When Microsoft was founded 50 years ago this month, it wasn’t clear the company would last 50 weeks, much less 50 years. Since then, it’s grown from a three-person company with barely any revenue to one worth approximately $1 trillion, depending on the day’s stock price, with 228,000 employees in 190 countries. These seven game-changers paved the way for the company’s success. (In my next column, I’ll look at Microsoft biggest bombs over the years.) Gates declares war on share-and-share alike In the earliest days of the PC revolution during the early-to-mid 1970s, 1960s-style idealism reigned. Many of the earliest techies believed technology could usher in a more equitable world, and as a model for that, they shared knowledge and work with each other freely. Nowhere was this more true than in the influential Homebrew Computer Club, in which people traded tips and advice on how to use the earliest PC, the Altair 8800 (which had to be assembled by hand). Microsoft’s first product was a version of the BASIC programming language for the machine. Much to Gates’ chagrin, though, people weren’t paying for it. Instead, they shared copies of it with each other for free. So in February 1976 he wrote an open letter to the Homebrew Computer Club titled “An Open Letter to Hobbyists.” It was a declaration of war on those he saw as thieves, and laid the operating principles that would later grow his company (then called Micro-Soft) into a behemoth.  Gates wrote, in part: “The amount of royalties we have received from sales to hobbyists makes the time spent on 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?…Most directly, the thing you do is theft.” So much for the share-and-share-alike ethos of the 1960s. The letter worked. After it, Microsoft had a solid cash flow. Microsoft hits big with MS-DOS For its first few years, Microsoft continued to write and sell programming languages for personal computers. It was a profitable niche. But that’s all it was…a niche, and a small one at that. Gates had bigger things in mind. The company’s first big breakthrough came in 1981 when he convinced IBM to pay Microsoft $430,000 to develop an operating system and provide other services for its still-secret, yet-to-be released new PC. IBM thought it was getting a great deal — it had expected to pay even more. But Gates outsmarted Big Blue. He negotiated terms that allowed Microsoft to sell the same operating system to other personal computer makers. (Microsoft called IBM’s operating system DOS and its own compatible operating system MS-DOS.)  So-called “clones” of the IBM PC flooded the market, and Microsoft got a royalty for every one of them sold because they all needed an operating system compatible with IBM’s PC. The company soon was rolling in money. Microsoft didn’t have to spend much time or money developing DOS and MS-DOS. It paid $50,000 to a company for an existing operating system called QDOS (short for “quick-and-dirty operating system”) and tweaked it to run on IBM’s PC and clones. Windows 3.0 and 3.1 rule the world To run MS-DOS and DOS you had to use a command line, which was no one’s idea of a good time and not particularly easy to do. While IBM PCs and clones were stuck in the old world, Apple was creating a new one with its graphically based operating system for the Lisa computer in 1983, and then the groundbreaking Macintosh operating system in 1984. It became clear graphical OSes were the future, and Microsoft eventually released its first version of one, Windows, in 1985. But it didn’t run as an operating system; instead, it ran as an application inside DOS. The same was true for Windows 2.0.  Neither version of Windows went anywhere fast. Then, in 1990 Microsoft released Windows 3.0 and two years later, the improved version called Windows 3.1. The operating systems were far easier to use than MS-DOS. But they were also inelegant and awkward, kludgy, crashed far too often and at times were head-scratchingly confusing to use. But they were good enough to replace MS-DOS as the standard for PCs, and they cemented Microsoft’s worldwide monopoly over operating systems.  They might not have been pretty, easy-to-use or reliable, but they accomplished their primary purpose: printing cash by the billions for Microsoft. Microsoft aims for its next target, businesses By the late 1980s, it was clear the PC revolution that had begun in the 1970s for hobbyists had gone big-time in the business world. Microsoft went after the market with a vengeance, launching Office in 1990. It included not just a software suite (Word, Excel and PowerPoint), but server software as well. Gates swept away the competition with shark-like tactics, some of which were found to violate antitrust laws.   Microsoft followed suit with countless other business services and software, including SQL Server, Power BI, Dynamics 365, Power Platform and many more. Microsoft soon owned the enterprise market. Satya Nadella replaces Steve Ballmer as CEO In 2000, Steve Ballmer replaced Gates as CEO. Under his hard-charging, sometimes clownish leadership that focused obsessively on Windows to the detriment of other products and technologies, Microsoft slowly drifted into irrelevance. It missed out on the mobile revolution and became an also-ran in the internet and social media. Ballmer tried to solve most problems with the bluster and business tactics that did well in the 1970s through 2000, but failed miserably in the 21st century. Bill Gates and Steve Ballmer during a meeting in the ’90s.Microsoft He lasted until 2014, when Satya Nadella took over. Many people’s first reaction to the choice was “Who?” Nadella didn’t brag and shout like Ballmer or swagger and resort to illegal tactics like Gates. Instead, with a calm demeanor, he dragged the company into the new century, killing flailing multi-billion-dollar projects like Windows Mobile, turning the company into a smooth operation rather than a series of warring fiefdoms, and pouring billions into new technologies that would eventually make Microsoft a tech leader again. Nadella turns to the cloud  Microsoft launched Azure, its cloud platform, under Ballmer in 2010. But it took Nadella to see its importance. He refocused the company away from Windows and towards the cloud. By 2024, its Intelligent Cloud division tallied $100 billion in sales. But that vastly understates how much cloud-related revenue the company brings in, because software and services like Office (now called Microsoft 365) have become cloud services as well. Satya Nadella addresses the Microsoft Build event in Seattle on May 21, 2024. Dan DeLong / Microsoft In essence, Microsoft became a cloud company. Microsoft bets big on AI Six years ago, Microsoft made what was at the time something of an under-the-radar investment: $1 billion into the startup OpenAI. Few people took notice. Three years later, in November 2022, OpenAI’s ChatGPT took the world by storm — thanks in part to $12 billion more in Microsoft investments. A year after that, Microsoft released its own version of ChatGPT, called Copilot, for enterprises.  Now, Copilot is integrated into virtually every part of the company, and Microsoft is building its own AI team and products separate from OpenAI. It’s become the world leader in AI, with no end in sight — a solid starting point for the company’s next 50 years.