Windows Turns 30: How It Changed Microsoft, and the World | QDaily Business History

"A computer on every desktop"

Looking back, November 20, 1985 was one of the most important days in Microsoft's history. That day, version 1.0 of the Windows operating system went out to users on square floppy disks. In under ten years, it became the first thing most personal computer owners saw when they switched on their machines.

At the time, though, the release hardly counted as news. Seven days after Windows shipped, The New York Times — the most important source of information for Americans in the pre-internet era — finally gave it fewer than 30 words at the tail end of an article about a computer trade show. The product would go on to change Microsoft and the whole computer industry:

"At Microsoft Corp. in Bellevue, Washington, a division with little clout has at last released its first graphical operating system. Windows was announced two years ago; it lets PC users run several different programs at once, in windows."

In 1985 Microsoft really was not a tech giant. The company that would later grow big enough to be sued for monopoly practices by both the U.S. Department of Justice and the European Union did not go public until 1986.

Its main business then was selling the MS-DOS operating system, and its main customer was IBM. But anyone watching the PC industry could already see the potential. The IBM PC, barely two years old, had left Apple's Macintosh far behind and become the standard for personal computers.

Windows 1.0: Microsoft Gets an Operating System of Its Own

MS-DOS and Windows are both operating systems. But what is an operating system, exactly?

The American writer G. Pascal Zachary, in ShowStopper, his book about Microsoft, offers an easy analogy:

Picture a 19th-century English manor house. The whole place runs in good order: the housekeeping staff clean, the driver washes the carriage that will be wanted tomorrow, the cook makes three meals a day. The aristocrat upstairs never has to think about the cleaning or the kitchen. Whatever he needs, he mentions it to the butler and it gets done.

If the personal computer is the manor house, the operating system is the butler, coordinating all the hardware — the servants and the fittings of the house. The software is the aristocrat: it only has to talk to the operating system to get its work done, no matter whose processor or whose memory the machine happens to use. The operating system takes care of everything.

An operating system is what makes writing software simple, and software is why ordinary people buy a personal computer at all.

That is the role MS-DOS played in 1985. Gates had bought the system from someone else for $50,000, and it made Microsoft the standard software platform for the IBM PC.

The DOS operating system interface — you had to type a complete command to run an application

DOS was a bit like a text version of Siri: you typed a command, it answered. But Siri understands something of what you mean, and DOS understood nothing; you had to ask with total precision. Opening Word, simple as that sounds, meant typing a line like c:\program files\word\word.exe.

Imagine a Siri that could only follow "home screen slash phone slash mom slash confirm call slash dial." For most people, DOS was simply too hard to use.

To lower the barrier and get more people onto its software, Microsoft decided to build a graphical operating system. The idea came from Gates himself, after he saw Visi Corp demonstrate a graphical system at the 1982 Comdex trade show.

The interface design of Windows 1.0

In November 1983, Microsoft announced its first graphical operating system: Windows 1.0.

This was Microsoft's first attempt at a graphical interface. Windows 1.0 let PC users open several applications at once in windows, and use a mouse to switch between them or close them.

It also shipped with a handful of small applications — a calendar, a calculator, a control panel — which became the standard accessories bundled with every later version of Windows.

Bill Gates told the tech publication InfoWorld shortly afterwards:

"We will put all of our resources and energy into Windows, exactly as we did with MS-DOS and Xenix. Third-party applications will only earn lasting competitiveness by using the advantages Windows gives them."

Windows 1.0 let PC users run several different programs at once in windows and move between them, which DOS could never do. It brought drop-down menus, scroll bars, icons, and dialog boxes.

Windows 1.0 was still a very rough product, but Microsoft kept the promise Gates had made and went on to build Windows 3.0.

The graphical interface of Windows 3.0

As the picture above shows, Windows 3.0 was the first version that really matched what Microsoft meant by a graphical operating system. The File Manager in particular became something genuinely built out of icons, replacing the MS-DOS file system that earlier versions of Windows had leaned on.

With this generation, large numbers of third-party developers began backing Windows.

Windows 3.0 was still, in fact, a graphical program running on top of DOS. The command line was the first thing a user saw; you had to type the right command before the graphical interface would appear.

Windows and Microsoft would not become the industry's rulers until 1995.

Windows 95: Microsoft Takes the Personal Computer

On August 24, 1995, Microsoft released Windows 95, along with an advertising campaign the tech industry had never seen the likes of.

The launch was held on an athletic field at Redmond University, and for the first time the event went out by satellite to an audience of 70,000.

The interface design of Windows 95

Where earlier versions required typing a command in DOS before Windows would load, Windows 95 was the first to make the graphical interface the PC's real default. Most of its icons became fixtures of every later version of Windows: the Recycle Bin, My Computer, and the Start menu.

For people meeting a personal computer for the first time, the Start menu meant they could find anything they wanted without thinking about where a file was stored.

To push Windows 95, Microsoft spent $300 million on a campaign that began in August that year. It paid $8 million just for the rights to the Rolling Stones' Start Me Up as the soundtrack for the ads. It even put the Windows 95 Start button and the Microsoft logo on the Empire State Building in New York and the CN Tower in Toronto.

An outdoor ad Microsoft made for Windows 95

Its rival Apple had pushed out its founder, Steve Jobs, years earlier, and he had gone off to build NeXT computers. Apple's own Macintosh System 7 had stalled and fallen behind Microsoft. The Mac was squeezed to the edge of the market in the 1990s, and Apple came close to bankruptcy.

As Windows spread, Microsoft built a highly efficient business that would run for 20 years: taking a cut of every Windows computer the PC makers sold.

Big manufacturers such as Dell and HP were then building at least 10 million personal computers a year, every one of them carrying Microsoft's operating system. Microsoft sold boxed copies of Windows at retail too, but the great bulk of its revenue came from the licensing fees PC makers paid to preinstall Windows before shipping.

The model let Microsoft keep a fairly small sales team and put its attention on selling software to large customers. Whoever won the fights inside the PC market, the winner still had to pay for Windows.

In the five short years from 1995 to 2000, licensing fees carried Microsoft's market value from $54 billion to a peak of $600 billion, an elevenfold rise.

Windows NT: Microsoft Takes Every Other Kind of Computer

Windows 95, and Windows 98 after it, brought Microsoft success on a scale nothing had matched, and made good on Gates's dream of a PC in every home. But Microsoft controlled only the personal computer. The Windows 9x line was too unstable to put on a company's servers.

For PC users in the 1990s, crashes were routine. The classic case was the Windows blue screen, which turned up every few days.

The Windows blue screen of death — users regularly ran into it before XP

When a business needed a machine with more performance and more stability, it still bought a workstation from Sun or Silicon Graphics: very high-end hardware running the far steadier UNIX operating system.

To win that most profitable slice of the software business, Microsoft decided to build a new operating system from the ground up: Windows NT. For it, Gates went outside his own staff and hired David Cutler, a celebrated programmer then working at the computing giant DEC.

Cutler had led development of the VMS operating system at DEC, work that earned him a reputation as the best operating-system designer around.

After joining Microsoft, Cutler brought a group of software engineers with him from DEC to form his own team. Next to most Microsoft employees, Cutler and his people did not fit in. They thought themselves more talented and more grown-up, and they mocked the Microsoft programmers who had written the Windows 95 kernel as "MicroSlop."

The Windows NT team faced punishing work from the first day. Building an operating system from scratch is hard, and Microsoft wanted NT to be a general-purpose system besides. Tom Miller, who ran the file system work, said, "Windows NT might be the last operating system — it's hard to imagine anyone building a modern operating system from scratch again."

Microsoft started preparing NT in 1989, and Gates meant to have the whole thing finished by 1991. The work turned out to be so vast that Cutler and his team pushed the delivery date back again and again. Microsoft did not finish the bulk of NT until 1993, and the five-year project cost $150 million.

By the time it was done, many of the original team were spent and left Microsoft. Cutler thought about leaving too, but Gates talked him out of it. He became something of a legend at the company, working on Azure cloud services in 2008 and on the Xbox in 2012, past the age of 60.

The interface design of Windows NT 3.1

Windows NT was worth the money. It displaced the UNIX systems businesses had relied on. It was more stable and faster, and it was the first version of Windows that could run 32-bit programs. It also ran on the same x86 processors as personal computers, so businesses no longer had to buy expensive specialized hardware.

Windows NT, and the Windows Server line that followed, became a fixture of the enterprise market. Even today, enterprise services bring Microsoft at least $5 billion in revenue every quarter.

Outside the enterprise, NT later served as the kernel of Windows XP, pulling Microsoft out of the wreck of Windows Me and locking in the hold on the personal computer market that Windows keeps to this day.

Steve Ballmer's ad selling Windows XP

Windows 7: The "Best" Version of Windows, and the Beginning of Microsoft's Decline

Say Microsoft's name today, though, and no one thinks of a company that rules the tech industry. The hottest consumer technology is no longer the personal computer but the phone, running iOS or Android. Windows is no longer the device that takes up most of people's time.

The irony is that the decline of Windows, and of Microsoft with it, set in around the release of what many people consider the best version of Windows ever made: Windows 7.

The interface design of Windows 7

Microsoft released Windows 7 on October 22, 2009. It replaced the trouble-ridden Windows Vista and became the most successful operating system in the company's history. A week after release it had already lifted PC sales by 40%, and within a full year Microsoft had sold 240 million copies.

What cost Microsoft its dominance was not the endlessly broken Vista, nor Apple's OS X with its yearly desktop update. It was the iPhone, released in 2007, and Android, which Google launched a year later.

The multi-touch technology Jobs demonstrated in 2007 overturned everything users had learned about operating a machine. Microsoft's Windows Mobile, meanwhile, was still trying to carry the PC experience onto a phone. And Apple's App Store, opened in 2008, meant third-party developers stopped treating Windows as the platform to build for first.

We call the iPhone and Android devices smartphones, but they are personal computers — personal computers more personal than the PC.

Almost any use you can think of now happens on the phone: social networks, games, instant messaging, reading articles. That is where you spend most of your time doing these things.

Meanwhile the whole PC market slid into a long decline.

The slide pushed traditional PC makers like Dell and HP to change what they were. Each of them, through more than a dozen acquisitions and spinoffs, moved from selling PCs to providing services to businesses. Most of the rest started rolling out more and more Android products, phones and tablets alike.

Even inside Microsoft, Windows no longer mattered as it had. Office and enterprise services had long since become the bigger earners.

Satya Nadella took over from Ballmer as Microsoft's CEO in February 2014. The Microsoft veteran had run internet services, Office, and cloud computing — every major business at the company except Windows.

Nadella turned Windows into the best place to show off Microsoft's services rather than a business demanding priority. The first thing he did was clear the iPad version of Office for release.

Julia White, Microsoft's Office marketing manager, demonstrating the Office app on an iPad Air

Office for iPad came out in March 2014 and was downloaded 12 million times in its first week. Three months later, Office reached the iPhone and Android phones.

The touch-screen Office app built for Windows devices did not arrive until late July 2015, a full 16 months after the iPad version. For Office, Microsoft's biggest money-maker, Windows was plainly no longer the platform to serve first.

"Facebook, Google, Apple, Amazon — these are the four most important companies in tech right now." So said Google chairman Eric Schmidt at the All Things D conference in 2011. Asked why Microsoft was not among them, Schmidt answered, "Microsoft has done fine with enterprise customers, but it hasn't started a consumer electronics revolution."

Facebook controlled the social lives of 1.5 billion people. Google controlled Android and internet services outside China. Apple still set the direction of personal computing hardware and took most of the industry's profits. Amazon was at once the world's largest online store and its largest cloud computing platform.

By 2011, more than 1.25 billion computers running Windows were still in use around the world. But they plainly stood for past glory rather than the future.

The desktop world Windows ruled could no longer give Microsoft the reach those four companies had. Like the many rivals Windows once beat, Windows saw its own great age end 30 years on.

Social networks, search engines, online retail — all of them exist today because the personal computer spread. And no one did more to push that along than the young, hard-nosed business leader who always turned up in a sweater, 30 years ago.

"A computer on every desktop and in every home." Windows did it.

Cover image from: jpupdates