A Look At The Business Model Of Microsoft

December 4th, 2013 | by JRO
A Look At The Business Model Of Microsoft

Microsoft has been a leading software and technology company since its founding in 1975. Harvard students Bill Gates and Paul Allen collaborated to create what was known as the Altair BASIC code, precursor of the Microsoft Windows operating system. Windows, which runs on approximately 1.5 billion computers worldwide, has put Microsoft near the top of the list of the world’s most valuable companies (at more than $318 billion at the end of November 2013).

There are various factors, business principles, and strategies that have led to Microsoft’s success throughout the years. One of these factors has been the constant presence of founder Bill Gates at or near the head of the business. Some of the factors that have persisted with the company and have contributed to its success include its ability to react and respond to trends, its promotion of corporate citizenship and philanthropy, and its ability to grow leaders from within its own ranks.

A Look At The Business Model Of Microsoft

Staying Current with the Times

Microsoft began between three childhood friends (Gates, Allen, and Ric Weiland) who went from creating software to managing business customer relationships (initially with IBM) to consumer electronics and gaming. The success of the Altair BASIC created the underpinning for MS-DOS, which stands for Microsoft disk operating system. One of the key components of the Microsoft strategy was to be opportunistic in the acquisition of complementary businesses and technologies that can help the company itself grow and prosper.

As IBM began development of the personal computer in the early 1980s (initially with the PC operating with the Intel 8086 microprocessor), Microsoft acquired the rights to Seattle Computers’ “quick and dirty operating system” (QDOS) version 0.1. QDOS, along with Microsoft’s M-DOS product were quickly married and licensed to IBM, eventually to become the operating standard for IBM and IBM-compatible computers. Staying in the moment and taking advantage of opportunities also led Microsoft to the release of the first XBOX gaming console in 2001.

Promoting Corporate Citizenship

One of the integral parts of the Microsoft business strategy is its corporate citizenship and philanthropy efforts. The Bill and Melinda Gates Foundation is an example of this principle at work. The foundation, according to the Foundation Center, is the largest foundation in terms of giving. The $3.2 billion in total gifts made by the foundation is more than the combined amount contributed by the next five foundations listed.

Employees of Microsoft have also been involved in giving programs promoted by the company. The company’s Employee Giving Campaign, started in 1983, has seen more than $1 billion in gifts go to approximately 31,000 non-profits both in the U.S. and worldwide. The success of the program (which has 65 percent employee participation) sets Microsoft apart from other companies, and the corporate giving initiative is integral to the business success of the company.

Finding and Growing Leaders

Much of the leadership at Microsoft evolved through relationships with Gates as well as knowledge and insight of his vision and the Microsoft culture. A friend of Gates, Steve Ballmer, would become the 30th person hired by the company in 1980 to manage the business relationship between Microsoft and IBM. Ballmer has spent 23 years at the company and moved from division head to Executive Vice President to President to current Chief Executive Officer. Ballmer’s assent is one example of the company’s philosophy of bringing in the right people for the job and retaining that talent, for the good of the company.


Benjamin Carrey writes on the tech industry, tech innovations, web development, gadgets, gizmos, tablets, laptops, accessories such as the kensington ipad keyboard case and other related areas.

Image credit goes to HyunOkjoo.