Table 12.1: Microsoft’s Total Revenue, Employment,
and Spending on Research and Development (R&D)
Year
Revenue
Number of
R&D
R&D/Revenue
(millions)
Employees
(millions)
(%)
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:
www.microsoft.com (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”.
Product
Segment
Client
Table 12.2: Sources of Microsoft Revenue, 2005
Sources of Revenue from Product
2005
Percentage
Segment
Revenue
of 2005
(millions) Revenue
Operating Systems including Windows
XP Professional and Home, Media Center
Edition, Tablet PC Edition
Server and
Server products including server software
Tools
licenses and client access licenses (CALs)
for Windows Server, Microsoft SQL
Server®, Exchange Server
Information
Including Licensing of MS Office System
Worker
products
Microsoft
Business Management Software including
Business
software sales (larger portion of revenue)
Solutions
and services sales
MSN
Personal Communications Services
including e-mail and instant messaging,
and online information offerings
Mobile and
Including Windows Mobile™ software,
Embedded
Windows Embedded operating systems,
Devices
MapPoint ®, and Windows Automotive.
Home and
Video Games including Microsoft Xbox
Entertainment
video game console system, PC games,
the Home Products Division (HPD), and
TV platform products for the interactive
television industry
All 7 segments
TOTAL
Source: 2005 Microsoft Annual Report
*: Numbers do not add to 100 due to rounding.
$12,234
30.75
Percent
growth
from
2004-2005
6
$9,885
24.84
16
$11,013
27.68
3
$803
2.02
6
$2,274
5.72
3
$337
0.85
36
$3,242
8.15
13
$39,788
100.01*
8
Table 12.3 Microsoft’s Important Product Introductions and Legal Events
Product Released to Public or Important Legal Event
BASIC for the Altair computer
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
Microsoft Word
1983
September
Excel for the Macintosh, Microsoft’s newest spreadsheet software program
1985
November
Windows 1.03, two years after it was announced
1985
October
Excel for Windows
1987
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 Pccompatible 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
Consent Decree with eight major provisions
2002
November
XBOX 360 game
2005
Year
1975
1977
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
Apple Computer’s iWork
Corel WordPerfect Office
95
2.7
1.6
Microsoft Windows
Linux
Unix
Novell Netware
55.1
23.1
11
9.9
Quicken
Microsoft Money
68
27
Sony Playstation 2
Microsoft XBox
Nintendo Game Cube
57.5
24
18.5
Operating systems
market***
Personal Finance
Software****
Video Game
Market in North
America*****
Source: *: “Mozilla Firefox Losing Market Share?” from www.searchenginejournal.com,
8/15/2005 article. **: Fried, Ina, “Apple's iWork emerges as rival to Microsoft Office”, CNET
News.com, Jan. 23, 2006. Published on www.zdnet.com. *: 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 Abbreviations
Acronym 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 set contains 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
Disk Operating System: DOS is the first operating system that Microsoft
MS-DOS 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.