality and Azure cloud computing divisions, as well as its DEI team. In July 2024, a global IT outage impacting Microsoft services caused disruptions across various sectors, highlighting the company's vulnerability to cyber threats. This incident was traced back to a flawed update of CrowdStrike's cybersecurity software.

Microsoft's leadership is vested in a board of directors, a common practice for publicly traded companies. This board primarily comprises individuals external to the company. As of December 2023, the board members include Satya Nadella, Reid Hoffman, Hugh Johnston, Teri List, Sandi Peterson, Penny Pritzker, Carlos Rodriguez, Charles Scharf, John W. Stanton, John W. Thompson, Emma Walmsley, and Padmasree Warrior.

Board members are chosen annually through a majority vote system at the company's annual shareholders' meeting. The board is structured with four specialized committees to handle specific aspects of the company's operations. These committees include the Audit Committee, overseeing accounting practices, including audits and reporting; the Compensation Committee, responsible for approving compensation for the CEO and other employees; the Governance and Nominating Committee, managing various corporate affairs, including board nominations; and the Regulatory and Public Policy Committee, focusing on legal and antitrust matters, as well as privacy, trade, digital safety, artificial intelligence, and environmental sustainability.

In March 2020, Bill Gates stepped down from the boards of both Microsoft and Berkshire Hathaway, citing his desire to concentrate on philanthropic endeavors. According to Aaron Tilley of The Wall Street Journal, this marked a significant departure in the tech industry, comparable to the passing of Apple co-founder Steve Jobs.

Microsoft has had three chief executives: Bill Gates (1975–2000), Steve Ballmer (2000–2014), and Satya Nadella (2014–present). When Microsoft went public in 1986, its initial public offering (IPO) price was $21, closing at $27.75 for the day. Due to nine stock splits, any IPO shares would be multiplied by 288 as of July 2010, meaning an IPO share today would cost about 9 cents. The stock price reached its peak in 1999, reaching around $119 (or $60.928 after adjusting for splits). Microsoft began offering a dividend in January 2003, starting at eight cents per share for the fiscal year. This increased to sixteen cents the following year and transitioned to quarterly payouts in 2005, with eight cents per share each quarter and a special one-time payout of three dollars for the second quarter of the fiscal year. While dividend payouts increased, the price of Microsoft's stock remained relatively stable for many years.

Standard & Poor's and Moody's Investors Service have both assigned a AAA rating to Microsoft, with assets valued at $41 billion and only $8.5 billion in unsecured debt. Consequently, Microsoft released a $2.25 billion corporate bond in February 2011, boasting relatively low borrowing rates compared to government bonds. For the first time in 20 years, Apple Inc. surpassed Microsoft in quarterly profits and revenues in Q1 2011, fueled by a slowdown in PC sales and substantial losses within Microsoft's Online Services Division (which includes its search engine Bing). Microsoft's profits were $5.2 billion, compared to Apple's $6 billion, on revenues of $14.5 billion and $24.7 billion respectively. Microsoft's Online Services Division has consistently operated at a loss since 2006, with a loss of $726 million in Q1 2011, following a $2.5 billion loss in 2010.

In 2023, Microsoft's sales were split between the United States ($106.7 billion, 50.4%) and other countries ($105.2 billion, 49.6%). Microsoft experienced its first-ever quarterly loss on July 20, 2012, despite record revenues for the quarter and fiscal year. This loss of $492 million was attributed to a writedown related to the advertising company aQuantive, which Microsoft had acquired for $6.2 billion in 2007. As of January 2014, Microsoft's market capitalization stood at $314 billion, ranking it as the eighth-largest company globally by market capitalization. On November 14, 2014, Microsoft surpassed ExxonMobil to become the second most valuable company by market capitalization, behind only Apple Inc. Its total market value exceeded $410 billion, with the stock price reaching $50.04 per share, marking its highest point since early 2000. In 2015, Reuters reported that Microsoft Corp had $76.4 billion in untaxed earnings abroad, according to U.S. law, as corporations do not pay income tax on overseas profits until these profits are brought back to the United States.

Microsoft has experienced significant growth in recent years, as evidenced by its financial performance and expansion. From 2005 to 2023, the company has seen consistent increases in revenue, net income, total assets, and employee count. Notable milestones include a surge in revenue exceeding $100 billion in 2018, a significant jump in net income in 2019, and a robust expansion of its workforce to over 200,000 employees in 2022.

In 2018, Microsoft secured a substantial $480 million military contract with the U.S. government to integrate augmented reality (AR) headset technology into American soldiers' weaponry. This agreement could potentially lead to the delivery of over 100,000 headsets. A key emphasis of this AR technology is its ability to facilitate realistic combat simulations, as highlighted by the phrase "25 bloodless battles before the 1st battle."

Microsoft's global operations extend to numerous countries through subsidiaries, such as Microsoft Canada, established in 1985. These subsidiaries play a crucial role in local market penetration, profit generation, and dividend distribution to shareholders.

As of early 2024, the top ten shareholders of Microsoft include The Vanguard Group, BlackRock, State Street Corporation, Steve Ballmer, Fidelity Investments, Geode Capital Management, T. Rowe Price International, Eaton Vance, JP Morgan Investment Management, Bill Gates, BlackRock Life, and other shareholders collectively accounting for 68.5% of the shares.