The Microsoft advantage
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May 14, 1998: 4:08 p.m. ET
Software titan's aggressive marketing, attractive pricing make it tough to beat
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NEW YORK (CNNfn) - No company in the world attracts more scorn or adulation than Microsoft.
The company's operating system software runs more than 93 percent of the world's personal computers. Its profits have grown at an average of 48 percent annually over the last ten years and revenues for PC application software reached $5.5 billion last year -- nearly half of the industry's $12 billion worldwide.
That dwarfs the PC industry's No. 2 software maker, Lotus Development, a unit of IBM which took in only $613 million last year.
"There are nearly 300 million PC users out there now, and so that gives us a very, very broad market. So we can put far more, you know, ten times more into R&D of the operating system, yet make it available for one-tenth or less the price," said Jeff Raikes, Microsoft's senior vice president of sales and marketing.
The company's chairman, Bill Gates, co-founded Microsoft in 1975. But the making of the monolith began on May 22, 1990, the day the company announced the availability of Windows 3.0. It went on to set the standard for operating systems worldwide.
Since then, Microsoft's staff has quadrupled to a work force of more than 25,000, and the rising stock price (MSFT) has created scores of Microsoft millionaires among its staff -- many of whom have since gone to create their own software companies.
And while a classic monopoly produces less and charges more for it, Microsoft has been cutting prices. As the company and its allies point out, Microsoft has flourished as a fierce competitor and aggressive marketer.
"Microsoft's competition -- most of it has been pretty inadequate. I don't see any reason to think that -- with all due respect -- a bunch of government lawyers are going to be any more clever than your average company, let alone Microsoft," said Esther Dyson, chairman, of EDVenture Holdings.
"It's a real challenge if you want to take this on, if you want to do it well without destroying a lot of value that's being created."
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Microsoft
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