Microsoft - Why They're Successful

this video is sponsored by raycon it's a company co-founded by ray j that makes these great earbuds that i've been using you can go to buy raycon.com companyman to get 15 off your order the link is in the description [Music] microsoft has been growing aggressively already for decades they have been one of the biggest companies out there but over the last few years they have really accelerated things i mean look at this in 2021 they had over 168 billion dollars in sales which has more than doubled over the past decade and it makes them the 15th largest company in the united states honestly how much time goes by before they're in the news again talking about their latest insanely large acquisition it's seemingly one after another on the stock market they were the third company to ever be valued above one trillion dollars and the second company to surpass two trillion yeah based on that figure we can call them a multi-trillion dollar company it's not often you get to say that and sure they've had a few missteps at times but overall we cannot deny that this has been one of the greatest all-time success stories so for today i want to talk about the history of this company while trying to identify some of the main reasons behind that success in january of 1975 the cover of popular electronics featured the altair 8800 made by the mits computer company which is now considered to be the first commercially successful micro computer two of the people that saw that magazine were computer enthusiasts paul allen and bill gates they had been friends since they were teenagers and three years earlier had actually established a small company called traffo data it was named after this equipment they designed to analyze data about traffic they sold it to some local traffic departments but that was as far as it went so when they saw this magazine it made them realize that computers would soon be dropping to a much more reasonable price and at that point it would be profitable to sell software for them their plan was to contact the maker of that computer tell them that they were already writing a programming language for it that would make it easier to create programs and therefore make the computer more attractive to potential users and they said that they'd be able to present that language within a few weeks now i don't believe that they had actually started on it when they made that claim but either way it was finished in time and distributed under the name altair basic which later evolved into microsoft basic and that was the start of microsoft they chose that name as a combination of the words micro computer and software they made 16 000 in that first year but by the end of the 1970s they were making over a million dollars a year by writing and licensing different computer languages so on to my list of why they're successful it was hard to find the exact words here but the ones that i chose are ruthless and relentless what i'm trying to convey is they have an overall reputation of fighting aggressively and many would argue even dirty against the competitors and let me give you a few examples of what i'm talking about in 1980 ibm was looking for someone to provide an operating system for their new pc the market leader at the time was called cpm it was made by this company digital research in this instance the two sides there were unable to come to a deal so microsoft stepped in and said they'd be able to do it and that was kind of their big break so microsoft goes to this guy named tim patterson from a smaller seattle company who had developed his own operating system called 86 dos that as i understand it was actually heavily based on cpm microsoft buys that system alters it and rebrands it as ms-dos and it was then included with the ibm pc so then digital research the creator of cpm takes issue with that and to avoid a lawsuit ibm said that they would make both of the systems available in their pc it would just be up to the buyer to choose which one however cpm ended up costing more and at that point it was just unable to compete with ms-dos so that right there is a sketchy situation that led to microsoft's product beating a major competitor another example would be a few years later involving a copyright issue with apple in 1985 microsoft introduced windows 1.0 and it really wasn't all that popular the overall design was influenced by the operating system apple used in the macintosh and parts of the gui or gui or whatever the look of it were actually licensed to them by apple when microsoft introduced windows 2.0 in 1987 one of the big differences was the titular windows were now able to overlap with each other along with other changes the differences made it so much more successful it was introduced in november and they sold a million copies of it by the end of the year well in 1988 apple filed a lawsuit against them claiming that the visual displays were too similar to their own the ultimate ruling was in favor of microsoft basically saying that most of the similarities were covered under that initial licensing agreement for windows 1.0 but again we have a sketchy situation where windows was greatly helped against a competitor i'm going to keep giving these examples in 1994 microsoft was willing to pay 1.5 billion dollars for the maker of the financial software quicken that controlled 70 percent of the market at the time with over 6 million users microsoft's existing competing software was called money and that controlled something like 22 percent of the market this potentially says a couple of things about them for one if you do the math it means that they were trying to control almost the entire market raising concerns of a monopoly which is a common theme for them and two it shows that they were trying to control that market not by further developing and promoting their existing product but rather by simply taking control of the competitor which is another common theme in the end the department of justice felt that it would create a monopoly they tried to prevent the acquisition and then microsoft just gave up at that point so the deal never actually happened my final example here has to do with internet explorer it's the web browser that in the second half of the 1990s practically beat out netscape and took control of that market by bundling it together with windows essentially giving it away for free it's a complicated issue but the concern became that they were utilizing their power to monopolize all of the internet browsers and even other software as well in the year 2000 the court actually ruled that microsoft had to break up into two companies that would separate their operating system business from their software business however there was an appeal that ruled that they didn't have to break up but they did agree to give other developers the power to make software for windows so yet again an aggressive technique against a competitor raised concerns of a monopoly alright my next reason behind their success is being financially cautious and i'll admit this may not apply as much today but financial stability was a big concern for bill gates and the following ceo steve ballmer from 2000 to 2014. from very early on bill gates wanted the company to maintain abnormally large amounts of cash his rule was that they would have enough money in savings to where they'd be able to operate for a full year without receiving any revenue on top of that he was very hesitant to hire new employees that he felt weren't 100 percent necessary and everyone that was on payroll was known to have low salaries that were complemented by what became valuable stock options they didn't have any long-term debt until the early 2000s it's just an overall safe approach that made them financially stable then when steve ballmer was in charge in 2004 the company had this big multi-million dollar cost-cutting effort that famously involved ending their towel service for employees you know they would provide towels for people that had been exercising or playing a sport or whatever it was a little extreme overall the efforts were thought to have a negative impact on employee morale people were leaving for google and other companies so they reinstated the towel service and other benefits a couple years later all i want to convey here is that historically microsoft has been more financially stable than most of their competitors and most companies in general my final reason behind their success is diversity because it's practically impossible to have over 100 billion dollars in sales without selling a variety of stuff here i'm going to start making a new list of the types of businesses in which microsoft has been heavily involved i've already talked about programming languages that's how the company started and then operating systems both dos and windows were the things that got them to that next level but what i haven't talked about is their productivity and business segment which of course includes microsoft office i mean we have all used this right in 1983 they introduced microsoft word but like many of their products it didn't catch on too well in the beginning but in 1986 they introduced a simplified version 3.0 that quickly became their best-selling product in 1985 they introduced excel based on an earlier program that didn't do too well then in 1987 they actually purchased forethought the company that made powerpoint for 12 million once they had collected all of these popular selling programs they started packaging them together in what became their new best-selling product also along the lines of professional products are a couple of major acquisitions in 2011 they bought skype for over 8 billion dollars i have an entire video about their evolution if you want to hear more about that and then in 2016 they bought linkedin for 26 billion dollars and believe it or not all of that combined office skype linkedin and some other things currently makes up their smallest segment accounting for 32 of their sales or 54 billion dollars another type of business that has historically been big for them was cable television you might not expect this one as much but they were involved in it in multiple ways in 1996 they got together with nbc to start the cable network msnbc however they did sell their portion of the channel in 2005. the following year they spent 1 billion dollars to buy 11 of comcast it was a deal that said comcast would buy half a million set top boxes from microsoft but their share of it was sold in 2009 also in 1997 microsoft bought web tv for 425 million dollars their main product was a box that allowed people to get on the internet using their existing tv they later rebranded it as msn tv and shut it down all together in 2013. as you can tell this isn't really a part of their business anymore so i won't spend too much time on it but starting in the late 90s cable tv was an important part of microsoft next up is a fun one video games in 2001 they introduced the xbox and that was the start of something big aside from the system itself and the 360 and the one and everything that followed they have become a major developer and publisher of the games themselves we're getting back to the acquisitions here i suppose the first notable one was bungie the maker of the halo games they actually bought them in 2000 in anticipation of having halo combat evolved ready as a launch title for the original xbox though they did split in 2007 and were later bought by the competitor sony some of the others worth mentioning is in 2014 they spent 2.5 billion dollars to buy the company that makes minecraft in 2021 they bought bethesda the maker of fallout and doom for 7.5 billion dollars and a holy cow in 2022 it was announced that they bought activision blizzard for over 68 billion dollars those numbers don't even sound real anymore obviously their biggest acquisition to date giving them major power over the video game industry another type of business worth mentioning would be devices though maybe not their most successful they acquired nokia's phone business in 2013 that pretty much just lost them billions of dollars again i have a video that talks about it in more detail not to mention the zune the subject of yet another previous video they also sell their line of surface electronics introduced in 2012 though they have shied away from devices in general now this overall segment that i've been talking about they call more personal computing it includes the devices the video games windows and search and news advertising like bing all of that combines for their second largest segment which is also right around 32 percent of their revenue the remaining 36 percent of the revenue comes from their biggest segment which is called intelligent cloud mainly cloud services and things along those lines i'm gonna go ahead and put that as the final one on my list and just say that it includes azure sql server windows server visual studio and github which they bought for 7.5 billion dollars in 2018. let me know in the comments how do you feel about microsoft there's just so much to talk about right for that reason i realize that my lists are not complete those are just the reasons that i perceive to be the biggest behind their success and the types of businesses that i found to be the most important or interesting let me know if you think there's something that should be added or taken away from the lists and any other thoughts you have about microsoft leave them in the comments i'd like to hear what you have to say today's sponsor is raycon and let me tell you these everyday earbuds have been getting a fair amount of views specifically i've been listening to the it's always sunny podcast i love hearing those guys talk about one of my favorite shows and i've been keeping up with it too because i always try to put on these earbuds when i'm doing something around the house or just anything in motion because they have yet to fall out they have these optimized gel tips for the perfect in-ear fits i mean i could literally just shake my head back and forth and they will not move it's crazy they have a built-in mic 32 hours of battery life that offers eight hours of continuous play time they come in five stylish colors high of the blue ones by the way they look very sharp and they sound great it's quality audio at half the price of other premium audio brands i recommend them they have over thirty thousand five star reviews and you can go to buy raycon dot com slash company man to get fifteen percent off your order the link is in the description thank you for watching [Music]

Channel: Company Man

Views: 295,081

Keywords: Microsoft, Computers, Windows, Xbox, Video Games, Tech, Technology

Id: 17b3yLZI6XE

Length: 13min 47sec (827 seconds)

Published: Wed Feb 09 2022