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IBM's Choice
Why did Bill get the DOS contract?

By:David K. Every
©Copyright 1999

Because of a recent article (Is Bill Gates a Genius), many people have kindly sent me the story of how IBM picked Microsoft to build DOS.

Most people repeat the story that they saw watching the PBS series called "Triumph of the Nerds", by Bob Cringley (with some small variants). The series is called, "Accidental Empires" in foreign markets (Australia and Europe). The TV series is based on Cringley's book called, "Accidental Empires : How the Boys of Silicon Valley Make Their Millions, Battle Foreign Competition, and Still Can't Get a Date". It is a good book, and yes I've watched the series too -- both are good. If you haven't read it, it is a pretty good read -- and usually dead on. The series is a almost as good as the book, but a little more "fluffy" and spun -- but has good interviews and gets the viewer involved.

There is are many flavors of the tale (all a little different), and there is lots of general computer history books. Personally, I like Steve Levy's Book, "Hackers". Levy's book is a little dryer, and longer, but I preferred it -- and it wasn't quite as sensationalized and got more the feel of what was going on. Most people would probably prefer the less technical Accidental Empires. Both are good books, and must reads for people who want to learn about the early History of Microcomputers.

Both are well researched, and based on the facts. But always remember -- WRITERS ARE HUMANS! They are not God's and not the pope (no infallibility). They are writers who've often done a lot of research -- but much of the information they get if from people who have agendas. They try to filter one persons agendas against another (hoping to balance out and get the truth), but everything (everyone) has biases and opinions, and writers make mistakes like everyone else. Always keep that in mind (on my site as well as in every book or TV show that you see).

Cringley's Version of the Story

The basic version of the story as told by Cringley is loosely as follows. (As always, read the original if you have interest in this -- don't just take my word for it). This is my paraphrased version of his version.

IBM was looking for an OS for their computer that they had slapped together. IBM did not have time to develop the OS themselves (IBM is, slow, and over-engineers products -- but thorough). So they went out on the hunt. For some reason they thought that Microsoft made CP/M (the then standard version of DOS). When they went to Microsoft, Bill Gates said, "Oh, no. I don't sell Operating Systems", talk to Gary Kildall over at Digital Research. IBM went to Digital Research, but Gary Kildall had snubbed them (and went out flying). No one else at the company had the authority to sign an NDA. IBM felt slighted, and went back to Microsoft, and then Gates made a pitch for the OS. Gates bought the product off Seattle Computer Products (which was really a rip-off of CP/M), and Gates was in the DOS business.

No offense -- but this story smells fishy on a couple of levels. It sounds more like what IBM or Microsoft said happened -- and as far as I can tell, that is who Cringley interviewed about the event. I have heard complaints (through the grapevine) from those over at Digital Research about that accounting of events.

The first issue I have with this tale is Bill Gates. He is not a lamb that is afraid to go into other people's markets -- and he is not likely to turn business away. The story smells fishy to imply that he would turn IBM away at the door, and only try to sell them Basic (missing an incredible opportunity) -- this is especially fishy to people who know his ruthless drive to win. So this telling is so completely out of character, that one must really wonder. If he did that, then he was he really a fool (business wise), and was even more lucky that IBM came back. (Which supports my article Gates a Genius? even more)

The biggest problem with this story is that it is quite common to let your lawyers look over an NDA (and to give time for people to do so) -- especially back then, when NDA's around computers were so new. So IBM's complete lack of understanding on this issue, can actually make them seem pretty stupid and fragile (more than I think they realize). But it may still be better than the alternative (if what I have heard is the truth).

That story (or some variants) are the most often repeated version of events. There are some subtle differences that go around (about why Gary Kildall wasn't there), and so on. But most stories have these elements in common. But still some things don't add up.

My Version of the Story

I was around during this time (and soon after), and was hearing some industry gossip. I did hear the tales as repeated in books, but I had heard some other intriguing stories and details, as told in user groups and by insiders (or wannabe's) at that time. I compiled all the likely stories into my own mental image of what happened. The problem is that it is based on industry gossip and are NOT CONFIRMED. That is why I have avoided putting this version on my site. However, I am getting so many corrections, to my abbreviated tale (as told in Gates a Genius?) that I must explain what I believe (even though I can't prove it). I had not abbreviate my story to make Gates look bad, I just didn't elaborate because my version is not supportable.

Read again -- this is NOT history. This is gossip. This is only what I believe based on what I had heard. There is plenty of reasons for people to hide this version, and I haven't gotten anyone who would really know to say if this is true. So take this with a rather large grain of salt.

An IBM Executive (Akers, I think) and Mary Gates (Bill's Mom) were both doing things with the United Way. They got talking, and it became known that IBM (who was looking for an OS for their new Microcomputer) should talk to Bill Gates and Microsoft.

IBM has a policy of being thorough -- and they were going to check out all potential OS's, themselves. (But this wasn't their industry -- so they didn't know of all the potential OS's). They went to Microsoft and had their first meeting with Bill. Bill told them that he had been working on an OS for some time, and could probably show them a demo in no time. (To which Microsoft quickly scrambled and started looking for something to show, and bought Seattle Computings' QDOS).

IBM was interested -- but they had to dot their i's, and cross their t's, and check everything else out. Unix was too resource intensive, and they didn't want to make something that was too powerful (or it would compete with their mini-computers) -- so it was put out of the running early on. IBM was getting into Microcomputers as much to use them as peripherals for their mainframes as anything else -- and they didn't want to overpower the Micros. (IBM has a long history of playing games with products performance -- dumbing them down to "fit" the marketing scheme). This is also why they chose one of the worst processors available the time, Intels processor, instead of TI's, Zilog, Motorola's or other superior processors (or instead of doing their own). They also chose the slowest variant, the 8088, instead of the superior 8086 for the same reason. Also, a primary reason for this choice, was because they were able to buy a piece of Intel (on the cheap) -- which they later sold (too soon) at a substantial profit.

Gary Kildall was supposed to have been somewhat a playboy (or free-wheeling 60's left-over, pot-smoking, free-sex kind of guy). Not only was his personality the opposite of IBM's, but he is rumored to have gotten caught having an affair with an IBM executives wife. This is a huge no-no at IBM -- and none too popular anywhere. This is why Digital Research was fairly quiet about the real reason (but still complained about the accuracy as told by others) -- because it doesn't look good for them to say, "Huh uh! The real reason we didn't get the contract is because our founder had the morals, and wisdom, of a Kennedy or a Clinton".

When IBM went looking for an OS, Digital Research (aka Gary Kildall) didn't have an ice-cube's chance in hell of getting the contract -- because of that indiscretion. He had an enemy in IBM (the executive himself), and had violated their corporate culture (politically doomed, in a political company). This is compounded by the fact that another high-level executive was talking about "Mary Gates boy Bill" (a golden child, and a shoe-in). So the visit to Digital Research was strictly a "cover your butt move", and Gates had probably already promised them the world.

So IBM did visit Digital Research, and Digital Research probably did say, "give us a day to have our lawyers look over the NDA". To which IBM had all the excuse they needed to bail, and get the hell out. They made the lame excuse about being slighted, only because it was better than the more lame reason (that politics and personality was more important than technology).

The Bocca-Raton boys were under extreme time pressures as well. So they were being far less thorough than was normal -- and rushing. They also took a somewhat abnormal tack for IBM -- and figured they didn't really care about doing it right the first time -- they were IBM, they could make mistakes and change them. (Or that was the thinking).

IBM did allow Digital Research to sell their product for the PC. And CP/M 86 did make an attempt at the market. But it was too pricey, mainly because its development wasn't being paid for by IBM (unlike Microsofts). So Gary Kildall, and Digital Research lost out -- and Bill Gates did luck out.

Note: There was no quality to Gates' or Microsoft's product -- it was timing and chance (and marketing and contacts) that lead to their success. They were wise and ruthless enough to exploit the opportunities -- there was no genius (but probably some fraud).

This is a compendium of the facts and tales as I've heard them. Remember, at the time Digital Research had sold 600,000 copies of CP/M. Microsoft didn't have anything to show yet. Yet IBM, a traditionally VERY CONSERVATIVE company, went with Microsoft. Something was going on -- and it was probably more substantial than Digital Research asking for time to review a Non-Disclosure Agreement, and it was probably politics. That left a lot of questions in my mind. The gossip about Kildall filled in the blanks just too well. It certainly sounds more likely (logical) than the "official" versions from IBM and Microsoft (which just don't sound quite right). Of course the truth is sometimes more surprising than fiction -- and it is possible that both Gates (Microsoft) and IBM acted completely out of character. I just somehow doubt it. I can smell hyped up PR -- and the "traditional" MS-IBM story just stinks.

Remember, this is only what I've pieced together from rumors and stories that went around at the time (or soon after). Use your critical skepticism, and take it as untrue (or at least unproven) until it is proven true (which is unlikely to happen). Just because I believe it, does not mean that you should. I tell this story strictly to inform you of why I don't completely agree with the version in Accidental Empires (or I refine it slightly), and why I brushed over that story.

Related Info

You can read History of DR-DOS is a somewhat related article.

Updated: 11/09/02

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