When Microsoft went public in 1986, the majority of its revenue came from selling software. It had just launched Windows, and previously saw huge success selling its operating system MS-DOS to personal computer manufacturers. In its 1989 financial report, the company neatly summarized its competitors in two categories: computer software makers (notably IBM, AT&T and Apple) and independent systems software vendors, such as Digital Research and AT&T.
Since then, the computer software company has evolved into something else that is harder to comprehend. The competitors that Microsoft mentions in its financial reports are something like a map to these changes: Some early competitors disappeared from the financial reports, either being bought by competitors or crushed by Microsoft itself. But new companies kept showing up, making the list grow larger and larger as Microsoft expanded into new markets.
Quartz analyzed the “Competition” section in Microsoft’s annual filings from 2018 back to 1989, the earliest accessible records available electronically. The changing list of competitors reveals how the company shifted business operations to stay relevant among rapid tech innovations and changing market conditions.
The big three
From Microsoft’s own perspective, the most consistent competitor of the business has always been IBM, which was mentioned more than 270 times in the competition section during the past 30 years. The two companies seem to have always moved in sync, both as partners and competitors. Microsoft’s early success was built upon the MS-DOS operating system, and selling it directly to computer-makers like IBM, but IBM eventually developed its own operating systems and desktop software.
Large microcomputer manufacturers (OEMs) are devoting significant resources to creating microcomputer operating systems, notably IBM, Apple Computer, and Sun Microsystems. (1989-1994)
IBM and Apple preinstall certain of their application software products on various models of their PCs, competing directly with Microsoft’s desktop application software. (1995)
Competitors such as IBM, Apple Computer, Sun Microsystems, and others are vertically integrated in both software development and hardware manufacturing. (2001)
Later, when Microsoft expanded to cloud-based products, IBM went that direction, too. IBM was a competitor on a number of fronts including “server operating systems,” “enterprise computing solutions,” “management of information technology infrastructures,” and “cloud-based services offerings (Azure).” In 2018, Microsoft identifies IBM as its competitor for products under “database, business intelligence, and data warehousing solutions offerings.”
Apple has also been a consistent competitor to Microsoft, though in a much narrower scope. The two share the majority of the market for operating systems today. Microsoft mentioned the iPhone as a competitor to Windows Phone from 2010 to 2015, and the iPod as a competitor to the Microsoft’s media player Zune from 2007 to 2010.
Oracle became a more significant competitor to Microsoft when the company expanded its products to offer server applications and support for multinational corporations.
Some early competitors fell out of the market as they either lost the battle to Microsoft’s Windows or got consolidated into Microsoft’s other competitors. IBM bought Lotus in 1995 in an attempt to compete with Windows; Oracle acquired Sun Microsystems in 2010, to strengthen its Unix-based software ecosystem. Novell was squashed out of the network services market by Microsoft in 1995 and entered a long-term decline afterwards.
More names have appeared as competitors in recent years, and some compete in more than one domain. The Windows operating system competes with Google across devices. The Office software programs (like Word and Excel) compete with Cisco’s. Microsoft’s cloud-based services compete with Amazon, Google, Salesforce, and VMware. Xbox competes with Sony’s PlayStation and Nintendo’s Switch.
Facebook first appeared in 2014 as a competitor to Microsoft’s search and display advertising business. In 2018, Microsoft mentioned Slack as a competitor to Office.
Microsoft’s competitors, 1989-2018
As Microsoft’s business continues to diversify, the list of competitors is likely to grow even longer. But you can bet that IBM will still be on the list.
Read other pieces from our field guide to Microsoft here: