Microsoft turns 35: Best, worst, most notable moments

An opinionated look back at the good, the bad and the ugly of Microsoft's 35-year history

Bill Gates co-founded Microsoft in 1975.

Bill Gates co-founded Microsoft in 1975.

The year is 1975. Gerald Ford is in the White House, South Vietnam falls, Muhammad Ali defeats Joe Frazier in the "Thrilla in Manila" world championship boxing match, the late-night comedy show NBC's Saturday Night (later called Saturday Night Live) debuts, One Flew Over the Cuckoo's Nest sweeps the Oscars, and Captain & Tennille's "Love Will Keep Us Together" and Glenn Campbell's "Rhinestone Cowboy" top the music charts.

And in Albuquerque, N.M., Harvard dropout Bill Gates and his high school friend Paul Allen set up a tiny business to write software for a new microcomputer called the Altair 8800. Their first product is the Altair BASIC language. At some point during that year, the company is called Micro-soft, and then MicroSoft, before it is ultimately named Microsoft.

From those modest beginnings, that company went on to help give birth to an entire industry, change the way we live and work, and become one of the largest software companies on the planet, creating countless millionaires -- and several billionaires -- along the way.

As Microsoft celebrates its 35th anniversary, I've decided to take an idiosyncratic and opinionated look at the best, worst and most notable moments, technologies, products, decisions and people in the company's history. A lot has happened in that time, so if you think I've left anything out or disagree with my choices, share your thoughts in the article comments.

Now, step into the Wayback Machine and read on.

Savviest business deal

In November 1980, Microsoft signed an agreement with IBM to provide an operating system for the still-secret IBM Personal Computer, to be released in 1981. The operating system would ultimately be called PC-DOS, a rebranding of Microsoft's MS-DOS.

Microsoft didn't actually write MS-DOS; instead it paid to have Seattle Computer rewrite its own QDOS (Quick-and-Dirty Operating System) for the purpose, without telling Seattle Computer to whom the operating system would be sold. (Microsoft signed the contract with Seattle Computer one day after signing the contract with IBM.)

QDOS was largely based on the CP/M operating system, owned by Digital Research. Ironically, IBM had originally turned to Digital Research for an operating system for the IBM PC, but the two companies' negotiations broke down. Too bad for Digital Research; Microsoft went on to use its relationship with IBM as a springboard to develop its worldwide dominance in business operating systems.

Smartest acquisition

In July 1987, Microsoft bought Forethought Inc. for $14 million in cash. Forethought had developed a presentation program for the Macintosh, initially called Presenter, which it renamed PowerPoint for trademark reasons. PowerPoint later became one of the core programs of Microsoft Office, which for many years has been the dominant office productivity suite.

Prickliest partnership

In August 1985, Microsoft and IBM signed a deal to partner in the development of an advanced operating system called OS/2. The operating system never achieved the widespread popularity of DOS -- or, later on, Windows -- and became a bone of contention between Microsoft and IBM.

Microsoft devoted most of its development resources to Windows and Windows NT, rather than OS/2, and ultimately abandoned OS/2 to IBM, which eventually abandoned it as well.

Most surprising investment

In August 1997, longtime Microsoft rival Apple Computer was teetering on the brink of disaster and in desperate need of cash. Microsoft rode to the rescue, buying $150 million in nonvoting Apple stock. As part of the deal, Microsoft agreed to continue to develop Microsoft Office for the Mac, and Apple agreed to bundle Internet Explorer with the Mac OS operating system as the default browser.

Both parts of the agreement have since fallen by the wayside: IE for the Mac is gone, and although Microsoft continues to update Office for the Mac (usually some time after the Windows version is updated), it isn't required to do so.

Most prophetic memo

In February 1976, Gates issued a public letter berating people who were freely distributing tapes of the version of BASIC he and Paul Allen wrote for the Altair, without paying Microsoft for them. Here are excerpts from Gates' "An Open Letter to Hobbyists," sent to the Homebrew Computer Club:

The amount of royalties we have received from sales to hobbyists makes the time spent of Altair BASIC worth less than $2 an hour.

As the majority of hobbyists must be aware, most of you steal your software.... Who cares if the people who work on it get paid?

Who can afford to do professional work for nothing? What hobbyist can put 3 man years into programming, finding all bugs, documenting his product and distribute for free?

Although the term open source hadn't been coined at the time, this letter set the stage for Gates' career-long battle with open-source and free software advocates.

Most beloved OS

Two operating systems stand out in Microsoft's long history as having more than their share of fans: MS-DOS 5 and Windows XP. Released in 1991, MS-DOS 5 was stable, fixed the worst problems of its notoriously buggy predecessor, MS-DOS 4, and for the first time broke the 640K memory barrier for DOS, allowing memory beyond that to be used for programs, drivers and so-called Terminate and Stay Resident (TSR) programs.

With 2001's Windows XP, Microsoft finally merged its consumer and business lines of Windows, essentially building a consumer-oriented operating system on top of the stable Windows NT kernel. It also finally stopped using DOS as the base operating system, making Windows XP far more stable and reliable than previous versions of Windows.

Some people believe XP was too much of a success, because Microsoft has had a hard time getting people to give it up for newer Windows versions. In 2008, more than 200,000 users signed InfoWorld's "Save XP" petition asking Microsoft to continue support for the aging operating system.

Which is the most beloved? I'll give the nod to Windows XP. MS-DOS 5, as good as it was, ultimately led to a dead end -- it was the best operating system in a line that eventually died out. Windows XP, in contrast, lives on not only on many people's computers, but in the heart of Windows 7, which still retains its predecessor's merged business and consumer lines.

Most reviled OS

Here you've got to choose among an unholy trifecta of MS-DOS 4, Windows Me and Windows Vista. Released in 1988, MS-DOS 4 was notoriously buggy, and many applications refused to run on it. Users commonly reverted to MS-DOS 3.3 or jumped ship to Digital Research's DR-DOS 3.41 to avoid MS-DOS 4, Microsoft's first serious misstep in operating systems. Windows Me, released in 2000, was buggy as well, and plagued by installation problems and a plethora of hardware and software incompatibilities.

But I give the "most reviled" crown to 2006's Windows Vista, which proved to be far more of a fiasco than Windows Me or MS-DOS 4. The five-year gap between the release of XP and Vista was the longest gap between versions of Windows ever, so people had high expectations for Vista. Unfortunately, it was bedeviled by hardware incompatibilities at launch, it wouldn't run on older hardware, and many people disliked its resource-hungry user interface.

Making matters worse, many PCs that were tagged as "Vista Capable" couldn't run the full version of the operating system -- a situation that led to a class-action lawsuit against Microsoft.

Tags ExcelMicrosoftsteve ballmerWordwindows server 2008bill gates

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Preston Gralla

Computerworld (US)

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