IBM approached Microsoft in July 1980 regarding its upcoming personal computer, the IBM PC. The computer company first proposed that Microsoft write the BASIC interpreter. When IBM's representatives mentioned that they needed an operating system, Gates referred them to Digital Research (DRI), makers of the widely used CP/M operating system. IBM's discussions with Digital Research went poorly, and they did not reach a licensing agreement. IBM representative Jack Sams mentioned the licensing difficulties during a subsequent meeting with Gates and told him to get an acceptable operating system. A few weeks later Gates proposed using 86-DOS (QDOS), an operating system similar to CP/M that Tim Paterson of Seattle Computer Products (SCP) had made for hardware similar to the PC. Microsoft made a deal with SCP to become the exclusive licensing agent, and later the full owner, of 86-DOS. After adapting the operating system for the PC, Microsoft delivered it to IBM as PC-DOS in exchange for a one-time fee of $50,000. Gates did not offer to transfer the copyright on the operating system, because he believed that other hardware vendors would clone IBM's system. They did, and the sales of MS-DOS made Microsoft a major player in the industry. Despite IBM's name on the operating system the press quickly identified Microsoft as being very influential on the new computer, with PC Magazine asking if Gates were "The Man Behind The Machine?" He oversaw Microsoft's company restructuring on June 25, 1981, which re-incorporated the company in Washington state and made Gates President of Microsoft and the Chairman of the Board.
Please join StudyMode to read the full document