In 1980, IBM first approached Bill Gates and Microsoft to discuss the state of home computers and Microsoft products. Big Bill gave IBM a few ideas on what would make a great home computer, including having Basic written into the ROM chip. Microsoft had already produced several versions of Basic for different computer systems, beginning with the Altair, so Gates was terribly excited at the prospect of writing a version for IBM. As you would be.
As for an operating system for the new computers, since Microsoft had never written an operating system before, Gates suggested that IBM investigate an OS called CP/M (Control Program for Microcomputers), written by Gary Kildall of Digital Research. Kildall had a Ph.D in computery things and had written the most successful operating system of the time; selling over 600,000 copies of CP/M, his code was definitely the dog's bollocks of operating systems at that time.
IBM tried to contact Kildall for a meeting, executives met with Mrs. Kildall who refused to sign a non-disclosure agreement. IBM soon returned to Bill Gates and gave Microsoft the contract to write the new operating system; one that would eventually wipe Kildall's CP/M out of common use. What unusual tactics for Microsoft, I hear you say..
The "Microsoft Disk Operating System" or MS-DOS was based on QDOS, the "Quick and Dirty Operating System" written by Tim Paterson of Seattle Computer Products, for their prototype Intel 8086 based computer.
QDOS was in turn, based on Gary Kildall's CP/M; Paterson had bought a CP/M manual and used it as the basis to write his operating system in six weeks. QDOS was different enough from CP/M to be considered legal.
Microsoft bought the rights to QDOS for $50,000, keeping the IBM deal a secret from Seattle Computer Products.
Gates then talked IBM into letting Microsoft retain the rights, to market MS DOS separate from the IBM PC project, Gates proceeded to make a fortune from the licensing of MS-DOS.
In 1981, Tim Paterson jacked in his position at Seattle Computer Products and found employment at Microsoft. If you can't beat 'em, join 'em..
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