Paul Allen, IBM and MS-DOS; How the alliance set the course of Personal Computing

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Paul Allen is no more.

Allen was more of a visionary, and less of a businessman.

He could visualise the future of technology, ahead of most his peers. He could foresee that computers would change the world in the immediate future. Bill Gates remembers that as early as in Seventies Allen was able to predict that computer chips would soon get super-powerful and give rise to a whole new industry. Such foresight stayed with Allen till his last days.

That’s why Allen founded the frontier research institutes like Allen Institute for Brain Science, Allen Institute for Artificial Intelligence, Allen Institute for Cell Science, and Stratolaunch Systems. That’s why he donated bulk of his wealth to education, wildlife and environmental conservation and healthcare.

On a rewind of 4o years, one could find that Allen’s vision was what it led to the most important turning point in the history of Microsoft – an association with IBM. And thereby converting Microsoft from a small outfit into one of the largest software players in the shortest period of time.

The story, rather history, goes like this.

It was in early 1980. IBM launched a classified project code named “Project Chess” with very few people involved in it. The objective of the project was to explore launching a new computing system that can be used by individuals. In short, a Personal Computing system.

The “Project Chess” needed programming software and an Operating System for it to succeed, and IBM was looking around for innovators outside of the company who are working on in the space. Soon, it came across a small company in Washington set up by two youngsters some five years ago and has been working to develop programming languages and operating software. The company named ‘Microsoft’ has just come out with a language named BASIC.

An IBM team met with Microsoft’s Allen and Bill. They discussed about the possibility of the emergence of a PC market, and moved over to Microsoft’s work on computer programming languages. The meeting was concluded with a plan to meet later.

In the subsequent meeting a month later, IBM team discussed about using Microsoft developed languages such as BASIC, COBOL, FORTRAN and Pascal on a licenced arrangement in the Personal Computers being developed under Project Chess. Without wasting much time and thereby a golden opportunity, Allen moved further and offered an Operating System for the PC.

Allen who was leading the Microsoft team secured the IBM deal without much convincing, and without actually having an operating system ready in his lab. Once the deal is signed, Allen quickly put together a ‘dirty’ operating system scrapping out from a version which was available with him, and named it QDOS (or Quick and Dirty Operating System). Realizing its potential  and and the significance of the deal with IBM, it was turned around in about an year as MS-DOS, or Microsoft-Disk Operating System.

Significant in the deal was Allen’s shrewdness in relinquishing any royalties in exchange of IBM accommodating non-exclusivity in the contract so that Microsoft could sell the same Operating System to anyone it would like to.

The non-exclusivity led to mushrooming of clones of IBM PCs in the marketplace soon after the first PC was launched by IBM in August 1981. Yes, with the same Operating System from Microsoft.

Soon MS-DOS became the industry standard for PCs. IBM PC and MS-DOS together set the course of Personal Computing, heralding the beginning of a new era.

An Era of Personal Computing….!