Microsoft - Perhaps The First College Dropout Success Story

Sarika Anand Sarika Anand
Jun 1, 2022 12 min read
Microsoft - Perhaps The First College Dropout Success Story

Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by Microsoft.

Perhaps the very 1st college dropout success tale is Microsoft, which was established by Bill Gates and Paul Allen. Microsoft, a US-based multinational tech giant, was ranked No. 21 in the Fortune 500 rankings of the largest US companies by total revenue in 2020. It was the largest global technology corporation by revenue, as of 2016. Along with Google, Apple,  Amazon, and Facebook, it is considered one of the Big Five corporations in the United States software industry.

In 2018, Microsoft was declared the world's most valuable publicly-traded company. In April 2019, Microsoft has become the 3rd U.S. public company to be worth over $1 trillion, behind Amazon and Apple. As of 2020, Microsoft has the third-highest brand value in the world.

Here's more about this software behemoth and how it came to be known as "Microsoft."

Microsoft - Company Highlight

Startup Name Microsoft
Formerly Called Microsoft Consumer Products (1980–1982)
Headquarters One Microsoft Way Redmond, Washington, U.S.
Industry Software development, Computer hardware, Consumer electronics, Social networking service, Cloud computing, Video games, Corporate venture capital
Founders Bill Gates and Paul Allen
Founded April 4, 1975
Subsidiaries LinkedIn, Skype Technologies, and GitHub
Areas Served Worldwide
Current CEO Satya Nadela
Website www.microsoft.com

About Microsoft
Microsoft - Latest News
Microsoft - Industry
Microsoft - Name, Logo, And Tagline
Microsoft - Founders
Microsoft - Startup Story
Microsoft - Mission and Vision
Microsoft - Products
Microsoft - Business Model and Revenue Model
Microsoft - Funding and Investors
Microsoft - Investments
Microsoft - Acquisitions
Microsoft - Growth
Microsoft - Competitors
Microsoft - Challenges Faced
Microsoft - Future Plans

About Microsoft

Microsoft Corporation, located in Redmond, Washington, is a leading multinational tech company that produces computers, computer software, electronics, and related services.

Microsoft's best-known software products are the Microsoft Office suite, Windows operating system, and the Internet Explorer and Edge web browsers. The company's main hardware solutions are the Microsoft Surface line of touchscreen personal computers and Xbox video game consoles.

The company is organized into three equally sized broad segments: productivity and business processes (legacy Microsoft Office, Skype, cloud-based Office 365, Dynamics, Exchange, SharePoint,  LinkedIn), intelligence cloud (infrastructure- and platform-as-a-service offerings Azure, SQL Server, Windows Server OS), and more personal computing (Windows Client, display advertising, Bing search, Xbox, and Surface laptops, tablets, and desktops).

Microsoft - Latest News

“Digital technology is a deflationary force in an inflationary economy. Businesses – small and large – can improve productivity and the affordability of their products and services by building tech intensity,” said Satya Nadella, chairman and chief executive officer of Microsoft. “The Microsoft Cloud delivers the end-to-end platforms and tools organizations need to navigate this time of transition and change.”

As of October 26, 2021, in comparison to the same period previous fiscal year, Microsoft Corporation released the following results for the quarter ending September 30, 2021:

  • Revenues climbed by 22% to $45.3 billion.
  • Operating income climbed by 27% to $20.2 billion.
  • Net income grew 48 percent and 24 percent, respectively, to $20.5 billion GAAP and $17.2 billion non-GAAP.
  • GAAP diluted profits per share were $2.71, while non-GAAP diluted earnings per share were $2.27, representing a 49 percent and 25 percent rise, respectively.
  • GAAP results include a $3.3 billion net income tax benefit.
"We had a good start to the fiscal year," Amy Hood, executive vice president and chief financial officer of Microsoft, said. "Our Microsoft Cloud generated $20.7 billion in revenue for the quarter, up 36 per cent year over year."

Microsoft - Industry

The information technology (IT) industry includes firms that produce software, hardware, or semiconductor equipment, as well as companies that provide internet or related services. The three main industry categories in the IT sector are technology hardware, software and services, equipment, and semiconductors and semiconductor tools.

The software solutions industry category includes organisations that provide internet/online and software services as well as IT services. Online services are companies that provide interactive services or online databases, such as social networks or search engines.

IT services are companies that provide data processing services or IT consulting to other companies. Eventually, the software includes all sorts of commercial and consumer software, such as video games as well as business and systems software.

The three industries that make up technology hardware and equipment are Technology hardware, communications equipment, storage and peripherals, and electronic equipment, instruments, and components. Communication equipment includes telephones, routers, and switchboards.

Technology hardware, peripherals, and storage include computers, cell phones, and printers. Electronic equipment, gadgets, and accessories include companies that make barcode scanners, security systems and transformers, as well as distributors and Original Equipment Manufacturers (OEM). An OEM is a company that develops types of equipment that are used in other businesses' finished products. Many Dell laptops, for example, have Intel processors and Windows pre-installed; Intel and Microsoft may be called Dell's OEMs.

Semiconductors are materials that can transmit electricity in some situations but not in others, making them excellent for managing currents. Silicon is a very common semiconductor material. This industrial category comprises both semiconductor manufacturers and semiconductor peripheral equipment manufacturers.

Microsoft - Name, Logo, And Tagline

Microsoft is a combination of the words "micro-processors" and "software".

Microsoft Logo
Microsoft Logo

The Microsoft logo represents technological innovation that, with his Windows operating system, introduced the computer to the average person. Their logo serves as a constant emblem of quality in an operating system named "Windows," which gives individuals access to the world of technology.

The new tagline for Microsoft, the world leader in operating systems for more than a decade, is "Be what's next."

Microsoft - Founders

On April 4, 1975, Bill Gates and Paul Allen established the company, Microsoft.

Founders of Microsoft - Paul Allen and Bill Gates
Founders of Microsoft - Paul Allen and Bill Gates 

Bill Gates

William Henry Gates III is a successful American businessman, investor, author,  software developer, and philanthropist. Along with his late childhood mate Paul Allen, he co-founded Microsoft. Gates was the business's largest individual stakeholder until May 2014, and he acted like the CEO, chairman, president, and principal software architect throughout his time there.

He was the richest person in the world every year from 1995 to 2017, except for 2010 and 2013. He is the founder and chairman of BEN, Cascade Investment, bgC3, and TerraPower, among others. Through the Bill & Melinda Gates Foundation, the world's biggest private foundation, he has provided huge sums of money to many humanitarian organizations and scientific research initiatives.

Paul Allen

Paul Allen was an American businessman, researcher, investor, programmer and philanthropist. He is primarily remembered for co-founding Microsoft in 1975 with childhood buddy Bill Gates. Forbes listed Allen as the 44th richest person on the planet in 2018. Apex Learning and Stratolaunch Systems, as well as the Allen Institutes for Brain Science, Cell Science, and Artificial Intelligence, were all established by Allen.

He donated more than $2 billion to a variety of organizations, including education, animal and environmental protection, the arts, healthcare, and community services. With SpaceShipOne, he sponsored the first crewed commercial spaceplane in 2004.

He has earned several awards and distinctions in a variety of fields, and in 2007 and 2008, he was named one of Time's 100 Most Influential People in the World.

Microsoft - Startup Story

Before co-founding Microsoft, Paul Allen and Bill Gates were ardent computer nerds in an era when computers were scarce. Even in high school, Gates and Allen skipped classes for spending all of their days in the school's computer room. They were finally caught hacking into the school's computer, but rather than being deported, they were granted unlimited computer time in exchange for assisting in improving the performance of a computer system.

While still in high school, Gates and Allen founded Traf-O-Data, a modest firm with the support of Paul Gilbert, and sold a computer to the city of Seattle for traffic counts.

In 1973, Gates left Seattle to attend Harvard University as a pre-law student. However, Gates' first love, programming, never departed him, as he devoted much of his time in Harvard's computer room polishing his skills. Allen moved to Boston shortly after, functioning as a coder and encouraging Gates to forgo Harvard so that they could work a full-time job on their concepts together.

In January 1975, Allen brought Gates an article on the Altair 8800 microprocessor from Popular Electronics magazine. MITS, the Altair's maker, was approached by Gates, who offered his and Allen's services to develop an Altair version of the new Coding language.

MITS decided to sell and commercialize the software under the name Altair BASIC when Allen and Gates presented their program to them after eight weeks. Gates and Allen were so enthused by the sale that they decided to start their software firm. As a result, on April 4, 1975, in Albuquerque, New Mexico—the origin of MITS—Microsoft was created, with Bill Gates as its first CEO.

The business opened its first international office less than a year later, in August 1977. ASCII Microsoft was the name of the Japanese branch. In 1979, the firm relocated to Bellevue, Washington, and two years later, Microsoft Inc. was formed. Allen was executive vice president while Bill was chairman and president of the board of directors.

Microsoft - Mission and Vision

Microsoft's mission statement says, "Our mission is to empower every person and every organization on the planet to achieve more."

Microsoft's vision statement is “to help people and businesses throughout the world realize their full potential.” The notion stated in this vision statement is how the organization goes above and beyond to help its clients make good changes.

Microsoft - Products

Microsoft's products are quite numerous, and a significant portion of them are aimed at businesses and business customers. Until a few years ago, Microsoft's products were largely desktop apps. Things have changed drastically over the years, with Microsoft creating a slew of discrete online and mobile apps for individual users.

A few of the products are:

  • Microsoft Windows
  • Bing
  • MS DOS
  • Skype
  • LinkedIn
  • Windows Phone
  • Microsoft Solitaire
  • Visual Studio
  • X Box 360
  • Microsoft Office
  • Internet Explorer
  • Microsoft Azure

Microsoft - Business Model and Revenue Model

Microsoft's primary revenue and profits come from developing, manufacturing, licensing, supporting, and selling a wide range of hardware and software products, cloud-based services, and services that integrate with them, as well as producing appropriate digital advertising that reaches a worldwide audience, conserving and expand its field of view and foundation.

The following are the three primary segments of Microsoft Revenue Generation:

  • Business Processes and Productivity - It comprises income from the sale and licensing of the company's various software products and cloud services for various devices and platforms. Office 365 Suite, Outlook.com, Exchange Email Platforms, OneDrive and SharePoint Content Management Tools, Skype Call Services, and others are examples of such goods and services.
  • Intelligent Cloud - Revenues from Microsoft's server products and cloud storage services are included. Sales and licencing of Visual Studio, Microsoft SQL Server, System Center, Microsoft Azure, and Windows Service, among other products, support Microsoft's commercial strategy.
  • Personal Computing - It comprised revenue from Microsoft services and products that give developers, professionals, and end-users cross-platform functionality. Microsoft makes money from licensing Windows OS, Windows Phones, and Microsoft patents, as well as selling mobile phones and PC peripherals.

It also makes money from selling and licensing Microsoft Xbox gaming systems, as well as Xbox live subscriptions, transactions, advertising, and royalties from third-party video games. Search advertising on the Bing Search Engine and proceeds from display advertising on the MSN portal is also included in this category.

Microsoft - Funding and Investors

Date Round Amount Lead Investors
Sep 1, 1981 Venture Round $1M Technology Venture Investors

Microsoft - Investments

Date Organization Name Round Amount
Sep 29, 2021 Truveta Corporate Round -
Aug 17, 2021 Rubrik Corporate Round -
Jul 29, 2021 OYO Series F $5M
Jun 4, 2021 Intelight Seed Round CA$1.5M
Jun 3, 2021 Sibucayi Pre-Seed Round $1K
Jun 1, 2021 One Store Venture Round ₩17B
May 25, 2021 Siemens Healthineers Grant $2.5M
Apr 14, 2021 Bukalapak Venture Round $234M
Mar 1, 2021 Loggi Series F $212M
Feb 1, 2021 Databricks Series G $1B

Microsoft - Acquisitions

Acquiree Name About Acquiree Date Amount
Clear Software Clear Software is an Intelligent Automation platform that protects and extends technology investments. Oct 22, 2021 -
Ally.io Ally.io is a strategic goal-planning and execution management software. Oct 7, 2021 $76M
TakeLessons TakeLessons is an ed-tech company with a robust, engaging learning platform and community for lifelong learning. Sep 10, 2021 -
Clipchamp Clipchamp is the video editing platform that empowers anyone to tell stories worth sharing. Sep 7, 2021 -
Peer5 Peer5 operates the world’s largest peer-to-peer (p2p) content delivery network. Aug 10, 2021 -
Suplari Suplari focuses on leveraging machine learning to help enterprises change the way they manage their suppliers and costs. Jul 28, 2021 -
CloudKnox Security CloudKnox develops a multi-cloud permissions management platform that protects critical cloud infrastructure resources and identities. Jul 21, 2021 -
RiskIQ RiskIQ is a security company that provides digital threat management solutions for software vendors. Jul 11, 2021 $500M
ReFirm Labs ReFirm Labs is a group of IoT security experts that develops a new method for vetting and validating firmware. Jun 2, 2021 -
Kinvolk Kinvolk is a software development company with commercial support for Linux, Kubernetes, and consulting across the cloud-native stack. Apr 29, 2021 -

Microsoft - Growth

As of July 2021, Microsoft reported $46.2 billion in revenue, $16.5 billion in net income, and $2.17 in profits per share for the quarter. The company's revenues increased by 21% year over year, but its net income increased by a more robust 47 percent.

First and foremost, Azure, Microsoft's cloud computing platform, saw a 51 percent increase in revenue in the quarter compared to the same quarter a year earlier, a number that would drop to 45 percent if currency changes were taken into account, according to the firm. According to preliminary research, the 51 percent rate is the company's highest Azure growth since the fiscal Q3 2020 period or the first calendar quarter of last year.

Taking a look at the rest of the company's performance, we may rank the revenue growth outcomes of its three main divisions as follows:

  • Intelligent Cloud has grown by 30%, thanks in part to Azure's expansion.
  • Productivity and Business Processes: 21% increase, with LinkedIn (46%) and the Dynamics 365 CRM solution leading the way (49 percent growth).
  • More Personal computing is growing at a rate of 9%, with search leading the way (53 per cent, excluding traffic acquisition costs).

Microsoft - Competitors

The top competitors of Microsoft are Apple, Sony, Samsung, Mozilla, Logitech International, Google, IBM, Cisco, VM Ware, SAP, Salesforce, Red Hat, AWS, Oracle Cloud, and Alibaba Cloud.


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Microsoft - Challenges Faced

Mobile - The fact that Microsoft has yet to figure out how to break into the mobile market is, of course, its largest and most obvious weakness. The mobile market share of Microsoft is now at 3.5%. This is a pitiful figure when compared to Apple's 14.8 percent and Google/Android's 80.2 percent.

Furthermore, Microsoft's Surface tablet has only managed to capture less than 3% of the tablet market. As a result, Windows is the only major operating system without a functional mobile component.

Ecosystem - Additional problem for Microsoft would be that their platform isn't up to par. Of course, there is one exception: Office 365. However, its Windows Store is about a fifth the size of the App Store and Google Play, Microsoft only recently released a free online version of its Office suite, Bing remains a distant second to Google Search, and Google's Chrome browser surpassed Internet Explorer in total market share for the first time this month, and it doesn't have a viable iTunes competitor.

Microsoft - Future Plans

For years, Microsoft has preached about the promise of rapid IoT growth via sensors and simple devices, all while creating a cloud empire and covertly acquiring startups that will help it manage these billions of cloud-connected devices.

According to some estimates, there are now 22 billion linked gadgets, with that number expected to rise to 50 billion this year, by 2025, or 2030, depending on whose study you trust. Although there is some debate over how many devices will be linked to the internet and when they will do so, Nadella has rebuilt Windows and Azure to prepare for it.

Microsoft also faces stiff competition from companies wishing to handle the billions of internet-connected gadgets. ARM, Qualcomm, Amazon, Huawei, Qualcomm, IBM, Intel, Dell, Google, Cisco, HP, Samsung, Oracle, and others are vying for a slice of this growing market, however, there is no definite victor yet. If the software titan is to succeed, it will have to persuade competitors and form partnerships with a large number of them. And this was why in current history, Microsoft has partnered with Cortana and Amazon on Sony on the future of cloud gaming, Alexa integration, Walmart on grocery store innovation, Samsung on Android apps, and many others.

Nadella made it absolutely clear that the company is devoting a considerable amount of resources to see what the next big thing is. Simultaneously, they aren't asserting that this is their way of implying that this one item will consume all of  Android, Windows, and iOS. People have generally grasped that Windows has a billion users worldwide, Android has 2 billion, and iOS has a billion. And it's not like either of them was responsible for the death of another.

Microsoft - FAQs

What does Microsoft do?

Microsoft Corporation is an American multinational technology company based in Redmond, Washington, that makes computer software and hardware, consumer devices, computers, and associated services.

Who founded Microsoft?

On April 4, 1975, Bill Gates and Paul Allen launched Microsoft.

How does Microsoft make money?

Microsoft's primary revenue and profits come from developing, manufacturing, licensing, supporting, and selling a wide range of hardware and software products, cloud-based services, and services that integrate with them, as well as producing appropriate digital advertising that reaches a worldwide audience, conserving and expand its field of view and foundation.

Who is the current CEO of Microsoft?

Satya Nadella is the current CEO of Microsoft.

Which companies do Microsoft compete with?

The top competitors of Microsoft are  Apple, Sony, Samsung, Mozilla, Logitech International, Google, IBM, Cisco, VM Ware, SAP, Salesforce, Red Hat, AWS, Oracle Cloud, and Alibaba Cloud.

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