and Spending on Research and Development (R&D)
Year / Revenue
(millions) / Number of Employees / R&D
(millions) / R&D/Revenue (%)
1975 / .016 / 3 / --- / ----
1980 / 8 / 38 / ----
1985 / 140.42 / 1,001 / -----
1990 / 1,183 / 5,635 / 177.45* / 15
1995 / 5,937 / 17,800 / 831.18* / 14
2000 / 22,956 / 40,000** / 3775 / 16.4
2005 / 39,788 / 61,000 / 6184 / 15.54
Source: Cusumano, Michael A. and Richard W. Selby. Microsoft Secrets. New York: The Free Press, 1995, page 3; 2000 and 2005 Microsoft Annual Reports from Microsoft website: (March 2006).
*: these numbers were estimated using figures for R&D/Revenue and Revenue from Cusumano and Selby, p. 3.
**: The 2000 Annual Report says “nearly 40,000 employees”.
Table 12.2: Sources of Microsoft Revenue, 2005Product Segment / Sources of Revenue from Product Segment / 2005 Revenue (millions) / Percentage of 2005 Revenue / Percent growth from 2004-2005
Client / Operating Systems including Windows XP Professional and Home, Media Center Edition, Tablet PC Edition / $12,234 / 30.75 / 6
Server and Tools / Server products including server software licenses and client access licenses (CALs) for Windows Server, Microsoft SQL Server®, Exchange Server / $9,885 / 24.84 / 16
Information Worker / Including Licensing of MS Office System products / $11,013 / 27.68 / 3
Microsoft Business Solutions / Business Management Software including software sales (larger portion of revenue) and services sales / $803 / 2.02 / 6
MSN / Personal Communications Services including e-mail and instant messaging, and online information offerings / $2,274 / 5.72 / 3
Mobile and Embedded Devices / Including Windows Mobile™ software, Windows Embedded operating systems, MapPoint ®, and Windows Automotive. / $337 / 0.85 / 36
Home and Entertainment / Video Games including Microsoft Xbox video game console system, PC games, the Home Products Division (HPD), and TV platform products for the interactive television industry / $3,242 / 8.15 / 13
TOTAL / All 7 segments / $39,788 / 100.01* / 8
Source: 2005 Microsoft Annual Report
*: Numbers do not add to 100 due to rounding.
Table 12.3 Microsoft’s Important Product Introductions and Legal EventsYear / Product Released to Public or Important Legal Event
1975 / BASIC for the Altair computer
1977 / FORTRAN (and later COBOL and Pascal) for microcomputers with an 8080 microprocessor
1981 / DOS 1.0 – the operating system for IBM’s first microcomputer
August 1982 / Multiplan – Microsoft’s first spreadsheet software
November 1983 / Microsoft Word
September 1985 / Excel for the Macintosh, Microsoft’s newest spreadsheet software program
November 1985 / Windows 1.03, two years after it was announced
October 1987 / Excel for Windows
March 1988 / Apple announces it will sue Microsoft over Windows 2.03. Case dismissed in 1992.
1989 / Gates discontinues relationship with IBM with his refusal to establish OS/2 as industry standard.
1989 / MS Word for Windows
May 1990 / Windows 3.0
1990 / FTC begins investigation on four of Microsoft’s practices
1993 / FTC charges Microsoft with illegally controlling the market for Pc-compatible operating systems
1994 / Department of Justice and Microsoft agree to a consent decree, which is ultimately rejected in Feb. 1995 by Judge Sporkin
1995 / Windows 95 and Internet Explorer 1.0 released
August 1996 / Internet Explorer 3.0, completely rebuilt version is launched
1997 / Internet Explorer 4.0 designed for Windows 95, Windows 98, and Windows NT
1998 / Department of Justice files complaint that Microsoft was illegally monopolizing the browser market. Judge Jackson gave ruling in June 2000.
1998 / Windows 1998 and Internet Explorer 5.0
June 2001 / Appeals Court Ruling including removal of Judge Jackson from any further participation in the case
2001 / Windows XP and Internet Explorer 6.0
November 2002 / Consent Decree with eight major provisions
November 2005 / XBOX 360 game
Table 12.4: Microsoft and Leading Competitor Market Share Information by Product
Market/Product / Product Name / Market Share (%)
Web Browser Market*
Internet Explorer / 87
Mozilla Firefox / 8
Applications Software**
Microsoft Office / 95
Apple Computer’s iWork / 2.7
Corel WordPerfect Office / 1.6
Operating systems market***
Microsoft Windows / 55.1
Linux / 23.1
Unix / 11
Novell Netware / 9.9
Personal Finance Software****
Quicken / 68
Microsoft Money / 27
Video Game Market in North America*****
Sony Playstation 2 / 57.5
Microsoft XBox / 24
Nintendo Game Cube / 18.5
Source: *: “Mozilla Firefox Losing Market Share?” from 8/15/2005 article. **: Fried, Ina, “Apple's iWork emerges as rival to Microsoft Office”, CNET News.com, Jan. 23, 2006. Published on *: Market Share Reporter.Detroit, MI: Gale Research, 2005. ****: Market Share Reporter.Detroit, MI: Gale Research, 2004. *****: Market Share Reporter. Detroit, MI: Gale Research, 2006.
Table 12.5: Industry Standard AbbreviationsAcronym / Definition
AOL / America On Line: A specific internet service provider.
API / Application Programming Interface: A set of definitions of the ways one piece of computer software communicates with another. It is a method of achieving abstraction, usually between lower-level (for example, an operating system) and higher-level (for example, an advanced application) software.
ASCII / American Standard Code for Information Interchange: This early computer standard code is used for information interchange among data processing systems, data communications systems, and associated equipment. The ASCII character setcontains 128 coded characters and consists of control characters and graphic characters.
BASIC / Beginners’ All-purpose Symbolic Instruction Code: A high-level programming language designed in 1964. BASIC was designed to be an “easy-to-learn” programming language and thus became a commonly used programming language for microcomputers.
CP/M / Control Program for Microcomputer: The operating system for which Microsoft chose to its early languages. It became the industry standard with the early computers and was a leading competitor of DOS in the early 1980s.
DOS or MS-DOS / Disk Operating System: DOS is the first operating system that Microsoft created, based on the QDOS (Quick and Dirty DOS) bought from Seattle Computer Products. It was later referred to as MS-DOS.
DR-DOS / Digital Research DOS: A direct competitor of MS-DOS.
GUI / Graphical User Interface: method of displaying text and graphics on a computer screen using pictures and images formed by patterns of dots.
IAP / Internet Access Providers (or sometimes referred to as internet service providers): A firm that provides access to the internet. AOL is an internet service provider.
ICP / Internet Content Providers: Any firm or individual that provides content on the Internet. For example, any company or individual with a Web site.
IE / Internet Explorer: Microsoft’s web browser.
IHV / Independent Hardware Vendors: Any firm other than Microsoft, that produces or develops hardware.
ISV / Independent Software Vendors (or developers): Any firm, other than Microsoft, that develops software.
JVM / Java Virtual Machine: Java can be installed on any operating system and once installed can be used as a platform for software that is separate from Windows. All copies of Java include a JVM that translates byte code into instructions for the operating system.
OEM / Original Equipment Manufacturers
OS / Operating System
OS/2 / The operating system that IBM worked on as a competitor of Windows.