The DOS Story Continues.
Microsoft’s second meeting with IBM
Finally IBM executives meet Gary but damage was done as:
• Gary was not at home when IBM team came first time.
• They waited long and finally Gary’s wife Dorothy (in charge of business side) finally signed the NDA. The NDA stated that Digital research cannot say IBM executives came to visit them or share any information of the meeting with anyone.
• DR wanted royalty whilst IBM wanted buy whole operating system.
• CP/M was already selling 8 bit CP/M OS. A 16 bit OS could not be developed in the time frame wanted by IBM.
In words of Jack Sams (IBM):
“IBM just couldn’t get Kildall to agree to spend the money to develop a 16-bit version of CP/M in the tight schedule IBM required.”
Gary wanted to sell the operating system CP/M on royalty basis but IBM wanted to buy whole thing.
So IBM team walks, certainly not pleased.
Sams comes back to Microsoft and as things did not go smoothly with Digital Research.
Bill Gates did not want to give Gary a second chance.
Bill asks Sam’s :
“Do you want to buy it [IBM] or do you want me [Microsoft] to buy it?”
IBM discussed operating system with Bill Gates, Paul Allen and Kay Nishi. The man most enthusiastic in getting Microsoft in the Operating System business was Kay Nishi, because Bill Gates was not interested in going to the OS business.
Paul Allen knew someone called Tim Paterson of Seattle Computer (SCP).
“There's a local company here in CL called CL Computer Products by a guy named Tim Patterson and he had done an operating system a very rudimentary operating system that was kind of like CPM.”- Paul Allen.
Tim Patterson, who originally was working as technician for a customer of SCP.
The customer was Retail Computer Store and Rod Brock, owner of SCP frequently visited the store.
Tim was at that time student of University of Washington.
According to Tim:
"I got to know Rod Brock of Seattle Computer when he came into the store periodically. We were selling his boards. Eventually he asked me to consult for Seattle Computer.”
Come to think of it many people wanting to study in the United States do not consider this university.
There must be something special about this university allowing students to ultimately develop their talents and creativity.
--Tech Know Simply.
University of Washington has given alumni such as:
• Bruce Lee
• Gary Kildall, inventor of CP/M. A variant was MS DOS by Tim Patterson.
• Tim Patterson
‘’’ Rod Brock hired me in June 1978, at fifty dollars a day, to make the board work. I left the retail computer store at that time."
Tim Paterson after graduating joins Seattle Computer Products. (SCP).
At this time all pcs were using 8 bit processor. Tim convinced his boss at SCP Rod to develop a computer system for the new chip.
The SCP 8086” computer” needed:
• An Operating System to run it.
They were already using Microsoft BASIC Language as this only available software.
The only company providing an Operating System was Gary’s company, (Digital Research).
The thing was it worked with a 8080/85 processor with a 8 bit Operating System. They were working on a 16 bit Operating System. Tim had to wait until the 16 bit OS was ready by CP/M.
The 16 bit OS -CP/M was not ready by April, 1980.
Tim decides to make his own version of CP/M and called it QDOS, Quick and Dirty Operating System. Well the name suited, since Tim did copy the API calls of CP/M.
In summer of 1980, the name QDOs was dropped and changed to 86-DOS.
SCP were getting ready to sell 86-DOS and even gave out advertisements.
Microsoft’s agreement with Seattle Computer Products
Paul Allen calls SCP owner Rod and negotiates a licensing agreement of:
• Flat fee of 10,000 US$
• 15,000 US$ per company Microsoft licensed the OS to.
• SCP would grant non-exclusive license rights to Microsoft.
• SCP could not ask about customers to whom Microsoft was selling QDOS to.
Microsoft had right to sell and license the software. They paid 25,000 US$ for their 1st customer for SCP. That was the last time to SCP was getting paid for customer of their OS.
This was Dec-1980.
In May 1981 –Tim leaves SCP and works for Microsoft.
July 1981- Microsoft buys whole of QDOS from SCP with a price of 50,000 US$.
86-DOS gets renamed to MS DOS.
Personal thoughts -TKS
I remember using GW-BASIC, (1988) then I did know belonged to Microsoft.
But heard about of Microsoft, was playing MS Simulator game on a DOS IBM PC AT (clone).
For a person wanting a career in Computer Science he/she should read books on:
• Steve Jobs biography
• Bill Gates biography
• Dos Story
Before deciding where to enroll in.
The IBM deal with Microsoft- Operating System
Nov/Dec-1980
The miscalculations were on reading the clauses by IBM team.
IBM would pay Microsoft as follows:
• 45,000.00 US$ for the Operating System.
• 310,000.00 US$ for Programming languages.
• 75,000.00 US$ testing and consultation.
An agreement was signed with IBM and Microsoft but Bill Gates left a clause.
This clause is very important for the business development manager in a software company. No wonder I used to hear software development is 20% of the whole process.
The clause was Microsoft would provide IBM an operating system, named PC DOS.
Gates agreed to sell Operating System to IBM for much lower 50,000 US$ but it was non-exclusive royalty deal.
• This meant Microsoft could sell the OS to anybody they wanted.
• Every time IBM sells a PC with copy of QDOS in it, Microsoft would be paid royalty.
The IBM team failed to overlook above statement. Maybe they got overwhelmed that Gates treated IBM team with “Chai and Biscuits” whilst Digital Research did not even give them their due respect’ and had to wait 3 hours! (Author’s opinion).
Sams assumed the operating system came with the programming language and IBM owned the Operating System called PC DOS.
August 1981-Microsft licenses MS DOS to IBM as “PC DOS”.
The IBM PC 5150 PC was released on 12th August 1981.
Gary was upset when he heard about it and IBM sensed legal infringement’ offering a solution.
IBM would provide both OS with the IBM PC and let the users decide. The thing was MS DOS was priced 40US$ and CP/M was priced at 240 US$.
This event secured the winner OF the PC business and next coming rich IT businessman.
IBM sold about 200,000 PC every month in the second year, generating 1 Billion US$ in revenue in 1st year.
What Happened to Gary Kildall?
Well stay tuned for post of Gary, original inventor of PC operating System.
Like us in Facebook.-Tech Know Simply(TKS).
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