Business Report By Alessandro Cowley – 9.1 Commerce, Mr. Sassine. This is a business report, on arguably – the most successful business in our world today, and the most successful business in the 20th century. The name of this prolific business which I am talking about, if you haven’t already guessed is Microsoft. A company with an overall revenue of over $60 billion USD, and a market cap of nearly $260 billion USD, making it the most prolific business of all time, the reason I chose to write a business report on Microsoft, is because the story of this organization is something that I admire, it’s a success story in the making, how one man’s vision changed the way our world works, changed the way we work, by making a product which is indispensable and an absolute necessity for almost every office and workplace and home in our modern lives

Microsoft was founded on April 4th, 1975 in Albuquerque, New Mexico By Bill Gates and Paul Allen. The story of Microsoft goes like this – a 24 year old geek who was a wiz kid at computers called Bill Gates left a career of finance and pursued a career in the manufacturing of computer software, as he abandoned his Harvard MBA degree in his last semester of his 2nd and final year. Bill Gates had a vision to do at the time something which was considered the impossible, he wanted to form a microcomputer company, which specialized in Micro Instrumental and Telemetry Systems (MITS), so to seek this vision he moved from Boston to Albuquerque, New Mexico and met a man who had a similar vision named Paul Allen. But this is important to understand, Microsoft didn’t get a instant hit, it wasn’t very successful for the first 10 years, as most of that time was spent on research and trial + error, many of the early projects of Microsoft failed, but only one was in the mind of Microsoft CEO Bill Gates – to make a personal computer which could be affordable and accessible to most people around the globe, Bill Gates kept that in mind, and all the failures from other projects didn’t really make Bill care that much, but the personal computer project was very close to him, he knew that if it went off properly it would be his mainstream success, just to give you a background view, back in the mid-late 70s and in the early 80s, computers were not really used at home, they were huge machines used in industrial places, worth hundreds of thousands of dollars, and all they did was print out the answer, they didn’t even have a screen, and these machines were mega huge, massive, they could never it into a house, and people wanted something like computers, and Bill knew he could deliver that, but he also knew they would be a lot of hard work, as his project was only in its early stages.Bill Gates was the average man, with the average salary, he knew he could do better, but lots of factors came in the way, but then something happened in 1985, which probably changed the course of the computing world. In August of 1985, Microsoft partnered with

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IBM, and together they produced an operating system called OS/2, used for industrial computers in commercial companies, it was much faster and better than the previous operating systems. Later than year, on November 20, 1985, Microsoft released it’s first retail version of Microsoft Windows, and Microsoft appeared on the stock market, going from $21 to $28 in the first day in trading, with the value of each share peaking up to $30, this resulting in Microsoft’s two founders – Bill Gates and Paul Allen, being made instant multi millionaires. Bill Gates but his stake on Microsoft as $233 million, a huge contributor in Microsoft’s total-value worth over half a billion dollars in 1986. In 1989, Microsoft delivered it’s first step to making PC’s. They finished the production of an office suite – calling in Microsoft Office, but only two applications were sold – Microsoft Word and Microsoft Excel. But better stuff was still to come, after the initial step to giving people personal home computers, on May 22nd 1990, Microsoft delivered Windows 3.0, a system which beat every other operating system on the market at the current time, in terms of the retail of computers, Windows 3.0 was about half a decade before it’s time, it resulted in amazing sales – 100,000 companies had purchased the product for there computers in the first 2 weeks, and over 300,000 people had bought it for there computers in the first 4 weeks. In 1993, Windows NT 3.1 was out, this contained much better graphics, a way better interface and computers the came with this were worth upwards of $15,000. Windows NT 3.1 was outstanding for it’s time, it had a 28MB RAM and could read files, save files on it’s memory and also Office could now be used on Home computers. But that was merely nothing. Since 1986-1993, Microsoft from $500 million now had over $10 Billion, and was ranked the 16th richest company in the world – according to Forbes magazine in 1994. But then in 1995, the product which would revolutionized and change computers forever was released – Windows 95. It included a start button, a 32MB RAM, it was the most successful product of all time, over a million copies of this product was sold worldwide in the first 4 days since the launch, this making Bill Gates a billionaire, and making Microsoft climb up the ladder of glory. But then something happened that could have caused a huge dilemma to Microsoft – the World Wide Web. In 1995, the World Wide Web was released to every single individual who owned a computer; all they had to do was buy the browser, and at the time Microsoft hadn’t developed a browser for the World Wide Web, but a company called Netscape made one it was very successful. Netscape was like oil to an already lit fire, making Microsoft the fire, making Netscape the oil, it was the first major issue that Microsoft encountered, but they handled it very well, as Microsoft are in the industry of computer software, they decided to beat Netscape, so they made there own Browser – called Internet Explorer. They released it in August of 1995, selling it for free with Windows 95

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Plus!, it was a huge hit, making the millions o Netscape users shift to Internet Explorer. Also in the August 1995 edition of Windows 95 Plus! – MSN was released, a software which allowed people the IM*communicate with people anywhere around the world who were on the World Wide Web. In 1997, Windows 97 was released, and it was also a huge hit, many more people bought the product or upgraded from Windows 95, the next year Windows 98 came out, this was an amazing product which was much better than the previous 2 editions, and it sold a million copies inside a week, it also included the first music and movie player ever created on computers – with the release of the new software; Windows Media Player, also Windows 98 was sustainable to handle CD -ROMs. Windows 2000 proved to be a success but was mediocre compared to Windows 95 and Windows 98, it was about on par with Windows 97, but it was the most complex operating system ever * - IM = Jargon for Instant Messaging created, it was focused and built on NT technology, and because of this, it crashed a lot. In 2000, Windows also released a new Office suite – Microsoft Office 2000, the first for almost 5 years, it was easier to use, basically allaround it was considered a much better office suit than Microsoft Office 1995, the revenue from Microsoft Office 2000 is $14.2 Billion and counting. In 2001, Microsoft corrected this problem, and let loose the most popular operating system in the world right now – XP. The XP introduced a brand new graphic user interface, it ran much faster, hardly would crash and had many other major changes. Later that year, Microsoft released a product which was not in it’s industry, Microsoft released a product which was no where near the world of computer software, with the release of the Xbox, thus moving Microsoft forward into the game console market, now Xbox is used

in most airplanes around the world as a game console. In 2003, Microsoft Office released a new Office suit, after Bill Gates made a promise in 2000 that a new office suit will be released every 2 years, Microsoft failed the target as they released it in 2003, but it was still an overall success, it met expectations, and Microsoft Office 2003, is the most popular Microsoft Office system used in the world today, it is used in about 68% of all computers (Including Apple Mac’s). In 2005, Microsoft made it’s first major loss, they released Office 2005, but it was a failure, it hardly sold, it was a disaster, making more loss than profit, putting Microsoft back a lot, they pledged to

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Windows XP

make a better Office Suite, the problem with Office 2005, is that is failed to connect properly, they were heaps of hiccups, and the Beta couldn’t support the operating system. 2007 called for huge celebration, Microsoft’s largest profit gain in over 12 years, with the production of the brand new operating system – Microsoft Windows Vista, and Microsoft Office 2007, both making a combined profit of $230 billion, something Microsoft needed after the 2005 disaster. Vista is a great program, but some applicants don’t properly work on Vista. Microsoft Office 2007 was great, a piece of genius, sold 8 million copies in just 10 days. On June 27th 2008, the world’s richest man and CEO and founder of Microsoft – Bill Gates retired from day to day work at Microsoft, following the 24 month transition period from his role as CEO and Chief Software Architect of Microsoft. Bill Gates has had upwards of $5 million USD put into his bank account every single day since 1995, his worst take home pay for one day being $5 million, 93 dollars and 15 cents – not bad, considering his highest take home day pay was $1.4 billion in 1995 after Windows 95. Now that he has retired from his job, his take home pay will drop from to about 3-4 million a day (CEO and CSA of Microsoft fetched him 2 million daily), but the money he acquires from shares etc, will still be rocket high – even on a daily basis, but now Bill Gates is the chairman of Microsoft, only going there once in a while to see how the company is going, he also visits important board meetings, because his ideas and plans are something Microsoft can’t do without.

There is no specific location for Microsoft, there is a Microsoft Headquarters, but that’s about it, Microsoft is spread world wide, in all countries on this planet, stretching from the crispy Cuban seas, to Big Ben in London, to the Monstrous terrain in Ulaanbaatar, Mongolia and the sea of sharks in Johannesburg, South Africa. Here are the best images I could find on Microsoft HQ on Google Earth, it is located at: Coordinates: 50 01′45.29″n 110 13′20.69″w

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Also, Here is Singapore’s Microsoft Corporation HQ:

The type of industry in which Microsoft belongs too is secondary, they produce goods in the form of Computer Software, Publishing, Research and Development, Computer Hardware and Video games, so therefore, Microsoft is a corporation which operates as a secondary industry as it produces products.

The managerial structure of Microsoft is broken down into many facets because for the simple reason of the amount of employees, there are over 90,000 employee’s working for Microsoft from 105 countries, which ranks upon one of the most employed companies in the world. At the top of Microsoft; the company is run by a board of directors, there are 10 of these people, most of them are outsiders to the company, out of these 10 board of directors, only 1 is permanent – Bill Gates, as he is the chairman of Microsoft and the founder of Microsoft, former CEO of Microsoft and former CSA of Microsoft. The current 2008 board of directors for Microsoft are: Steve Ballmer (Yale Bachelors Law degree, MBA from Wharton experience from working at Ford general manager, board of directors Houston Investment Bank, currently the CEO of Microsoft), James Cash Jr. (Columbia University MBA, experience from working at Toshiba, former CEO of HP and Compaq), Dina Dublon (INCEAD Finance degree, Johannesburg Imperial Bank GM for 17 years), Bill Gates (Harvard Bachelors in Law, Harvard Bachelors in Finance, Harvard MBA failed to complete, but he completed an honorary degree in 2007, former CEO of Microsoft, former CSA of Microsoft, current Chairman of Microsoft and founder of Microsoft in 1975), Raymond Gilmartin (Wharton Commerce and Masters in Finance and Masters in Economics, former GM of General Motors – 23 years), Reed Hastings (Yale Law degree – 13 years supreme court lawyer, 6 years as board of directors of Macintosh), David Marquardt (MBA Harvard University, former CEO of Goldman Sachs for 31 years), Charles Noski (Oxford University degree in Political Management and Law,

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Wharton Masters in Economics, 16 years board of directors BMW), Helmut Panke (IIM Ahmedabad (IIMA), IIT Mumbai, Tata’s board of directors, 15 years, Reliance CFO 4 years, Computer engineer 9 years) There are many other facets with incorporate the managerial structure of Microsoft. There is an Executive team, made up of 16 company officers from around the world, but basically the key people of Microsoft are: Bill Gates (the current chairman), Steve Ballmer (current CEO of Microsoft), Ray Ozzie (the current CSA of Microsoft), Craig Mundie (current CRSO of Microsoft), these people are key elements for Microsoft, but of course there are thousands of other employees, who work hard day and night making different service packs, improving office, making better system operators and working around the clock to make every Microsoft PC user safe from the most recent threats, and fixing problems and so on, also making graphic cards for the Xbox and the list goes on, out of the 90,000 odd employees, obviously some have a huge task, some have a small task, but at the end of the day, each of them does there job, and because they do, Microsoft is what it is today.

In 1998, Microsoft got sued by the United States government for being an abusive monopoly, and the judgment was passed April 3rd, 2000, in the case called: The United States vs. Microsoft, an antitrust case because Microsoft insisted that Internet Explorer (which first appeared in the Plus Pack sold separately from Windows 95) was not a product but a feature which it was allowed to add to Windows, the courts did not agree with this, they believed it was Microsoft’s plot to put down the world’s best browser at the time – Netscape, to kill all the competition.

I ACKNOWLEDGE THE WORK ON THE OTHER PAGE IS NOT MY OWN WORK. IM JUST USING A QUOTE.

In the 2008 Annual report, Microsoft stated:

“ Lawsuits brought by the U.S. Department of Justice, 18 states, and the District of Columbia in two separate actions were resolved through a Consent Decree that took effect in 2001 and a Final Judgment entered in 2002. These proceedings imposed various constraints on our Windows operating system businesses. These constraints include limits on certain contracting practices, mandated disclosure of certain software program interfaces and protocols, and rights for computer manufacturers to limit the visibility of certain Windows features in new PCs. We believe we are in full compliance with these rules. However, if we fail to comply with them, additional restrictions could be imposed on us that would adversely affect our

business. ”

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This picture shows Bill Gates testifying………

Microsoft was forced to split into 2 separate units, and also had to pay a hefty fine of $340 million, as they were found guilty of being an antitrust organization to the United States of America, also being an “abusive monopoly”, but the 2 separate units was appealed, and then it got overturned in 2001 by the department of justice after Microsoft appealed the antitrust charge, saying that when Internet Explorer was released it was just an extra feature not a product, so many people think that luckily for Microsoft, they just got away with a slap on their wrists, when they deserved much more than that. Microsoft has had it’s fair share when it comes to walking in and out of courtrooms, legal matters, heaps of boring paperwork that only lawyers can make sense of and so on, but basically the laws and regulations which are fixed upon Microsoft is that they can NEVER ever use there power in the PC world to get advantage over other organizations, Microsoft, can never act like the bully in the world of software, like it did before to Netscape, Microsoft will not be allowed to employ the “abusive monopoly” tactics again – and if they do, they will have to take the harsh consequences. The federal government also now says that Microsoft is not allowed to ever defame another company – through advertisements, through messages or any other means. Microsoft also is not permitted to be an antitrust organization ever again, when ever they release anything – it has to be run through the government, because the United States found that Microsoft was being antitrust, through the release of Internet Explorer, and the rivalry between Microsoft and Netscape, which Microsoft won after what was termed “abuse of power” and “abusive monopoly”, these are the laws/restrictions and regulations which Microsoft must now always keep in mind.

Microsoft’s target market is basically anyone who owns a computer, anyone who is thinking of buying a computer and also, anyone who is interested in buying Microsoft’s game consoles, such as the amazingly prolific Xbox (Released 2000/01) and the 2nd best game console after the Play station 3 – Xbox360 (2004/05). Microsoft has made the following products: PRODUCT ONE:

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Microsoft Windows – A series of software operating tools, made my Microsoft, it is the dominate force in the personal computer market. Windows, has about 90% of the operating system market world wide.

- A screenshot, of Windows Vista Ultimate (Build 6000) PRODUCT TWO: Microsoft Office - Microsoft Office is important software which 98% of personal computers have and is usually called Office Suite, it includes, Word, Excel, Powerpoint, Access and so on. It was Introduced in 1989 with Windows 1990, then the next Microsoft Office suite was in 1995, followed by 1998 and then Microsoft Office 2000, Microsoft Office 2003, Microsoft Office 2005 (this was a failure), Microsoft Office 2007 (great success), Microsoft Office 2010 (to be released December 2009).

- The 2003 Microsoft Office Suite Logo.

PRODUCT THREE: Microsoft Servers (Windows Server System ) – This is a brand which has all of Microsoft’s servers products, which included server editions of Microsoft Windows operating system and so on. The intent of Microsoft Servers is for major corporations or businesses, the servers are also used for internet cafés, they are use for password logins (like the Novell System at our School, but much more complex, it’s the exact one as the system in the PBL rooms). Microsoft Servers is used for multi user systems, its good for a place where there are 50 computers, with 170 registered users, because the servers act as a system where you enter your password and you access your account, if you save work, you can access it on any computer connected to your specific server, as long as you saved it on your account, and the work has to be accessed from your account, but from any computer in the server.

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- Recognize these?

PRODUCT FOUR: Microsoft Visual Studio - This is the Integrated Development Environment from Microsoft. It is used for graphical technical work, it is a great software to make websites and graphical work such as posters/advertisements etc.

- This is the logo of the 2005 version.

PRODUCT FIVE: Microsoft Expression Studio – This is a suite of design as well as media appliances made by Microsoft, which targets designers and developers

- The box set of Microsoft Expression Studio

PRODUCT SIX: Xbox360 – The Xbox360 started a revolutionary start to the world of game console, made my Microsoft, the Xbox360 allows you to play online, play any games and play TV, movies and music – you can even store it on the Xbox360. The Xbox360 was made after the development of the Xbox, it competes with the PS3, Wii and other amazing Game Consoles. The Xbox marked Microsoft’s step forward into the world of gaming and making game consoles.

- Who wouldn’t want this beauty?

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PRODUCT SEVEN: Windows Live – This brand is all of Microsoft’s software products which are on the internet, such as Windows Live Messenger, Windows Live Hotmail (after Microsoft bought hotmail), Windows Live Search (After Microsoft bought over MSN)

- The logo of Windows Live. There are many other products which Microsoft have developed over the years, but there just too many to name, but I have covered the top 7 products for Microsoft in the last 15 years.

Microsoft has gotten funded through the years, through a lot of advertisements, the amounts of advertisements on the internet today are so many! Microsoft gets funded by the advertisements on all of it’s products, Internet Explorer – so many advertisements, billions of them, out of that, a special amount goes to hosts such as Google, but 0.05% of all advertisements used on Internet Explorer goes to Microsoft, this might not seem a lot, but think about it – billions of ads, lets say on Sydney Morning Herald, struggling home loans is the article, and then on the right hand side, an advertisement is there of a bank saying that their interest rates are lower, for that, the bank paying the advertisement would be paying upwards of $3,000 per hour, now if that article is active for a week, how much would the bank pay the newspaper company? Over half a million dollars, that’s the answer – now 0.05% of that is 25,200 – not bad for Microsoft, but think – billions of advertisements are there as well, so 25,200 x 1 billion – now think. Doesn’t Microsoft make a killing from this? Same thing happens through ads on the Microsoft Website, there worth a lot! So the main funds are drawn from advertisements by Microsoft, in the initial stages of Microsoft back in the 70s, Bill Gates was the main man who did most of the funding, in the 1986 Microsoft was worth half a billion dollars, Bill Gates funded $233 million, that’s almost 50% of the money, but now Microsoft is funded by advertisements, and sponsoring etc.

Many people believe Bill Gates retired from formal duties at the top at the right time, they believe the Golden run of Microsoft is coming to an end, and the magnificent Golden age of Microsoft is slowly falling, since 1995, Microsoft has being the dominating company in the world, WorldCom came close, but the bankruptcy of WorldCom meant Microsoft is on top, the distance between Microsoft and the 2nd most prolific organization/company is an Everest, and no one is expected to catch up to Microsoft for a long time. But without a shadow of doubt in my mind right now, my prognosis is that the greatest threat, the greatest issue facing Microsoft right now has to

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be Apple Macintosh, they are causing the greatest competition, Apple Macintosh are slowly catching up, there products are getting much better, and many argue that Apple Mac’s have far superior technology to Microsoft. But saying that, Microsoft is much more popular around the world, many people don’t know Macs, all they know is PC and Microsoft, but if Apple can manage to advertise themselves better, maybe Microsoft would be at a more foreseeable threat. Microsoft has to up the anti if they are going to wade of the threat Apple Macintosh causes, they have to fight fire with fire, if Apple produces a great product, Microsoft must produce an Excellent product. Open Office also poses a potential threat, as Open Office gives away an Office suite for free, but Microsoft charges money for an Office suite, and right now, I personally think for free, Open Office is much better, of course I’m not saying that Microsoft has to make their office suite for free, all I’m trying to convey is that Microsoft has to make a better Office Suite, because after looking at how amazing Open Office’s Suite is and it’s free, then comparing with Microsoft’s Office and seeing that it costs upwards of $150, you think – why not use Open Office? Microsoft has to make better quality products, or things will get out of hand, Microsoft much make products that are not just excellent or great – but world class products – products which no one else has the ability to duplicate or beat, Microsoft got the money advantage, but they should use it my making there products unbeatable, if it means hiring new people – then do it, but they should do all they possibly can to make Microsoft a better company, a better business, being the richest company in history – Microsoft should show that off, make products which no other company can beat, if they do that, then we all know that they will go back into the revenue of the golden days which they experienced through the late nineties. The main issue why Microsoft isn’t succeeding in the way they did is because they haven’t really established themselves on the internet, Google is the leading company on the Internet, even though they make half of what Microsoft makes in one year, there catching up, and very quickly too, last year, Bill Gates realized this and he then tried to buy Yahoo!, but his masterful plot failed, he wanted Yahoo! For over $60 billion, but Yahoo! Refused, saying that in the long run, they can make over $60 billion in 4 years. Microsoft is way behind in the cyber world, Google is way in front, with the production of the Google Chrome, with Gmail, G-Chat, Google Maps, Google Earth, Google News, and many, many more, The prospect of Google looks great for many more years, but Microsoft doesn’t look like having such a clear future, this issue of the internet is important, they must find away to beat Google, to beat Yahoo, find away to do something – they already bought over Hotmail, which is a great major step, there reaping the benefits of it now, but there no where near the super giants – Google and Yahoo, they had a 10 year head start, but Microsoft is capable of everything, with the entrepreneurial brain of

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Bill Gates, anything can be done, if Bill wants to get ahead of Google, he will do it – if it takes him a year to get a plan, he will get it, and it will be successful, he will manage to get Microsoft ahead of Google, the 10 year head start will soon disappear, there on the direction now, but more must be done! Gates is amazing, technically and in every facet, all they need is a scheme and a plan – the rewards will be a future full of prosperity, because what happens if someone invents something better than the computer? If that happens, I tell you what – Microsoft can did a hole and lower a Mahogany coffin. They must invest in the internet, I must brace on that very important point.

So there it is, a thorough business report on the most prolific company of all time. Led by an amazing man – Bill Gates, the world’s richest man, maybe not in wealth anymore, but he is definitely the world’s richest man when it comes to life, when it comes down to having a heart, helping all those people with the Melinda and Bill Gates foundation. Microsoft will strive and aim for new heights, even in the absence of the more amazing business man this world has ever seen.Remember what he said. “Be nice to nerds! One day you could end up working for one!” I’ll let you ponder on that quote, but that’s my queue to leave, so Adios all who reads this and I hope I have taught you something and enhanced your understand and learning of how a business works and how the most successful business of all time is led, how it runs and how it works. Thanks for reading this.

By Alessandro Cowley

9.1 Commerce, Mr. Sassine.

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Bibliography

1) Microsoft (2008) [Online], accessed from the internet on 10th September: http://en.wikipedia.org/wiki/Microsoft

2) Bill Gates (2008) [Online], accessed from the internet on 11th September: http://en.wikipedia.org/wiki/Bill_Gates

3) Bill and Melinda Gates Foundation (2008) [Online], accessed from the internet on 13th September: http://en.wikipedia.org/wiki/Bill_Gates

4) Xbox360 (2008) [Online], accessed from the Internet on 11th September: http://en.wikipedia.org/wiki/Xbox_360

5) Windows Live (2008) [Online]. Accessed from the Internet on 13th September: http://en.wikipedia.org/wiki/Xbox_360

6) MSN Historical Timeline (2005) [Online]. Accessed from the Internet on 12th September: http://www.microsoft.com/presspass/press/2002/nov02/11-08MSN8GlobalTimeLine.mspx

7) United States vs Microsoft antitrust case (2004) [Online], Accessed from the Internet on 10th September: http://en.wikipedia.org/wiki/United_States_v._Microsoft

8) Internet Explorer (2008) [Online], Accessed from the Internet on 13th September: http://en.wikipedia.org/wiki/Internet_Explorer

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