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Event

IBM–Microsoft operating-system deal

IBM's 1980 contract with Microsoft for the IBM PC's operating system, which Microsoft bought from Seattle Computer Products.

5 links, 1 backed by primary records

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Dates
Nov 1980 – Aug 1981
Also known as
IBM DOS deal, PC DOS deal

In 1980 IBM needed an operating system for its first personal computer. Microsoft signed the contract in November 1980 without having one, licensed 86-DOS from Seattle Computer Products, bought it outright in 1981 and delivered it as PC DOS. Keeping the right to sell it to other manufacturers as MS-DOS became the basis of Microsoft’s business.

According to The Seattle Times, Mary Maxwell Gates, who served on the United Way’s national board with IBM’s president John Opel, helped cement the connection.

Connections 5

involved

  • IBM commissioned PC DOS Scholarship & press 1
  • Microsoft supplier; kept the right to license MS-DOS to others Scholarship & press 1
  • Seattle Computer Products sold 86-DOS to Microsoft Scholarship & press 1

    SCP later sued Microsoft, claiming it had concealed the IBM connection, and settled out of court for almost $1 million.

led to

influenced by

  • Mary Maxwell Gates According to The Seattle Times Scholarship & press 3

    The obituary reports that IBM president John Opel, who sat with her on United Way's national board, called Microsoft the company 'run by Bill Gates, Mary Gates' son'. The IBM and Microsoft records cited here do not say her tie decided the deal.

Timeline 1 date
  1. Nov 1980 – Aug 1981 IBM–Microsoft operating-system deal
Proof 3 sources
  1. Microsoft MS-DOS early source code, Computer History Museum, 25 Mar 2014. Scholarship & press
    But their favored OS was the newly-written PC DOS, commissioned by IBM from the five-year-old Seattle-based software company Microsoft.
    Microsoft retained the rights to the operating system and licensed it to other computer manufacturers, calling it MS-DOS.
    Microsoft originally licensed 86-DOS in December 1980 for a flat fee of $25,000. By the next summer they recognized the importance of owning it and being able to license it to other companies making IBM-PC clones, so they purchased all rights for an additional $50,000.
    PC DOS version 1.0, which supported only floppy disks, was shipped when IBM first released their PC in August 1981.
  2. The IBM PC, IBM. Primary record
    Microsoft provided the OS, which would later become known as MS-DOS.
  3. Mary Gates Dies: Cancer Claims Longtime Seattle Civic Leader And Mother Of Microsoft Founder Bill Gates, The Seattle Times, 10 Jun 1994. Scholarship & press
    Mrs. Gates also figured in her son's success. She helped cement Microsoft's early connection with IBM, which led to development of the IBM PC with DOS, an operating system supplied by Microsoft.
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