Microsoft executives fired up the company's employees at last month's annual company meeting, a silver anniversary party that celebrated past successes and focused on the challenges of the future.
Although there was palpable enthusiasm at the event, industry analysts and Microsoft customers said the company's current technology bets, notably its .Net strategy, will largely dictate the company's ability to overcome new challenges.
The software giant has survived for 25 years by either getting ahead of the high-tech curve or catching up to competitors rapidly and eventually taking over a market - "embrace and extend", in Microsoft-speak.
"One of Microsoft's strengths throughout history is its ability to morph itself to accommodate new trends, models, and technologies," said Dwight Davis, a Microsoft analyst at Summit Strategies.
Future challenges include making the transformation to a "software as services" company via its .Net initiative, expanding its reach into ancillary areas such as interactive TV and mobile computing, and enhancing its position as an enterprise vendor. Also looming is the antitrust case, which holds the key to whether Microsoft remains a single company. Microsoft is appealing the case.
Chairman and chief software architect Bill Gates, greeted by a standing ovation from Microsoft's 19,000 Redmond, Washington-based employees, said that Microsoft history is in some ways repeating itself.
Beginning at the company's origin, when he and fellow co-founder Paul Allen wrote a version of Basic that ran on more than 200 hardware systems - the same philosophy that enables Microsoft software to run on a variety of hardware today - Gates traced the company's past and outlined its future.
"[Many] of the bets we made in the 80s are the reason for [Microsoft's] prosperity in the 90s," Gates said.
Microsoft also made a remarkable about-face on the Internet in late 1995, modifying its proprietary model and embracing Net protocols in all its products.
Moving forward, customers say they are relying on Microsoft to further its interoperability efforts with other operating systems and platforms, support more industry standards, and continue to provide the operating systems on which desktop applications run.
Stanford University is moving its networking support from NetWare to Windows 2000, a migration prompted by Microsoft support for Kerberos authentication in Windows 2000, according to Cedric Bennett, IS director at Stanford.
"The more Microsoft moves in the direction of widespread industry standards, the more we'll deploy them," Bennett said.
Microsoft's continued success will ride on overcoming a number of challenges.
* Embracing wireless and handheld technologies* Further interoperating with legacy systems* Moving into nascent markets, such as interactive TV* Expanding presence as back-office supplier to enterprises.