Microsoft's 25th anniversary celebration in September 2000 included a call to action from executives Bill Gates and Steve Ballmer, who challenged employees to make the next 25 years "even more innovative and exciting" than the first 25. At an all-day event celebrating the milestone, Gates and Ballmer recalled the successes of the past two and a half decades and discussed the company's future. "Back in 1975, Paul Allen and I saw the potential to turn a hobbyist's personal computer into a device that would revolutionize the world," Gates told the more than 20,000 Microsoft employees who gathered for the event. "In 25 years, we've accomplished a lot of things people said were impossible, and we've shattered every myth about what the PC can do. ... I'm confident that we'll have even more impressive things to remember in our 50th year. We've got the people and the skills to make it happen, and we're just as passionate today about technology as we were back in 1975."
Microsoft originated in 1975 in Albuquerque, New Mexico, but soon moved back to Gates' old stomping grounds in the Seattle area. In its first year, Microsoft earned $16,005. In 1978, the company's annual sales—largely from software-development tools—surpassed $1 million for the first time. However, Microsoft's big break came in 1981, when IBM bundled MS-DOS with its first PC. In 1985, Microsoft's first Windows release was underwhelming and didn't hint at the market dominance to come. But the company's applications and MS-DOS continued to sell, and in 1986, Microsoft went public at $21 a share. In the late 1980s, Microsoft worked with IBM to develop OS/2, a successor to MS-DOS. But OS/2—and Microsoft's relationship with IBM—was doomed. Microsoft was secretly improving Windows and turning it into a true contender.
In 1990, Microsoft released Windows 3.0, and the face of computing changed almost overnight. Although Windows 3.0 wasn't as attractive or full-featured as the Macintosh OS, it was backward-compatible with MS-DOS, so it sold like hotcakes. Windows 3.0 also spelled the end of Microsoft and IBM's OS collaboration, and IBM continued working on OS/2 alone. One year later, Microsoft released Windows 3.1, which was even more successful than the previous version. The Windows 3.x product family eventually filled out with a network-friendly version, Windows for Workgroups (WFW). Meanwhile, Micro-soft plotted a next-generation system known only by the code name Chicago.
Microsoft was also working on a high-end, platform-independent OS that grew out of the company's work with IBM and OS/2. Windows NT debuted in 1993 and featured the Windows UI and a level of security and stability that escaped the rest of the Windows family for almost a decade. In 1995, Microsoft's Chicago project saw the light of day as Windows 95. The most successful software product launch of all time, Win95 sold millions of copies in its first 4 days.
Missed in the hoopla of the Win95 launch, however, was the upcoming Internet tidal wave, as Gates later described it. The company announced in late 1995 that it was embracing the Internet and proceeded to do so through subsequent versions of Internet Explorer (IE), Outlook Express, NetMeeting, and other Web-enabled tools. In 1998, Microsoft released the most controversial version of Windows yet: Windows 98. Win98 fully integrated the OS with Internet technologies and caught the attention of the Department of Justice (DOJ). Meanwhile, in the enterprise arena, NT 4.0—sporting the friendlier Win9x UI—surpassed Novell NetWare as the most popular server platform.
For Microsoft, the 1990s ended under the shadow of a federal investigation and a court verdict finding the company guilty of breaking US antitrust laws. Despite the trial, Microsoft plowed ahead with new versions of NT (which the company renamed Windows 2000) and Win98, as well as revenues of almost $23 billion for fiscal year 2000. Looking forward, the company has completely changed its focus from a supplier of shrink-wrapped software to a provider of services and software over the Internet. The Microsoft .NET initiative will guide the company into the future, according to Microsoft President and CEO Ballmer.
".NET will change computing as dramatically as any development since the PC generation began. Over the next few years, we've got our work cut out for us in creating and enabling .NET," Ballmer said. "But we've got a clear road map, an unparalleled product line, fantastic leaders, and incredible employees. It's our employees—doing the best work of their lives, creating breakthrough innovations and revolutionary software—who will make that happen."