International Business Machines Corp. (NYSE:IBM) didn’t pay much for MS-DOS — Gates later recalled it as “something like $186,000” — but it was the PC’s clones that made MS-DOS a Microsoft moneymaker thanks to per-use licenses. Microsoft would also move from New Mexico to Seattle in 1981, incorporating as “Microsoft,” with Gates as president and Allen as executive vice president.
By the mid-1980s, the PC was clearly the world’s dominant computer system, and Microsoft was raking in the money. In the year of its wildly successful IPO — which made Gates one of the richest Americans at the age of 31 — Microsoft generated nearly $200 million in revenue and had more than 1,000 employees. This, of course, would be just a starting point. Within another 15 years, Gates became the world’s richest man, Microsoft grew into the most valuable company on Earth, and Microsoft would become the first and only software company ever to gain a place on the Dow Jones Industrial Average (INDEXDJX:.DJI), befitting its stature as the largest software company in the world by revenue.
And just think: All of that achievement began in 1975 with a strip of paper and a blinking computer hobby kit.
Nemesis rising
In a strange twist of fate, one of Microsoft’s most dogged opponents was also founded on April 4. Marc Andreesen and Jim Clark got together on April 4, 1994 to found Mosaic Communications, which later became Netscape. Netscape was on the vanguard of the early Web: It was one of the first companies ever to attempt to capitalize on the Web’s growth, and it created the first successful browser, Netscape Navigator. Netscape was also instrumental in developing both the widely used secure sockets layer protocol and JavaScript.
Netscape’s ascent was dizzying, and it had a massively successful public offering only a year and a half after incorporation that would make it — though still unprofitable — a multibillion-dollar company. Microsoft did not leave the Web uncontested, however, and its hardball tactics in promoting Internet Explorer led to the high-profile antitrust suit that nearly broke Bill Gates’ empire into pieces. Netscape was a key combatant in the antitrust battle against Microsoft, but it should have focused more intently on building a better product. By 1999, Netscape got an offer it couldn’t refuse when AOL, Inc. (NYSE:AOL) came calling with $10 billion. In the end, Microsoft won its antitrust suit and won the browser battle against Netscape. Today, Netscape is used only as the brand name for one of AOL, Inc. (NYSE:AOL)’s discount Internet service providers.
The article Microsoft’s Long, Strange Trip Through the Computer Age originally appeared on Fool.com is written by Alex Planes.
Fool contributor Alex Planes owns shares of Intel. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, Intel, International Business (NYSE:IBM) Machines, and Microsoft.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
