Microsoft, a fixture in the computing industry for 50 years, has evolved into a key player as the internet has become integral to daily life. Founded with the ambition of placing a computer in every home and office, Microsoft is marking its half-century milestone by aiming to lead in the rapidly progressing field of artificial intelligence (AI).
eMarketer analyst Jeremy Goldman described Microsoft as a “boring company and a boring stock,” despite its vast market value of $2.9 trillion, second only to Apple’s market cap. The company’s revenue is significantly bolstered by cloud computing, facilitated by its widely-used Office software, which has transitioned from physical disks to online hosting. Goldman’s view is that while Microsoft’s infrastructure may not be glamorous, it is exceedingly valuable. The company competes with Amazon Web Services (AWS) and Google in the cloud-computing arena.
Originally named “Micro-Soft” in 1975 by Bill Gates and Paul Allen, the company launched the MS-DOS operating system, eventually known as “Windows,” which powered most computers around the globe. Microsoft’s Office suite, featuring Word, Excel, and PowerPoint, became essential business tools, effectively competing against free alternatives like Google Docs. According to Goldman, the continued success of Office underscores Microsoft’s innovation prowess.
Under the leadership of CEO Satya Nadella, Microsoft transitioned its software offerings to cloud-based subscription services accessible on various devices, a move that likely protected its market share from being eroded by free services like Google Docs.
Despite its impact, Microsoft remains overshadowed by other tech giants in areas like social networks, smartphones, and AI-driven digital assistants. The company launched Xbox consoles in 2001, acquired Activision Blizzard two years ago, and added a subscription service for gamers. Microsoft’s Bing search engine, launched in 2009, trails behind Google. The acquisition of LinkedIn in 2016 has resulted in steady growth, though it doesn’t match the reach of platforms like Facebook or Instagram.
While Microsoft is considered a potential buyer for TikTok, which faces a potential U.S. ban if not sold by ByteDance, the company has struggled to create a compelling user experience, a weakness highlighted by Goldman.
Former CEO Steve Ballmer was criticized for neglecting the shift to mobile devices. Nadella’s leadership marked a pivot towards being a “mobile-first, cloud-first” entity, with significant AI investments, including a stake in ChatGPT’s creator OpenAI and integrating AI into products like Bing, although with limited success.
Independent analyst Jack Gold has noted that Microsoft’s AI capabilities lag due to a lack of proprietary chips or foundational models, putting it behind AWS and Google. Gold anticipates that Google’s Cloud revenue will surpass Microsoft’s Azure in two years.
