IBM Opens the Window for Microsoft

The question was: “Do you want to buy it or do you want me to buy it?” The answer would change computing. The speaker was IBM exec Jack Sams, who needed an operating system for the IBM Personal Computer 5150. The machine was being built with open architecture—unheard of at IBM—when introduced in 1981. The question was posed to 24-year-old Bill Gates, whose startup, Microsoft, didn’t actually have an OS, but had located one called QDOS (for Quick and Dirty Operating System) from a local firm. Given the opportunity to buy QDOS or rent it, IBM did the latter.

Gates shrewdly negotiated the right to license QDOS—which became MS-DOS, and later part of Windows—to all comers. And they came. The rush of third-party computer makers that followed the PC’s introduction in 1981— including Dell, Compaq, and HP—would turn Microsoft into the biggest software maker on the planet and eventually force IBM out of the PC market. Sams’s question seems stupid now, but would have seemed less so for a company racing for a market that was getting away. Maybe IBM should have asked one of its mainframes first.