Microsoft is now 50 years old and future successes are built on the ability to “new victory”

Half a century ago, childhood friends Bill Gates and Paul Allen started it. Microsoft From a strip mall in Albuquerque, New Mexico. After 50 years and almost $3 trillion, the company will celebrate its 50th birthday on Friday from its vast campus in Redmond, Washington.

Today, Microsoft, the world’s second most valuable public company, has only had three CEOs in its history. One is current CEO Satya Nadella. The other two are Gate and Steve Ballmer. Both are the 11 wealthiest people in the world due to Microsoft’s fate.

Microsoft has mainly been on the rise recently, with Nadella turning the company into a major power player in cloud computing and artificial intelligence, but birthday parties landing at awkward moments.

The company’s stock price fell for the fourth consecutive month for the first time since 2009, experiencing its sharpest quarterly decline in three years. This was all before the announcement this week that President Donald Trump had wiped out tariffs.

Cloud computing has been the main source of Microsoft’s new revenue since Nadella took over as CEO in 2014. However, Azure Cloud reported disappointing revenue in the recent quarter. Hood said revenue growth this quarter would fall from 17% the previous year to 10%.

Nadella said management is positioning the company to improve sales incentives to maximize revenue from traditional workloads while also benefiting from the ongoing AI boom.

“I want to acquire something new rather than protecting the past,” Nadella told analysts during a conference call.

The past remains healthy. Microsoft generates about a fifth of its annual revenues primarily from its productivity software from commercial clients. Windows accounts for around 10% of sales.

Meanwhile, the company used massive cash piles to record three biggest acquisitions in over eight years, snapping LinkedIn late 2016, adjusting Nuance Communications in 2022 and Activision Blizzard in 2023 for a total of $121 billion.

“Microsoft has found a way ahead of the curve. In 50 years, this is a company that can still be at the forefront of technological innovation,” says Soma Somasegar, a former Microsoft executive who invests in a startup at venture company Madrona. “That’s a place where the company deserves praise for coming in.”

When Somasegar gave up his position as corporate vice president at Microsoft in 2015, the company repealed $7.6 billion write-up from unauthorized purchases of Ballmer’s Nokia device and services business.

Microsoft is currently in the historic stage of investment. The company built $13.8 billion in shares in Openai and spent nearly $760 billion last year on capital expenditures and financial leases, an increase of 83% from a year ago, enabling the use of AI models in Azure Cloud. In January, Nadella said Microsoft had $13 billion in annual AI revenue, with more AI revenue than Openai.

Microsoft spending limits free cash flow growth. A Guggenheim analyst wrote in a memo after the company’s revenue report in January that he “must believe in the future.”

Of the 35 Microsoft analysts tracked by Factset, we recommend that 32 buy stocks that Nadella is 10 times more grateful since becoming CEO. Azure has become a horrible threat Amazon Web services and startups and businesses that pioneered the cloud market in the 2000s are swarming up cloud technology.

Winston Weinberg, CEO of Legal AI Startup Harvey, uses the Openai model through Azure. Weinberg praised Nadella’s focus on customers of all sizes.

“Satya literally responds to emails within 15 minutes of having technical issues and he routes them to the right person,” Weinberg said.

Still, technology is moving more and more rapidly, and its ability to stay on top of Microsoft is not guaranteed. Industry experts highlighted four key issues the company must address as it pushes for the next half century.

Microsoft did not respond to requests for comment.

There is optimism that the new president of the Trump administration and the Federal Trade Commission opens the door to the kind of contract production that has proven to be extremely challenging during the presidency of Joe Biden, who led the FTC.

However, regulatory uncertainty remains.

It’s not a new risk for Microsoft. In 1995, the company paid a $46 million disbandment fee to the software manufacturer. Intuition After the Justice Department filed a lawsuit to block the proposed transaction. A few years later, DOJ has given Microsoft a revamp of some of its practices after the groundbreaking antitrust incident.

During Biden’s term, Microsoft promoted the $75 billion purchase of its biggest acquisition of history, Video Game Publisher Activision. But after a long legal battle with the FTC.

At the end of Biden’s appointment, the FTC launched an anti-trust investigation at Microsoft. The investigation is ongoing, Bloomberg reported in March.

Nadella has developed a relationship with Trump. In January, the two reportedly met for lunch at Trump’s Mar Arago Resort in Florida. Tesla CEO Elon Musk.

The US is not the only concern. “Microsoft has found that it uses a powerful position in software to make AWS difficult,” the UK Competitive Markets Bureau said in an independent survey in January. Google To effectively compete for cloud customers who want to use Microsoft software in the cloud. ”

Last year, Microsoft worked to unbundle globally from Microsoft 365 productivity software subscriptions, addressing concerns from the European Commission, the European Union’s executive arm.

Quite early in Microsoft’s history, the company became the world’s largest software manufacturer. In the cloud, Microsoft is AWS’ biggest challenger. Most of the company’s revenue comes from businesses, schools and governments.

However, Microsoft is in other markets where its position is weak. These include video games, laptops and search ads.

Mary Jo Foley, editor-in-chief of Microsoft’s advisory group’s instructions, said the company might be better off focusing on the best things rather than continuing to provide Xbox consoles and surface tablets.

“Microsoft is nothing special in the consumer space (with the exception of gaming),” writes Foley, who has been covering the company’s on and off since 1984.

It’s unlikely that Microsoft will leave the game, especially after an Activision trade. Around $12 billion, Microsoft’s $69.6 billion in fourth quarter revenues, from the Microsoft 365 productivity bundle games, search, news ads and consumer subscriptions. This does not include the sale of devices, Windows licenses, or advertising on LinkedIn.

“As a company, all-in on Microsoft’s gaming,” Nadella appeared in 2021 alongside gaming unit head Phil Spencer. “We believe we can play a leading role in democratizing the game and defining its future interactive entertainment at scale.”

Microsoft has undoubtedly a strong position in AI today thanks to its early alliance with Openai. Microsoft has added Startup’s AI model to Windows, Excel, Bing and other products.

The breakout is Github Copilot, which generates source code and answers developer questions. GitHub reached $2 billion in annual revenue last year, with Copilot accounting for more than 40% of the business’s revenue growth. Microsoft bought Github in 2018 for $7.5 billion.

However, rapid deployment with AI can be bothering you.

The company “doesn’t provide the foundation that it needs to properly deploy AI from a security and governance perspective, because it’s more of a concern that everything is “first,” Foley writes. Microsoft is also not good at helping customers understand return on investment, she wrote.

The AI ​​Ready Copilot+ PCS introduced by Microsoft last year has not attracted much attention. The company had to delay the release of its recall search feature to prevent data breaches. Additionally, Copilot Assistant subscriptions for Microsoft 365 Productivity Suite customers, which cost $30 a month, are not popular in the business world.

“Copilot was a real opportunity to lead,” said Jason Wong, an analyst at tech industry researcher Gartner. “But increasingly, Copilot is just an add-on, not something new in the net to drive AI.”

At 50, the biggest problem Microsoft faces is whether it can build an impressive technology on its own. Products like the Surface and Hololens expanded the real-life headsets, but crashed into the market a few years ago.

The success of the team was a novel addition to the software bundle, but after the explosive growth of such products, the success of the app came during the communal pandemic. zoom And slack, that Salesforce I’ve got it. Additionally, Microsoft is still investigating quantum computing.

In AI, Microsoft’s best thing to date has been an investment in Openai. Somasegar said Microsoft is in the best position to become a big player in the market.

“For me, it’s been two and a half years since ChatGpt came on, and we’re not even in the Uber and Airbnb moments,” Somasegar said. “There’s so much value creation that needs to happen with AI. As much as everyone else thinks, “What does that mean? How do you get there?”