WEBVTT - An Update on Microsoft 0:00:04.120 --> 0:00:07.160 Get in touch with technology with tech Stuff from how 0:00:07.200 --> 0:00:13.800 stuff works dot com. Hey there, and welcome to tech Stuff. 0:00:13.840 --> 0:00:16.800 I'm your host, Jonathan Strickland. I'm an executive producer with 0:00:16.840 --> 0:00:19.560 How Stuff Works, and I love all things tech, and 0:00:19.680 --> 0:00:23.600 today we're going to revisit an old friend of ours. 0:00:23.640 --> 0:00:26.279 You see tech Stuff listener Rob. That's that's not the 0:00:26.280 --> 0:00:28.720 old friend. He's just he's a listener. He's a friend, 0:00:29.120 --> 0:00:31.560 not an old friend. He asked me a while back 0:00:31.800 --> 0:00:33.800 if I could do a follow up episode or two 0:00:33.880 --> 0:00:38.720 about Microsoft, which of course is the world's largest software company. 0:00:39.200 --> 0:00:43.360 The last episode I recorded on tech Stuff about Microsoft 0:00:43.479 --> 0:00:48.239 specifically was The Microsoft Story, Part two, and that published 0:00:48.280 --> 0:00:51.239 back on July tenth, two thirteen. That was back when 0:00:51.280 --> 0:00:54.680 Lauren Vogelbaum was co host of tech Stuff, and the 0:00:54.720 --> 0:00:58.440 show has changed a lot since then, as has the 0:00:58.480 --> 0:01:02.160 company Microsoft. Today, I tend to go into much greater detail, 0:01:02.840 --> 0:01:05.840 uh whenever I do a story about a company than 0:01:05.959 --> 0:01:08.640 I used to do back in those days. So rather 0:01:08.720 --> 0:01:11.440 than just pick up where I would have left off 0:01:11.560 --> 0:01:14.560 back in I thought it would be valuable to give 0:01:14.560 --> 0:01:18.080 a quick overview of the company leading up to and 0:01:18.080 --> 0:01:20.920 then pick up in real detail from there. So I'm 0:01:20.959 --> 0:01:24.679 gonna give kind of a high level look at the 0:01:24.800 --> 0:01:29.559 history of Microsoft. It's not the same level of UH 0:01:29.640 --> 0:01:32.039 coverage I would give if I were doing this all 0:01:32.120 --> 0:01:34.959 for the first time, but it's more than just the 0:01:34.959 --> 0:01:39.840 the the summary. So Paul Allen and Bill Gates co 0:01:40.120 --> 0:01:46.520 founded Microsoft on April four, That was almost exactly one 0:01:46.640 --> 0:01:49.680 year before Steve Jobs and Steve Wozniak would go on 0:01:49.760 --> 0:01:53.880 to co found Apple. Bill Gates would actually drop out 0:01:53.880 --> 0:01:57.120 of Harvard in order to start this company. Allen and 0:01:57.160 --> 0:02:01.120 Gates started out by developing a Basic interpreter for the 0:02:01.160 --> 0:02:06.880 Alta eight hundred. Basic as in the programming language UH. 0:02:06.920 --> 0:02:10.440 The Altar eight eight hundred was a very early personal microcomputer. 0:02:10.560 --> 0:02:13.400 In fact, some people call it the first personal computer, 0:02:13.919 --> 0:02:16.600 and you would order it the back of a magazine 0:02:16.639 --> 0:02:19.200 and then kind of assemble the whole thing and you 0:02:19.200 --> 0:02:22.000 would have your own computer that was pretty limited in 0:02:22.040 --> 0:02:24.600 what it could do, but it was the first time 0:02:24.960 --> 0:02:29.960 that a microcomputer was widely available to people outside of 0:02:30.639 --> 0:02:32.880 you know, the engineers that were working in R and 0:02:32.919 --> 0:02:37.799 D labs. So Basic is a high level programming language. 0:02:38.040 --> 0:02:41.040 It was originally created back in the nineteen sixties as 0:02:41.080 --> 0:02:44.960 an educational tool over at Dartmouth College. So Gates and 0:02:45.000 --> 0:02:48.880 Allen didn't invent Basic, They just developed a version of 0:02:48.919 --> 0:02:52.040 Basic that would work on the ALTA eight eight hundred, 0:02:52.320 --> 0:02:56.440 and Basic was a pretty easy to grasp programming language, 0:02:56.440 --> 0:02:59.680 and college students who had been studying computers were already 0:02:59.720 --> 0:03:02.120 from the you're with it, so it was an attractive 0:03:02.160 --> 0:03:05.000 thing to have on your platform, and it made it 0:03:05.000 --> 0:03:08.920 possible for people who had studied computer science to own 0:03:08.960 --> 0:03:12.160 their own computers for the first time and to program 0:03:12.200 --> 0:03:15.680 on them. Now, Microsoft, which in the early days was 0:03:15.760 --> 0:03:20.480 hyphenated so it was micro hyphen Soft, was right there 0:03:20.520 --> 0:03:24.440 at the very dawn of the personal computer age, and 0:03:24.440 --> 0:03:27.800 the company had a dominant hold on implementations of Basic 0:03:28.000 --> 0:03:32.040 for different computer systems, including the Apple two that used 0:03:32.080 --> 0:03:35.680 Apple Soft Basic and the Commodore sixty four which had 0:03:35.800 --> 0:03:40.480 Commodore Basic. All of those came from Microsoft. The company 0:03:40.520 --> 0:03:44.800 also started producing hardware in nineteen eighty, so five years 0:03:44.840 --> 0:03:47.680 after it had been founded, and they created a computer 0:03:47.800 --> 0:03:51.600 card that users could install in an Apple too, and 0:03:51.680 --> 0:03:54.200 it would allow the Apple two to run the CP 0:03:54.440 --> 0:03:58.840 slash M operating system. That operating system was really important 0:03:58.840 --> 0:04:01.840 because there was a lot of business. The software applications 0:04:01.880 --> 0:04:05.600 that were built upon that operating system, they used that 0:04:05.680 --> 0:04:09.720 operating system and they wouldn't be compatible with the Apple 0:04:09.760 --> 0:04:12.760 TO operating system. So this was a great deal for 0:04:12.800 --> 0:04:16.240 both Microsoft and Apple because Microsoft was making a killing 0:04:16.480 --> 0:04:19.680 selling these computer cards and Apple was able to get 0:04:19.680 --> 0:04:22.279 its foot in the door in the business market. That 0:04:22.400 --> 0:04:24.600 was something that the company was having trouble. They were 0:04:25.080 --> 0:04:28.600 they were better able to get into education and personal computers, 0:04:29.080 --> 0:04:31.880 but they were having a bit of a difficulty getting 0:04:31.920 --> 0:04:34.320 into the business side of things where you had more 0:04:34.440 --> 0:04:38.320 established companies like IBM that were really dominating that space. 0:04:39.200 --> 0:04:44.160 Before Windows, Microsoft developed the Disk Operating System or DOSS 0:04:44.160 --> 0:04:49.040 for IBM. That's kind of being a little over simple. 0:04:49.200 --> 0:04:52.720 I'll explain more in a second, but IBM was launching 0:04:52.720 --> 0:04:55.920 its first personal computer. In fact, it was the company 0:04:55.960 --> 0:04:59.560 that defined the term personal computer or PC. IBM would 0:04:59.560 --> 0:05:02.360 offer up two different flavors of its PC, and one 0:05:02.400 --> 0:05:05.000 of them were was to run on the CP slash 0:05:05.200 --> 0:05:09.120 M operating system and the other was to run on DOSS. 0:05:09.120 --> 0:05:12.800 But the DOSS systems were significantly cheaper, and so people 0:05:12.839 --> 0:05:17.200 began to buy that version more than the CP slash 0:05:17.360 --> 0:05:22.200 M version. Uh which got into all sorts of issues 0:05:22.279 --> 0:05:24.719 later on. If you listen to my episodes about IBM, 0:05:24.800 --> 0:05:28.039 you know about how that story unfolded. Well before long. 0:05:28.160 --> 0:05:32.600 Microsoft doss was another industry standard, and you can learn 0:05:32.600 --> 0:05:35.039 more about that in that IBM episode. A lot of 0:05:35.040 --> 0:05:38.719 Microsoft success stem to run the company's dealings with IBM, 0:05:38.760 --> 0:05:42.960 which frequently favored Microsoft at the expense of Big Blue. 0:05:43.400 --> 0:05:46.960 I mean, the business deals favored Microsoft more than the 0:05:47.120 --> 0:05:51.280 favored IBM. Microsoft would also buy the rights for the 0:05:51.360 --> 0:05:55.960 operating system q doss from a company called Seattle Computer Products. 0:05:55.960 --> 0:05:58.160 Now this is what I meant when I said it's 0:05:58.160 --> 0:06:00.880 a little bit of a simplification as say that Microsoft 0:06:00.960 --> 0:06:04.600 developed DOS, because what they did was they found q 0:06:04.839 --> 0:06:07.680 doss that was developed out of Seattle Computer Products and 0:06:07.720 --> 0:06:10.080 said we would like to license that. We would actually 0:06:10.080 --> 0:06:13.800 like to purchase the rights to this software, to this 0:06:13.880 --> 0:06:18.880 operating system, and Seattle Computer Products said sure. Because they 0:06:18.880 --> 0:06:21.840 didn't know at the time that Microsoft had landed this 0:06:21.920 --> 0:06:25.960 deal with IBM. Microsoft kept that part secret because if 0:06:25.960 --> 0:06:29.080 Seattle Computer Products found out IBM was behind it, then 0:06:29.120 --> 0:06:33.080 they would have increased their asking price. So once Microsoft 0:06:33.160 --> 0:06:37.080 had the rights, they rebranded q doss as ms DOSS 0:06:37.120 --> 0:06:40.159 and they made truckloads of cash off it. And I 0:06:40.200 --> 0:06:43.120 suppose you could say a lot of Microsoft's business practices 0:06:43.600 --> 0:06:48.360 are both extremely aggressive and somewhat clandestine in nature. By 0:06:48.400 --> 0:06:52.200 night two, Microsoft was an international company, which was not 0:06:52.279 --> 0:06:55.000 bad considering it was less than a decade old. And 0:06:55.200 --> 0:06:58.600 in nineteen eighty three IBM cloned computers started to appear. 0:06:58.680 --> 0:07:03.159 Now Microsoft make money not just from IBM directly, but 0:07:03.279 --> 0:07:07.520 also from the manufacturers that made these clone devices. See, 0:07:07.560 --> 0:07:11.760 IBM had failed to create a proprietary machine. They had 0:07:12.040 --> 0:07:15.000 built their PCs from a lot of off the shelf parts, 0:07:15.000 --> 0:07:18.880 so that meant other manufacturers could copy the IBM PC 0:07:19.080 --> 0:07:22.480 designed by using those same components or components that were 0:07:22.480 --> 0:07:26.680 similar enough to function the same way. Further, IBM did 0:07:26.720 --> 0:07:30.960 not have an exclusive license with Microsoft, so other companies 0:07:31.000 --> 0:07:34.720 could then also licensed DOSS from Microsoft and build a 0:07:34.720 --> 0:07:39.400 machine capable of running IBM PC software. But their machines 0:07:39.560 --> 0:07:43.160 cost less than ibm s PCs did, which would eventually 0:07:43.240 --> 0:07:46.040 lead to IBM pulling out of the consumer space. But 0:07:46.120 --> 0:07:48.520 this was a huge benefit to Microsoft, because of course 0:07:48.560 --> 0:07:51.720 they were making licensing deals left and right. The first 0:07:51.840 --> 0:07:56.840 version of Microsoft Windows, the graphic user interface operating system 0:07:56.960 --> 0:07:59.240 that I'm pretty sure we're all familiar with at least 0:07:59.280 --> 0:08:03.000 on some level, would debut in the fall of nine five. 0:08:03.120 --> 0:08:05.600 That would be Windows one point oh. But the company 0:08:05.600 --> 0:08:09.280 would see real success in nineteen ninety upon the release 0:08:09.320 --> 0:08:12.560 of Windows three point oh. That signal to move away 0:08:12.600 --> 0:08:16.720 from Doss and toward the gooey or graphic user interface approach. 0:08:17.080 --> 0:08:20.480 It also meant more software companies began to develop programs 0:08:20.520 --> 0:08:23.960 that would work only on Windows because that's the operating 0:08:24.000 --> 0:08:26.560 system people were buying. So it made more sense for 0:08:26.640 --> 0:08:29.720 software programmers to focus on the operating system where the 0:08:29.760 --> 0:08:33.840 customers were rather than dedicate resources to develop software for 0:08:34.080 --> 0:08:38.760 less popular operating systems. And this made young Jonathan very sad, 0:08:38.840 --> 0:08:42.600 because young Jonathan much preferred Doss to Windows for many years, 0:08:42.679 --> 0:08:47.120 But that's a tangent. Microsoft also introduced a suite of 0:08:47.120 --> 0:08:51.960 productivity software around this time called Microsoft Office, which became 0:08:52.040 --> 0:08:55.120 incredibly popular. It would go up against a bunch of 0:08:55.280 --> 0:08:58.880 established giants in the productivity software space like word Perfect 0:08:58.880 --> 0:09:02.520 and Lotus one two three. Over time, Microsoft Office would 0:09:02.520 --> 0:09:06.880 become the most popular productivity suite in businesses, possibly because 0:09:06.920 --> 0:09:10.400 Microsoft made not only the programs but also the operating 0:09:10.400 --> 0:09:16.800 system that everyone was using in Microsoft unleashed a monstrosity 0:09:16.800 --> 0:09:20.120 on the world in the form of Microsoft Bob. This 0:09:20.160 --> 0:09:23.600 Friday's episode will be all about why that particular graphic 0:09:23.679 --> 0:09:26.240 user interface is largely considered to be one of the 0:09:26.280 --> 0:09:31.480 biggest turkeys in software. Also in ninety Microsoft made a 0:09:31.520 --> 0:09:34.839 deal with a company called Spyglass, which had created an 0:09:34.840 --> 0:09:39.640 Internet browser. Microsoft had not jumped on the internet bandwagon 0:09:39.760 --> 0:09:43.600 very early on, so the agreement was to license spyglasses 0:09:43.640 --> 0:09:47.720 browser as Microsoft Internet Explorer, and the deal was that 0:09:47.840 --> 0:09:51.840 Microsoft would pay Spyglass a royalty fee for every copy 0:09:51.960 --> 0:09:56.760 Microsoft sold. Only Microsoft didn't sell any copies at all, 0:09:56.880 --> 0:10:00.880 instead bundling the browser with Windows ninety five, so Spyglass 0:10:00.880 --> 0:10:05.480 didn't get any royalties. Womp womp. Windows was the first 0:10:05.480 --> 0:10:09.160 build of Windows to feature the start button, so int 0:10:09.440 --> 0:10:11.320 we got the start button, we would eventually lose the 0:10:11.360 --> 0:10:13.600 start button. People would cry out about it, and then 0:10:13.640 --> 0:10:18.080 we would get it back. In Microsoft announced a partnership 0:10:18.120 --> 0:10:21.319 deal with NBC to start a new cable news television 0:10:21.320 --> 0:10:26.400 station called MSNBC. Microsoft would divest itself of its ownership 0:10:26.520 --> 0:10:29.160 of the cable channel in two thousand five, it would 0:10:29.720 --> 0:10:33.080 maintain a stake in the website until two thousand twelve, 0:10:33.760 --> 0:10:38.520 in the U S. Department of Justice accused Microsoft in 0:10:38.640 --> 0:10:43.600 engaging in anti competitive practices, stating that by bundling Internet 0:10:43.640 --> 0:10:46.840 Explorer with Windows, it had an unfair advantage over other 0:10:46.920 --> 0:10:50.720 companies that were making Internet browsers. Further, the complaints state 0:10:50.800 --> 0:10:54.280 that Microsoft had tightly coupled Internet Explorer with Windows itself 0:10:55.000 --> 0:10:58.840 in an effort to disadvantage competing browsers. So for a 0:10:58.840 --> 0:11:00.679 while it looked like the U. S. Government was going 0:11:00.720 --> 0:11:04.480 to force Microsoft to break up into two companies, one 0:11:04.520 --> 0:11:07.960 of them would concentrate on operating systems and another that 0:11:07.960 --> 0:11:11.839 would create other types of software. But eventually Microsoft was 0:11:11.880 --> 0:11:14.319 able to settle the case and agreed to a policy 0:11:14.360 --> 0:11:17.640 that would allow PC manufacturers to include software from other 0:11:17.760 --> 0:11:21.440 companies on a brand new computer, not just Microsoft suite 0:11:21.480 --> 0:11:23.920 of programs. Have a little bit more to say to 0:11:24.000 --> 0:11:27.280 bring us up to but before I get into that, 0:11:27.360 --> 0:11:37.600 let's take a quick break to thank our sponsor. In 0:11:37.640 --> 0:11:41.880 two thousand, Bill Gates stepped down as CEO of Microsoft, 0:11:42.040 --> 0:11:44.400 and Steve Balmer, who had been a salesman with a 0:11:44.440 --> 0:11:47.560 company since nineteen eighty, took over. He would stress the 0:11:47.600 --> 0:11:51.600 importance of developers, developers, developers, and if you don't get 0:11:51.600 --> 0:11:54.400 that reference, you need to go to YouTube and search 0:11:54.600 --> 0:12:00.320 Steve Balmer and the word developers. You're welcome. Microsoft kept 0:12:00.360 --> 0:12:04.120 on trucking and turned out more versions of its operating system, 0:12:04.240 --> 0:12:08.040 like Microsoft XP, which was so incredibly popular that there 0:12:08.040 --> 0:12:11.040 are still people using it today even though it hasn't 0:12:11.040 --> 0:12:14.960 received any support for years. But the company also created 0:12:15.160 --> 0:12:19.080 some that were not as not received as enthusiastically, like 0:12:19.160 --> 0:12:22.920 Windows Vista that didn't do so well, then Windows seven, 0:12:23.000 --> 0:12:26.080 which did a lot better than Windows eight with its 0:12:26.120 --> 0:12:29.760 tiled metro approach that was intended to bring together traditional 0:12:29.800 --> 0:12:35.080 desktop experiences with touch screen interfaces. That product would end 0:12:35.120 --> 0:12:39.160 up getting mixed reviews, and then Windows ten, which decided 0:12:39.160 --> 0:12:42.680 to skip right over Windows nine, has done much better 0:12:42.760 --> 0:12:46.960 in general. Microsoft also waited into the smartphone market with 0:12:47.080 --> 0:12:52.000 Windows Mobile later known as Windows Phone, even purchasing Nakia's 0:12:52.000 --> 0:12:56.000 mobile division for about seven billion dollars back in fourteen. 0:12:56.240 --> 0:12:58.440 I'll talk more about how that turned out in just 0:12:58.520 --> 0:13:02.840 a moment. And Microsoft also got into console gaming with 0:13:02.960 --> 0:13:06.240 the Xbox console in two thousand one, and following that 0:13:06.360 --> 0:13:09.000 up with the Xbox three sixty and two thousand five, 0:13:09.280 --> 0:13:11.800 and the Xbox One in two thousand thirteen. I'll talk 0:13:11.840 --> 0:13:14.840 more about how that's going in these episodes as well. 0:13:15.280 --> 0:13:19.480 In two thousand nine, Microsoft introduced a search engine called bing. 0:13:20.040 --> 0:13:24.960 According to Statista dot com, which calls itself the Statistics Portal. 0:13:25.400 --> 0:13:30.640 Microsoft owned sites, including Being account for twenty of all 0:13:30.720 --> 0:13:34.240 search traffic, second only to Google, which has a dominant 0:13:34.240 --> 0:13:36.959 sixty three point five percent of the market. I was 0:13:36.960 --> 0:13:40.760 actually surprised to see Microsoft having that high of a percentage, 0:13:40.800 --> 0:13:45.120 to be honest. In Microsoft got into the cloud computing 0:13:45.160 --> 0:13:48.240 business with the launch of a new product called Microsoft 0:13:48.320 --> 0:13:54.240 Azure originally called Windows Azure or Azure if you prefer specifically, 0:13:54.280 --> 0:13:58.360 Azure is a platform for software as a service, platform 0:13:58.440 --> 0:14:01.000 as a service, and infrastruct as a service. So what 0:14:01.040 --> 0:14:03.760 does that mean. Well, software as a service is a 0:14:03.800 --> 0:14:07.599 model of business where the developer of the software hosts 0:14:07.600 --> 0:14:11.840 that software on web servers and customers pay a subscription 0:14:11.960 --> 0:14:15.600 fee typically to use that software, and you would use 0:14:15.640 --> 0:14:18.960 something like a web browser to access the software interface 0:14:19.080 --> 0:14:23.040 or maybe an app some sort of thinly designed interface. 0:14:23.400 --> 0:14:27.040 But everything's actually happening on the server side. So if 0:14:27.040 --> 0:14:30.160 you use something like Slack that's kind of a software 0:14:30.160 --> 0:14:32.280 as a service, or maybe you have a subscription with 0:14:32.320 --> 0:14:35.040 a streaming music service that's kind of the same thing. 0:14:35.520 --> 0:14:39.080 Platform as a service is similar, but goes one step 0:14:39.160 --> 0:14:43.520 further back. This is more for developers rather than end users. 0:14:43.720 --> 0:14:45.520 So let's say you've got a great idea for some 0:14:45.640 --> 0:14:48.440 software that you would love to run as a software 0:14:48.480 --> 0:14:51.440 as a service model, but you lack the foundation to 0:14:51.560 --> 0:14:54.880 develop and run your software. You could make a deal 0:14:54.920 --> 0:14:58.040 with a company that provides a platform as a service, 0:14:58.080 --> 0:15:00.440 and for a fee, you can make use of the 0:15:00.480 --> 0:15:02.880 system they've built out, so you don't have to build 0:15:02.920 --> 0:15:05.640 it out yourself. You don't have to test and then 0:15:05.640 --> 0:15:09.200 try and scale up and go through all that process. 0:15:09.480 --> 0:15:12.400 Other companies that have established themselves have already done all that. 0:15:12.520 --> 0:15:16.040 You just end up essentially leasing space from them, and 0:15:16.040 --> 0:15:18.120 then you build out your own software and you offer 0:15:18.160 --> 0:15:21.320 it up to users. Infrastructure as a service gets a 0:15:21.360 --> 0:15:25.280 bit more abstract. This approach typically uses virtualization to provide 0:15:25.280 --> 0:15:30.000 the actual infrastructure needs rather that some other entity requires 0:15:30.040 --> 0:15:32.240 in order to run its business, which could involve things 0:15:32.240 --> 0:15:37.040 like data partitioning, security measures, backup services, and more. Stuff 0:15:37.320 --> 0:15:41.000 like that so big broad things as opposed to very 0:15:41.000 --> 0:15:46.680 specific applications. In two thousand eleven, Microsoft bought Skype for 0:15:46.720 --> 0:15:50.200 about eight and a half billion dollars. But I I 0:15:50.280 --> 0:15:53.880 covered that recently in the episodes about eBay, so I'm 0:15:53.880 --> 0:15:56.960 not going to go through that again. In two thousand twelve, 0:15:57.040 --> 0:16:00.880 Microsoft produced some new hardware under the brand when those Surface, 0:16:01.520 --> 0:16:03.840 and this ends up being a little confusing for a 0:16:03.840 --> 0:16:06.840 while because the company had used surface to refer to 0:16:07.360 --> 0:16:11.040 a couple of different things, some tablet devices, and then 0:16:11.200 --> 0:16:13.640 they also use surface to talk about some high tech, 0:16:13.720 --> 0:16:18.680 extremely expensive smart tables. Ultimately, these devices are meant to 0:16:18.680 --> 0:16:22.000 be flagship products that other manufacturers can use as a 0:16:22.080 --> 0:16:25.360 model when they design their own similar devices that will 0:16:25.400 --> 0:16:30.640 feature Windows operating systems and touch screen interfaces. Today, the 0:16:30.760 --> 0:16:35.160 Surface line includes desktops, laptops, tablets, and larger devices like 0:16:35.400 --> 0:16:38.720 an interactive whiteboard called the Hub, and I'll talk more 0:16:38.720 --> 0:16:43.280 about that in our next episode. Then in two thousand thirteen, 0:16:43.600 --> 0:16:45.880 we got the Xbox One, like I mentioned a moment ago, 0:16:46.080 --> 0:16:50.400 and Microsoft's announcement of its intended acquisition of Nokia, which 0:16:50.400 --> 0:16:52.600 gets us up to speed with those older episodes of 0:16:52.640 --> 0:16:54.840 tech Stuff. Now we can turn our attention to what 0:16:54.960 --> 0:16:58.200 has happened to the company since that episode published, and 0:16:58.240 --> 0:17:02.040 a lot of stuff has gone down, y'all. Almost immediately 0:17:02.200 --> 0:17:05.640 after our last Microsoft episode went live, the company announced 0:17:05.680 --> 0:17:09.520 it would have a company wide reorganization, and this reorg 0:17:09.600 --> 0:17:14.520 would focus Microsoft on services and devices rather than software. 0:17:15.200 --> 0:17:18.080 This was something that Bomber was talking about. The reorgan 0:17:18.200 --> 0:17:21.760 dissolved some divisions and created some new ones, and grouped 0:17:21.960 --> 0:17:28.000 various products into new departments. In August, one month after 0:17:28.040 --> 0:17:32.679 our last Microsoft episode published, Microsoft announced that CEO Steve 0:17:32.720 --> 0:17:36.639 Bomber would retire within the following twelve months. So this 0:17:36.760 --> 0:17:38.560 is kind of typical for tech stuff. I do an 0:17:38.560 --> 0:17:41.280 episode about a company, and then a month after the 0:17:41.320 --> 0:17:45.320 episode goes live, something huge happens. Well. In his open 0:17:45.440 --> 0:17:48.960 letter to Microsoft employees, Bomber said that the company was 0:17:49.040 --> 0:17:53.560 undergoing a transformation into a hardware and services company. It 0:17:53.640 --> 0:17:56.719 started off as a software and operating system company, so 0:17:56.760 --> 0:17:59.520 this was a big shift in its strategy, and Bomber 0:17:59.560 --> 0:18:02.439 said there was need for a new CEO to guide 0:18:02.440 --> 0:18:05.600 the strategy for the long term. Company founder Bill Gates 0:18:05.600 --> 0:18:08.440 would end up playing a part in selecting Bomber's replacement 0:18:08.480 --> 0:18:11.040 along with the Board of Directors. To be fair, Gates 0:18:11.080 --> 0:18:14.639 was chairman of the board at the time. Now, Microsoft 0:18:14.680 --> 0:18:18.640 was still trying to pivot their mobile device strategy. At 0:18:18.640 --> 0:18:21.639 this point. They had started off with Windows Mobile, but 0:18:22.119 --> 0:18:26.160 that failed to gain real traction in the marketplace. Then 0:18:26.200 --> 0:18:29.120 they launched Windows Phone. It was kind of a reboot. 0:18:29.600 --> 0:18:32.600 The Verge would actually call it a painful reboot. That's 0:18:32.600 --> 0:18:35.520 a quote from the Verge. I can't dispute that description 0:18:35.600 --> 0:18:39.399 because it was not a smooth or seamless process. But 0:18:39.480 --> 0:18:43.360 this was when Microsoft hoped to unify the user experience 0:18:43.640 --> 0:18:47.439 across multiple devices with the touch screen tiled approach we 0:18:47.480 --> 0:18:51.800 saw on Windows eight. So Microsoft had seen how Apple 0:18:51.920 --> 0:18:56.480 users innately understood the touch interface on devices like the iPhone, 0:18:56.640 --> 0:18:59.840 the iPod Touch, and the iPad, and they said, well, 0:18:59.840 --> 0:19:02.120 that makes a lot of sense. Apple has created this 0:19:02.240 --> 0:19:05.919 interface that is the same across multiple devices, so if 0:19:05.960 --> 0:19:08.200 you use one, you understand how it works on all 0:19:08.200 --> 0:19:10.600 the others. What if we took that same idea, but 0:19:10.640 --> 0:19:13.480 we applied it even more broadly. It's not just for 0:19:13.560 --> 0:19:17.080 mobile devices, but for everything like laptops and desktops. And 0:19:17.080 --> 0:19:19.800 it seemed to make sense at first, if you went 0:19:19.960 --> 0:19:23.440 all in on Microsoft products as a user, you would 0:19:23.440 --> 0:19:27.000 have the same sort of interface, the same methods of 0:19:27.520 --> 0:19:31.600 navigating your computer as you use to navigate your phone. 0:19:32.000 --> 0:19:37.119 It just didn't really take off. Android and iOS were 0:19:37.160 --> 0:19:41.080 really firmly entrenched in the smartphone space, and enough people 0:19:41.119 --> 0:19:44.439 didn't care for the touchscreen interface on their laptop or 0:19:44.480 --> 0:19:48.679 desktop machines that it ended up derailing the strategy pretty 0:19:48.720 --> 0:19:52.920 early on. Several PC review journalists complained that this new 0:19:52.960 --> 0:19:56.040 direction on PCs actually made it harder to use the 0:19:56.080 --> 0:19:59.879 traditional keyboard and mouse interfaces. So they said, well, if 0:20:00.040 --> 0:20:03.840 don't want to use this tiled metro approach that Windows 0:20:04.320 --> 0:20:08.200 forces you into, and you switch over, you can use 0:20:08.240 --> 0:20:11.440 a mouse and a keyboard, but it's not nearly as 0:20:11.440 --> 0:20:13.280 easy as it used to be. It's actually making it 0:20:13.320 --> 0:20:16.880 more difficult for you to use your machines. So it's 0:20:16.960 --> 0:20:22.160 possible that Windows was pushing toward a jump in uniformity 0:20:22.200 --> 0:20:25.679 and user interface experience that the world just was not 0:20:25.800 --> 0:20:28.520 ready for. Or maybe you could argue that their implementation 0:20:29.200 --> 0:20:31.600 uh failed to live up to expectations, or maybe it 0:20:31.680 --> 0:20:33.959 was a combination of the two. Whatever the case, it 0:20:34.000 --> 0:20:37.719 didn't work. Speculation about who would be the next Microsoft 0:20:37.800 --> 0:20:41.439 CEO ranged from internal candidates like Tony Bates, who was 0:20:41.520 --> 0:20:46.320 leading the Business Development Division, two people from outside of Microsoft, 0:20:46.400 --> 0:20:49.680 such as Read Hastings, the CEO of Netflix. It would 0:20:49.680 --> 0:20:53.440 take the company six months to find a new CEO 0:20:53.640 --> 0:20:57.879 and to agree upon that new CEO. Bomber would stay 0:20:58.000 --> 0:21:01.719 in the position of CEO until his replacement was chosen, 0:21:01.960 --> 0:21:04.280 and that happened on February four, two thousand and fourteen, 0:21:04.280 --> 0:21:07.920 when the Board of Directors announced that Satya Nadela, who 0:21:07.920 --> 0:21:10.480 had been an executive vice president of Microsoft Cloud and 0:21:10.600 --> 0:21:14.520 Enterprise Division, would be the new CEO. And Nadela had 0:21:14.560 --> 0:21:17.960 been with Microsoft since nineteen two, so he had been 0:21:17.960 --> 0:21:20.800 with a company for quite some time. He was one 0:21:20.840 --> 0:21:23.640 of the people leading the charge to bring Microsoft services 0:21:23.680 --> 0:21:26.080 to the cloud, and as Balmer had mentioned in his 0:21:26.160 --> 0:21:29.040 retirement letter, that was sort of the direction Microsoft was 0:21:29.040 --> 0:21:32.040 heading in with more cloud based and service based businesses 0:21:32.400 --> 0:21:36.000 and fewer software packages. In two thousand thirteen, the Cloud 0:21:36.040 --> 0:21:39.400 and Enterprise Division had accounted for more than twenty billion 0:21:39.520 --> 0:21:42.560 dollars in revenue and more than eight billion dollars in 0:21:42.640 --> 0:21:47.200 operating income, so it was a clear leader in their 0:21:47.320 --> 0:21:50.560 company One thing I think is pretty phenomenal is that 0:21:50.640 --> 0:21:54.719 Satya Nodela would become only the third CEO in the 0:21:54.880 --> 0:21:58.520 history of Microsoft, which had been around for four decades 0:21:58.640 --> 0:22:01.720 at that point. So you had Bill Gates, Steve Bomber, 0:22:01.760 --> 0:22:05.040 and then Satya Nadela. Only a few companies have had 0:22:05.080 --> 0:22:08.080 their top levels of leadership remain as stable as that, 0:22:08.400 --> 0:22:12.359 and I'm reminded of companies like Nintendo, for example. Another 0:22:12.400 --> 0:22:15.000 thing that's phenomenal is that Nadela was only forty six 0:22:15.080 --> 0:22:17.639 years old when he took that position. He would end 0:22:17.720 --> 0:22:22.520 up shaking things up considerably. And uh, we'll talk more 0:22:22.560 --> 0:22:25.800 about those shakeups in just a second, but first let's 0:22:25.840 --> 0:22:36.480 take another quick break to thank our sponsor. The same 0:22:36.600 --> 0:22:39.600 day that Steve Bomber stepped down and Adela became the 0:22:39.600 --> 0:22:43.520 new CEO of Microsoft, the co founder, Bill Gates would 0:22:43.520 --> 0:22:46.280 step aside as chairman of the board and John W. 0:22:46.520 --> 0:22:50.120 Thompson would take over as chairman. Gates would remain connected 0:22:50.160 --> 0:22:55.040 to Microsoft as a technology advisor. Bomber, meanwhile, would remain 0:22:55.119 --> 0:22:59.560 on the Microsoft board until August and then he stepped down. 0:22:59.720 --> 0:23:03.440 Since really a year after announcing his retirement as CEO, 0:23:03.600 --> 0:23:06.439 he wanted to spend his time and effort focusing on 0:23:06.480 --> 0:23:09.480 a brand new purchase he had recently made, which was 0:23:09.520 --> 0:23:12.879 the basketball team, the Los Angeles Clippers. He bought the 0:23:12.880 --> 0:23:17.240 team for about two billion dollars. His Impulse Buys and 0:23:17.320 --> 0:23:21.119 my Impulse Buys are on two different planets and funding. 0:23:21.160 --> 0:23:24.919 Addendum to that, Steve Bomber said in September that he 0:23:25.000 --> 0:23:29.160 wanted the team to ban the use of iOS devices 0:23:29.200 --> 0:23:34.119 and switched to Windows based gadgets instead, So the idea 0:23:34.119 --> 0:23:36.520 would be that no longer would you see anyone on 0:23:36.520 --> 0:23:40.960 an iPhone on the Clippers team. Back to Microsoft. In 0:23:41.040 --> 0:23:45.000 July two thousand fourteen, so essentially half a year after 0:23:45.119 --> 0:23:47.920 he took over the role of CEO, Nodelo would send 0:23:47.920 --> 0:23:50.920 out a message to all employees saying that the company 0:23:50.960 --> 0:23:54.560 needed to drop the devices and services focus that Bomber 0:23:54.640 --> 0:23:58.400 had talked about just one year earlier. In that message, 0:23:58.400 --> 0:24:02.720 he said, quote, we will reinvent productivity to empower every 0:24:02.720 --> 0:24:05.880 person and every organization on the planet to do more 0:24:05.960 --> 0:24:10.560 and achieve more end quote small goal. He also proposed 0:24:10.640 --> 0:24:14.919 doing this by focusing on cloud services and mobile platforms, 0:24:15.000 --> 0:24:18.480 so getting away from this idea of devices and services, 0:24:18.680 --> 0:24:21.520 and he said we would still do some hardware, but 0:24:21.560 --> 0:24:24.240 we're not going to be a hardware company. It wasn't 0:24:24.280 --> 0:24:26.879 just a directive about the company changing focus, however, It 0:24:26.880 --> 0:24:30.080 also had some pretty tough news to come along with it. 0:24:30.480 --> 0:24:34.520 Microsoft was going to cut eighteen thousand jobs over the 0:24:34.520 --> 0:24:37.680 course of twelve months. Most of those cuts would affect 0:24:37.720 --> 0:24:40.600