Israel is currently home to one of Microsoft's three strategic global research and development centers. The Microsoft Israel center is home to some of the company's most exciting and innovative technologies, and employs over 1,000 Israelis.

The Microsoft-Israel center is comprised of core product efforts and incubations in the areas such as big data and business intelligence, cloud, machine learning and personalization. Microsoft's Israel Research and Development Center was the first Microsoft R&D Center to open outside of the United States.

Relying on its original R&D operation which was founded in 1991 and tapping into Israel's deep technological talent pool and its thriving high-tech community, Microsoft inaugurated in April 2006 the Israel Research & Development Center as a significant expansion of the scope and nature of its technology activities in Israel. The Israel R&D Center is strategically situated in two main locations - in Herzeliya, heartland of Israel's high tech industry and in Haifa, home to many graduates of the Technion, Israel's leading technology university. Both of these locations are now home to many prominent venture capital firms and multinational companies with their own research centers.

Some of the prominent innovations that have come out of Microsoft's Israel R&D center include the disk compression and antivirus components of Microsoft's DOS-6 operating system and a bidirectional Windows operating system and Hebrew Windows developed for Microsoft by Kivun Computers.

Marking Microsoft's fifth Israeli acqusition of 2015, including startups Adallom and Aorato, in November 2015 Microsoft announced the purchase of Israeli cyber-security startup Secure Island for an undisclosed sum. Secure Islands is in the business of data protection, and will continue to provide their services to their existing clients such as Vodafone, Credit Suisse, and UBS.

Speaking via video conference at Microsoft Israel R&D Center’s 2016 Think Next event in Tel Aviv, Microsoft founder Bill Gates stated that Israeli developments in areas like analytics and security were “improving the world.”

General manager of Microsoft Global Accelerators Zack Weisfeld praised Israeli start-ups in October 2016, saying that “at the end of the day, and if you get them to the right place, they're unstoppable.”

Microsoft aqcuired Israeli cyber-security firm Hexadite for for $100 million in May 2017. One month later, in June 2017, Microsoft purchased Israeli cloud analytics & optimization service Cloudyn for between $50 and 70 million.

Sources: Microsoft;
Sawers, Paul. “Microsoft confirms acquisition of Israel-based cyber security firm Secure Islands,” Venturebeat, (November 9, 2015);
Shamah, David. “Bill Gates: Israeli tech ‘changing the world,’” Times of Israel, (February 25, 2016);
Shead, Sam. “Execs from Facebook, Google, and Microsoft explain why they use Israel for their R&D,” Business Insider (October 6, 2016);
Tsipori, Tali. Microsoft buys cyber security co Hexadite for $100m, Globes, (May 26, 2017);
Nitzan Cohen. Microsoft buys Israeli cloud solutions co Cloudyn, Globes, (June 30, 2017);

Israel Science & Technology: Microsoft & Israel