If you’re going to be critical of Microsoft, fine. But get the facts straight.
Gates didn’t drop out of high school. He did drop out of Harvard. The circumstances leading to his dropping out are pretty fascinating…
In December of 1974, Allen was on his way to visit Gates when along the way he stopped to browse the current magazines. What he saw changed his and Bill Gates's lives forever. On the cover of Popular Electronics was a picture of the Altair 8080 and the headline "World's First Microcomputer Kit to Rival Commercial Models." He bought the issue and rushed over to Gates's dorm room. They both recognized this as their big opportunity. The two knew that the home computer market was about to explode and that someone would need to make software for the new machines. Within a few days, Gates had called MITS (Micro Instrumentation and Telemetry Systems), the makers of the Altair. He told the company that he and Allen had developed a BASIC that could be used on the Altair [Teamgates.com, 9/29/96]. This was a lie. They had not even written a line of code. They had neither an Altair nor the chip that ran the computer. The MITS company did not know this and was very interested in seeing their BASIC. So, Gates and Allen began working feverishly on the BASIC they had promised. The code for the program was left mostly up to Bill Gates while Paul Allen began working on a way to simulate the Altair with the schools PDP-10. Eight weeks later, the two felt their program was ready. Allen was to fly to MITS and show off their creation. The day after Allen arrived at MITS, it was time to test their BASIC. Entering the program into the company's Altair was the first time Allen had ever touched one. If the Altair simulation he designed or any of Gates's code was faulty, the demonstration would most likely have ended in failure. This was not the case, and the program worked perfectly the first time [Wallace, 1992, p. 80]. MITS arranged a deal with Gates and Allen to buy the rights to their BASIC.[Teamgates.com, 9/29/96] Gates was convinced that the software market had been born. Within a year, Bill Gates had dropped out of Harvard and Microsoft was formed. Source
This took some serious moxie and ability from a 19 year old kid. Don’t think Gates and Allen lacked talent.
Because of their success, IBM came knocking on Gates’ door. Gates wanted to sell BASIC to IBM on a ROM chip, but first IBM needed an operating system. Gates sent IBM to Gary Kildall, calling Gary with an IBM rep in his office and giving Gary a heads up. This comes straight from Tom Rolander, who worked with Kildall, was present throughout these events, and was Kildall’s best friend.
IBM wanted a flat license fee and wanted to change the name of the OS from CP/M to PC-DOS. Kildall refused, so IBM returned to Gates. What follows is fascinating. Gates had no idea how he was going to provide IBM an operating system, but commits and finds a way to deliver six weeks later...
He had given Gary Kildall first shot. He wasn't going to give him a second. Kildall was a better programmer. Gates was a better businessman and saw the opportunity a lot clearer than Gary Kildall did.
Bill Gates greatest skill is to give people what they want. Bill Gates didn't have an operating system to sell but told IBM he did. Paul Allen, Microsoft's co-founder knew of where he could get an operating system just across town.
Tim Paterson owner of Seattle Computer Products had written Q-DOS a close imitation of CP/M. Allen bought it from him for $50,000. He never mentioned that he was going to resell it to IBM.
Microsoft renamed it MS-DOS, then a made a deal with IBM. IBM would pay them royalties for each copy and Microsoft would retain the ownership rights to the operating system. This meant they could license MS-DOS to anyone they wanted.
IBM PCs became the industry standard. But, they priced their machines too high which opened the door for IBM compatible computers or clones and Microsoft sold the operating system to every single one of them.
Gary Kildall was not happy when he found out about the Microsoft-IBM deal. He considered it theft when he learned how similar MS-DOS was to CP/M. He was too easy going to sue and even if he did, copyright laws would have made it hard for him to win. A copyright only protects you from an outright copy, not an imitation.
The threat of litigation caused IBM to give Kildall a deal. IBM would offer CP/M as an option along with MS-DOS. That was fine with him. He believed the PC industry had room for two operating systems. Competition was good, he thought. Just like there was room for two colas and three automakers.
IBM never told him they would let customers choose between MS-DOS at $40 and CP/M at $240. Of course, who would pay 6 times more for the same thing? Source
Rod Brock was the owner of Seattle Computer, a hardware manufacturer. Tim Paterson was Brock’s employee. Brock sold non-exclusive rights for Q-DOS to Paul Allen and eventually sold the code outright for $50,000 (Source), not “a couple of grand.” It only took Paterson eight weeks to create Q-DOS, referencing a CP/M manual. In today’s dollars, that’s over $140K for eight weeks work (Source). This was a good deal for Seattle Computer, which didn’t want to be in software, but hardware. .Paterson joined Microsoft’s team a year later (Source). Gates didn’t buy “MS DOS from a brilliant programmer in his garage who was too stupid to know what he had for a couple of grand.”
The real coup made by Gates was getting IBM to allow him to sell the OS to others. Credit Gates with luck or vision, he was willing to pass on more money today for a big potential future payout…
In what would become a typical move for the company, Gates and Balmer bought an OS for $50,000, which they in turn licensed to IBM for $80,000. Even in the early 1980s, $80,000 wasn't very much money. So what was Gates thinking? It turns out that he was thinking far ahead. He said as much when interviewed for the PBS series "Triumph of the Nerds": "the key to our...deal was that IBM had no control over...our licensing to other people."
Microsoft realized that the IBM PC was going to create a mass market for personal computers. Gates gambled that the business cycle would follow the mainframe model and spawn clones. Out of necessity, these clones would be obliged to pay Microsoft any price to use DOS, which meant that the company was the gatekeeper that PC makers had to pay to compete in the personal computing world.
It worked. Source
Criticize Vista (I know I do). Criticize Microsoft. But do it from a position of knowledge and accuracy, not ignorance and falsehoods.
And credit Gates with a technical business brilliance that ranks him along side, if not superior to the likes of Edison, Ford, and Rockefeller.