From DOS to Windows: How Microsoft became one of the most valuable companies on earth

Thirty years after its stock went public, we chart Microsoft’s successes, including Windows, Xbox and more.

Back in the days of typewriters, the idea of having a computer on every desk was the stuff of science fiction. But Microsoft co-founders Bill Gates and Paul Allen had the vision, and set about changing the world.

Microsoft's stock went public on March 13th 1986 and it was the most valuable company on Earth.

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They set up Microsoft in 1975, and brought in Gates’ former Harvard classmate Steve Ballmer as a business manager in 1980. Shortly afterwards, IBM approached Microsoft about a project codenamed ‘Chess’. In response to this, Microsoft created a new operating system – essentially the brains of the computer, which makes the hardware work in sync with the software. It called it the Microsoft Disk Operating System – MS-DOS for short.

The first PC running DOS was released in 1981. While it was effective, non-techy types were confused by the strange commands they had to enter to make it work. Having to type ‘C:’ followed by a cryptic set of commands meant it wasn’t the most intuitive system to use. By today's standards, it looks like another language altogether.

DOS spread thanks to Microsoft’s aggressive business tactics. One of its targets was Sir Alan Sugar’s computer company Amstrad. A Microsoft salesman – or “mid-Atlantic smoothie”, as Sugar called him – visited Amstrad’s offices in Brentwood, Essex, trying to sell the company DOS. But Sugar refused. The salesman returned every day until Sugar finally relented and bought it for a very low sum. For Microsoft, it was more important to get MS-DOS used on as many computers as possible rather than making a big amount of money from any one deal.

But DOS was still alien to a lot of consumers. To make things simpler, Microsoft introduced its first graphical user interface, Windows 1.0, in 1985. Compared to DOS, it was a revelation, as instead of typing commands, users navigated using a mouse to point and click on directories and applications.

[Read more: 15 things you didn’t know about Microsoft Windows 1.0]

Windows introduced many aspects of the modern-day operating system, including drop-down menus, scroll bars, icons and dialogue boxes.

Windows 1.0 interface

At 9.35am on March 13, 1986, Microsoft’s stock went public due to strong retail demand. According to a report by Fortune, chief financial officer Frank Gaudette exclaimed: “It’s wild! I’ve never seen anything like it – every last person here is trading Microsoft and nothing else.’’

Gates initially didn’t want to go public. “The whole process looked like a pain, and an ongoing pain once you’re public,” he said.

“People get confused because the stock price doesn’t reflect your financial performance. And to have a stock trader call up the chief executive and ask him questions is uneconomic – the ball bearings shouldn’t be asking the driver about the grease.”

Windows continued to evolve, and in 1988, helped make Microsoft the world’s largest PC software company based on sales. Windows 3.0 (1990) and 3.1 (1992) sold 10 million copies in their first two years, which was the highest number of any Windows version to date. Microsoft was quickly becoming a household name.

Bill Gates with Windows 3 box

Windows 95 sold seven million copies in its first five weeks, and brought built-in support for a then little-known feature called the internet (whatever happened to that, eh?). At the time, previous versions of Windows and MS-DOS were running on about 80% of the world’s PCs.

Windows 95 drove Windows into the mainstream, and thanks to the blossoming of the internet, drove PC sales. Microsoft’s stock price peaked at $58.72 a share on December 27, 1999, valuing the company at $620 billion. At the time of writing, its shares are worth $98.01.

With a personal worth of $72 billion, Gates earns roughly $114 a second, meaning that if he dropped a 100-dollar bill, it wouldn’t be worth his time stopping to pick it up.

Microsoft has diversified its offerings in the last 16 years, branching out into games consoles with the Xbox, cloud computing with Microsoft Cloud and mobile devices with Windows Phone. Arguably Microsoft lost ground to rivals by not reacting quick enough to the popularity of mobile devices like smartphones and tables.

But when it comes to desktops, Microsoft still dominates – Windows 10 is now on 400 million devices. Under the leadership of Satya Nadella, it continues to push the boundaries as to what’s possible with personal computing devices.

Discover more about Microsoft in our articles What would the world be like without Bill Gates? and 30 years of Windows from Minesweeper to Metro: A history of Microsoft Windows.