It all started with two kids who shared a geeky hobby.
Growing up in Seattle, childhood friends Bill Gates and Paul Allen were obsessed with an emerging industry called computing. As teenagers, they haunted the University of Washington's computer lab, the only place they could get their hands on the technology that so fascinated them.
By 1971, they'd taken so many liberties with the lab's equipment that its director sent Allen a letter demanding he turn in his key. Little did Allen know that in 2017, he'd read that letter aloud to a crowd gathered to celebrate the dedication of a new computer science school in his name.
By then, Gates and Allen had accomplished their goal of helping put a computer on every desk and in every home, laying the foundation for the digital technology that has since proliferated into every corner of our lives. They called their company Microsoft, and it led the personal computing revolution.
Revenge of the hobbyists
In 1975, the two friends were in their twenties: Gates was studying at Harvard and Allen had dropped out of college to take a job at Honeywell. Allen had a lightbulb moment that would change their lives — and ours — when he spotted an ad on the cover of Popular Electronics. It was for a build-it-yourself computer called an Altair 8800.
A company called MITS sold the computer as a kit. An Altair was about the size of an apple crate, with no screen, just lights and switches on the front. You'd program it by punching holes into paper.
Allen wondered if he and his friend could create a programming language for it.
Allen "went running to Bill and said, 'We have to catch this train,'" said Ed Lazowska, a computer science professor and Bill and Melinda Gates chair emeritus at the Allen School at the University of Washington. "The rest is history."
Together, they built something called an "interpreter," which would tell the computer how to execute commands from the user. They offered to license the program to MITS, which could sell it along with the kits. MITS said yes. They were in business.
Allen and Gates moved to Albuquerque to work with MITS, forming an informal partnership called "Micro-soft." Their program for the Altair became Microsoft BASIC — think of it as the root of all their software that was to come.
Microsoft wasn't the only company that was creating programming. Computer makers did, too, although sometimes it was just simple binary. The problem was, computer makers often wrote programs that only worked for specific machines. They couldn't be used on other devices. Microsoft's big idea was to make programming that worked on many models and could be sold separately.
The notion that software itself had value was novel — so much so that Gates had to write a letter to fellow hobbyists begging them to stop pirating it. "As the majority of hobbyists must be aware, most of you steal your software," Gates wrote in 1976. "Hardware must be paid for, but software is something to share. Who cares if the people who worked on it get paid?"
According to Lazowska, this was a seminal moment for the fledgling software industry. "The notion that software had value really stems from that letter that Bill wrote to hobbyists," he said. "Of course, these days we think software is the value, in many ways. That's where the creativity arises more than anywhere else. That's one of the many things Microsoft brought to the world. It's the software industry."
Back in the 1970s, the new industry was facing a big limitation: a small pool of customers. Computers mainly belonged to kit hobbyists — the early adopters who Gates was trying to persuade to become paying customers — or to the academic and business institutions that could afford much more powerful room-sized mainframes.
"When Microsoft was launched, digital technology was in universities and major companies in multimillion dollar computers, locked in big air conditioned rooms," Lazowska said.
But Gates and Allen had a moonshot idea: To put a computer on every desk. Running Microsoft software, of course.
"Now, digital technology is absolutely everywhere, and that's the transformation," said Lazowska. Today, he says, computing is so omnipresent — it's the phone in your pocket, the watch on your wrist, the laptop you use for everything — that we barely think about it. "In many ways, it's the vision of Bill and Paul that drove that transformation," he said.
The PC boom
Most people learned of Microsoft's next big innovation because it came preinstalled on the first home computers IBM rolled out in the early 80s. It was called the Microsoft Disk Operating System — MS-DOS, for short.
In a shrewd business move, Gates and Allen made sure they could license MS-DOS to any computer manufacturer, not just IBM. That non-exclusivity deal helped Microsoft software take over the world.
MS-DOS was groundbreaking, but it wasn't exactly user-friendly by today's standards.
At a recent vintage computer festival in Seattle, Michael Brutman booted it up on an early PC. "The DOS environment is very minimal," he said. Really minimal. Just a black screen where you type in commands listed in a two-inch thick manual, which he also had on display.
Still, the advent of the PC — short for personal computer — meant that ordinary people were learning how to type those commands. Even if they didn't work for a major research university or corporation, they might encounter a PC in their school or office.
" If you used an IBM PC, Microsoft was there," Brutman said.
Microsoft's next step into the desktop world was even bigger. Enter Windows.
Instead of typing commands, Windows allowed users to navigate by pointing and clicking on colorful, intuitively-named icons. Microsoft didn't invent the graphic operating system, but it did make it cheaper and more widely available — and that really helped personal computers take off.
For University of Washington tech historian and author Margaret O'Mara, two things come to mind when she thinks back on Microsoft's greatest hits: " I immediately think of Windows and Office," she said. "I think of the system that by the end of the 1990s was running on nearly every single desktop computer in the world."
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That system introduced household names we still use today: Word, PowerPoint, Excel. The idea that applications could be used across industries and parts of society was something new.
"Software was a tool you could use in your home, in your school and in your office," O'Mara said. "These were no longer separate things."
Attempts to reboot
By now, Microsoft's moonshot was a success. The company did get a PC on every desk — running Microsoft software. Now it needed a new frontier.
Microsoft was a software company, but by the early 2000s, its top rivals were scoring big wins in hardware. Apple built its devices in-house, giving the company more control and a product that was often sleeker and easier to use. Its iPod and iPhone were the superstars of the mobile technology world.
Microsoft's attempts to compete — like the Zune, its 2006 ill-fated answer to the iPod — didn't pan out. Likewise, the Windows Phone and the Kin, Microsoft's 2010 forays into smartphones, were a bust.
But one of the company's big hardware reinvention efforts paid off. Microsoft branched out to become a gaming company, driven by the wild success of the Xbox video game console, which debuted in 2001. Hit games like Halo gave it unique appeal, and the idea to let gamers play together over the internet on Xbox Live set the gaming system apart.
Today, the company is reinventing itself yet again. Microsoft Azure, its cloud computing platform, has been a big revenue driver. The company uses its vast network of data centers to sell technology services to other businesses, many of which are adopting artificial intelligence applications and need cloud computing to run them.
Microsoft, too, is betting heavily on artificial intelligence. With its partner OpenAI, Microsoft has built ChatGPT into its Bing search engine. Microsoft is also increasingly outfitting Windows and Office products with Copilot, its in-house AI software.
"The company's ability to reinvent itself is remarkable, and that's pretty unusual," Lazowska said. "Many companies just keep riding the same horse and don't change — and eventually fade away."
Full disclosure: Microsoft is a financial supporter of NPR, but we cover them like any other company.
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