Microsoft’s developer tools roots
Microsoft is quietly building a monopoly in the developer tools segment. Does the history of the tech giant help explain how this is happening?
Ask 10 startups or scaleups if they use the “Microsoft stack”, and I’d be willing to bet that almost none do. By “Microsoft stack”, I mean using any one of C# or F# as a programming language, the .NET framework, ASP.NET for web development, or SQL Server as a database. However, if you asked the same companies if they use one or all of Visual Studio Code, GitHub, Copilot, TypeScript, or npm, then all may reply that they do.
The questions might seem different, but they are in fact almost identical. VS Code, GitHub, TypeScript, npm are all technologies owned and operated by Microsoft which are increasingly popular with startups and modern tech companies, but just don’t have strong Microsoft branding.
The Windows maker is quietly investing more in developer tools than any Big Tech giant. It acquired GitHub for $7.5B in 2018. It likely spent hundreds of millions of dollars per year to develop Visual Studio Code – then and then gave it away for free while upselling some of its services. It also offers GitHub Copilot for $10/month or $100/year, which may currently be a loss-making price point.
So, why is Microsoft investing so much into developer tooling, and why does the rest of Big Tech seem comparatively uninterested in competing in this area? This question has been bugging me, so I attempted to find an answer. In order to properly understand what’s happening today, it’s useful to go back in time to when Microsoft became a highly profitable “dev tools monopoly” once before, in the 2000s.
This deep dive covers the first part of the story, covering:
A programming language interpreter company. Microsoft started out as a company selling BASIC interpreters to various hardware companies.
More and better developer tools. Following the success of MS-DOS and Windows, the company still built developer tools like Microsoft C, QuickC and MFC.
Journal for developers. Microsoft Systems Journal (MSJ). In the same year as going public, Microsoft started a printed magazine for MS-DOS and Windows developers.
Visual C++, a Development System for Windows. Microsoft created this IDE to make it easier to develop apps for Windows.
Visual Studio. The first IDE by the company that supported multiple programming languages.
Microsoft Developer Network (MSDN). Microsoft managed to figure out how to charge a large premium for quality documentation and access to the latest software.
“Developers, developers, developers!” This now-famous chant had more context: Microsoft knew that it needed developers to adopt the newly launched .NET framework, to make it a technology adoption success.
1. A programming language interpreter company
Most people associate Microsoft with the ubiquitous Windows operating system, but the company actually began by creating a language interpreter.
Building a BASIC interpreter in two months
On New Year’s Day in 1975, an advert for a minicomputer appeared on the front page of Popular Electronics, then the world’s most popular electronics magazine. It was for the Altair 8800; a small computer with an Intel 8080 CPU. The price was $439 (around $2,500 today) and the Altair couldn’t do much by itself: it had to be extended with memory (up to 4KB), and additional interface boards needed to be purchased to make it practical to use, like a typing board, cassette tapes, floppy disks, etc. All these were separate purchases, and some weren’t available at launch.
The price was incredibly low for its time. Before the Altair 8800, computers that were equally capable cost several times more, whereas the Altair was accessible to hobbyists. Its manufacturer, MITS (Micro Instrumentation and Telemetry Systems), hoped to sell 200 units, but sold 2,500 units in five months, and the device became the first commercially successful computer.
The advert caught the attention of programmers Bill Gates and Paul Allen and Paul Allen, who predicted the device would quickly become popular, and spied an opportunity to develop software for it. They contacted MITS offering to develop an interpreter for a popular programming language called BASIC (Beginner's All-Purpose Symbolic Instruction Code). It’s a simple enough language:
INPUT "Enter the value of n: ", N
IF N <= 1 THEN PRINT N : END
A = 0
B = 1
FOR I = 2 TO N
C = A + B
A = B
B = C
NEXT I
PRINT "The", N, "th Fibonacci number is:", B
ENDBASIC code to calculate the nth Fibonacci number
Allen and Gates did not have an Altair computer, but realized time was of the essence; so Allen wrote an Altair simulator based solely on the Intel manual for the 8080 chip (!!) Meanwhile, Gates wrote the BASIC interpreter to run on this simulator. In March, Paul Allen flew to meet the manufacturer, and demonstrated that it worked flawlessly: he loaded the interpreter into the machine, and then proved correctness by typing in simple programs like printing 2+2, sums of numbers, squares of numbers, and so on.
MITS was interested in distributing BASIC with the Altair, as the software would make their kit more useful for developers. This was the point when Allen and Gates created a corporate entity to do business: on 4 April 1975 they named and founded “Microsoft.” The company’s first contract was a licensing agreement to allow Altair to distribute their version of BASIC under the name “Altair BASIC.”
Microsoft BASIC
Microsoft’s emergence coincided with the start of a boom in affordable personal computers; every new hardware wanted to ship software to be more appealing to professional and hobbyist developers. A BASIC interpreter made all such systems easier to sell, and Microsoft developed and licensed many more BASIC interpreters to other manufacturers, including to Apple for the Apple II, to IBM, the Z-80, and the Commodore 64.
Smartly, these versions of BASIC were called “Microsoft BASIC” and the company extended the functionality of BASIC, adding improved string manipulation and better graphics support. Plus, the “Microsoft” brand name was displayed whenever the interpreter started up, which raised the company’s profile with users.
2. More and better developer tools
Microsoft’s commercial breakthrough began with creating and distributing the DOS operating system in 1981, and then the Windows operating system in 1985. In 1990, Microsoft launched Windows 3.0 and also introduced Microsoft Word and Microsoft Excel. This combination of an operating system and word processor helped Windows gain more popularity, and made the OS even more popular. Here’s how sales of the different versions compared: