Decades of innovating in the heart of Silicon Valley: Microsoft’s deep roots in the Bay Area
Rewind the clock to 1981, when Kim Carnes topped the charts with “Bette Davis Eyes” and the dashing archaeologist Indiana Jones thrilled moviegoers in “Raiders of the Lost Ark.”
It’s also when Microsoft first established roots in the heart of Silicon Valley by opening an office in Mountain View with five employees.
Microsoft is celebrating its 50th anniversary this year, and we’re looking back on the growth and innovation of teams based here in the Bay Area.
The strategic importance of putting down stakes in Silicon Valley, with its unique concentration of tech talent, research universities, inventive startup culture, and forward-thinking venture capital firms, was clear even in the earliest years of Washington state-based Microsoft.
From that handful of employees in 1981 to several thousand now, the Bay Area has been a key driver of Microsoft’s innovation. And in our current era of AI transformation, Microsoft is relying on the expertise of Bay Area employees more than ever.
Early years
When Microsoft opened its first office in Mountain View in 1981, the former orchards west of San Francisco Bay had already earned the nickname Silicon Valley for the many semiconductor companies that had sprung up near Stanford University.
In those early years, amid the Bay Area’s vibrant startup culture, Microsoft was strategic in its acquisitions to build out its productivity software, helping to revolutionize how people work. In 1987, Microsoft bought Sunnyvale-based Forethought, Inc., maker of PowerPoint.
PowerPoint was one of the applications included in Office 95, which debuted with Windows 95 on August 24, 1995, marking a watershed moment in tech and cultural history. People lined up outside stores for midnight release parties.
Shawn Villaron was 21 years old at the time, interning with the PowerPoint team at an office on Sand Hill Road in Menlo Park. The Windows 95 and Office 95 launch ushered in big changes for Microsoft, and for its presence in Silicon Valley.
“It was the day that personal computing went mainstream,” Shawn recalled, “The response from everyone was validation that I was working on stuff that mattered. It made those late nights and tough deadlines worth it.”
That opportunity to build products people all over the world depend on led Shawn to forge a career at Microsoft. Thirty years later, he’s vice president and general manager in Microsoft’s Office Product Group, responsible for PowerPoint. Shawn also serves as the regional leader for Microsoft Bay Area.
`The internet tidal wave’
In May 1995, Bill Gates sent his legendary memo to Microsoft executives explaining that the world was about to experience an “internet tidal wave” with “exponential improvements in communications networks.” Startups in Silicon Valley helped fuel that technological shift, and Microsoft Bay Area expanded through key acquisitions.
In 1997, Microsoft acquired Hotmail, a Sunnyvale-based pioneer of Web-based email. Hotmail evolved into Outlook, a cornerstone of our Microsoft 365 suite of productivity software.
For Katy Brown, who joined Microsoft in 1997 as an account manager for Northern California, it was an exciting time working closely with customers as they began to shift operations, commerce, and communication to the internet.
“It was clear that the internet would have long-lasting, transformative ramifications,” said Katy, who is now corporate vice president, Americas Enterprise Sales for Microsoft. “We’ve seen that in everything from the rise of software-as-a-service to cloud computing to generative AI. With our significant presence here in Silicon Valley, we’ve been able to attract the right talent to drive Microsoft’s innovation in all of these areas.”
Hardware innovation and the cloud-computing revolution
Also in 1997, Microsoft bought Palo Alto-based WebTV Networks Inc., maker of a TV set-top box that connected to the internet. The WebTV team that joined Microsoft has continued to innovate in hardware, driving development of custom chips and devices.
The team contributed to the 2001 launch of Xbox, Microsoft’s bold entry into the gaming world, and expanded into end-to-end silicon architecture design and verification work for Xbox 360.
By 1999, the region’s importance to Microsoft was abundantly clear, and the company opened a new 32-acre campus in Mountain View. In 2022, we opened a new Silicon Valley Campus, built with sustainability at the forefront.
With the new campus, Microsoft Bay Area grew through a combination of home-grown innovation and strategic acquisitions. We expanded into new areas, with teams pioneering new mobile software solutions, devices and hardware, cybersecurity tools, and powerful communications platforms. And we deepened our connections with the region’s rich startup culture through our corporate venture fund, M12, and through Microsoft for Startups.
Two more significant milestones for Microsoft in the Bay Area: The company acquired LinkedIn in 2016 and GitHub two years later. While the two companies operate independently, they contribute to the network of resources in the region.
As Microsoft became a leader in cloud computing with Azure, Microsoft Bay Area has played a key role. Teams in the region have helped lead development of Azure Local, bringing Azure’s compute, storage, and intelligence directly into customer environments. Azure Networking originated within the region to support cloud networking.
A systems approach to AI innovation
We’ve now entered a transformative tech moment that may dwarf all the others: the era of AI. It’s a moment that Microsoft Bay Area employees spent years laying the groundwork for.
The launch of Microsoft Copilot in 2023 has supercharged that focus on AI innovation. Bay Area employees have worked on everything from Copilot in PowerPoint and Microsoft Designer to the launch of Copilot+ PCs and the development of the Phi-3 family of small and medium language models.
Microsoft Bay Area engineers have played key roles on custom chips including Azure Maia 100, the company’s first in-house AI accelerator, Microsoft Azure Cobalt CPU, an Arm-based processor for general purpose compute workloads, and Azure Boost DPU, a processor architected to accelerate datacentric workloads in the cloud.
It’s been an exhilarating journey for Padma Parthasarathy, vice president, silicon engineering, verification, and validation. She joined Microsoft Bay Area in 1998, first working on WebTV, then Xbox, Kinect, Microsoft Band, the HoloLens mixed-reality headset, and most recently, Azure Maia AI silicon and systems to meet the exploding demand for Microsoft cloud and AI workloads.
“I started out making 3D graphics for game consoles, and from there I shifted to doing design and now I’m working on verification and validation of our custom silicon for AI workloads in datacenters,” Padma said. “It’s been an incredible journey. I feel really lucky to have been a part of the hardware innovation in Microsoft and working with such a team to push the boundaries of what’s possible with silicon design.”
Looking to the future
Shawn Villaron says the promise unleashed by advances in AI makes this moment feel even more seismic than the Windows 95 launch.
“History books are going to be written about what’s going on right now,” he said. “Microsoft, and Microsoft Bay Area, will be at the forefront of a lot of those narratives.”
One indication of the Bay Area’s growing importance in Microsoft’s AI strategy: In the last year, the company has welcomed two tech visionaries from the Bay Area to drive AI innovation and join Microsoft’s senior leadership team.
In March 2024, Mustafa Suleyman, an entrepreneur and technology strategist who co-founded DeepMind and Inflection AI, joined as executive vice president and CEO, Microsoft AI. Microsoft AI focuses on advancing Copilot and our consumer AI products and research.
In October, Jay Parikh joined as executive vice president, CoreAI, an organization within Microsoft to empower every developer to shape the future with AI. Jay previously served as CEO of Lacework, a cloud security company, and as vice president and global head of engineering and infrastructure at Facebook.
While the focus of Microsoft Bay Area’s work has evolved over the years with technological shifts, there has been an important throughline: Our strength lies in our talented people and a culture grounded in growth mindset. With that foundation of creativity and collaboration, Microsoft Bay Area has stayed at the forefront of innovation.
“I’ve had a front-row seat to the technological transformations over the past three decades,” said Shawn. “I can’t wait to see what our teams create next.”
