How did Microsoft manage to grow profits at a rate higher than its rate of growth in the 1990s?

Answer 1

increasing margins

Answer 2

In its early stages it devoted more money (percentage wise) to research and development. As it has matured, margins have risen. Maybe theres less spent on R&D, maybe it has monopoly power, whatever you want to call it, it has found it easier to charge higher prices (relative to research costs) as it has grown.