Surely you have heard about the great fortunes that have been accumulated by entrepreneurs such as Elon Musk (founder of Tesla), Jeff Bezos (Amazon) among others. Well, in the 90s, that place belonged to a single person who was barely around 40 years old. We refer to Bill Gates, co-founder of Microsoft, who at the beginning of that decade became the richest person in the world. The curious thing about his case is that all that money was possible due to a specific event, something isolated and partially fortuitous. Find out here what was that moment that practically completely changed his life, and that of millions of users around the world.
Contents
Bill Gates and the software vision
We are not going to recount how Bill Gates founded Microsoft and got involved in the personal computer industry. However, we do have to point out that the native of Washington had a very clear vision of how this market would take shape, even when it was just beginning in the late 1970s.
Microsoft was probably the first successful company dedicated exclusively to software and it is worth remembering that one of its first important approaches was with Apple, the company founded in a garage by Steve Jobs and Steve Wozniak that achieved overnight success with the Apple II, one of the first personal computers with a screen and keyboard, aimed at ordinary people and home use.
Cassette with Applesoft BASIC, the first collaboration between Apple and Microsoft. Photo: Apple Security
The manual for that language. Photo: eBay
Microsoft had developed the Altair BASIC programming language (for the Altair 8800, the first commercially successful personal computer), after which it developed versions for other computers. It did so for Apple (with Applesoft BASIC, available for the Apple II) and later even with IBM (with an internal BASIC chip for the IBM PC).
“Software was the future”
By the early 1980s, Bill Gates was very clear that the future of his company, and of the industry itself, was much more focused on software than hardware. The biggest companies at the time were Apple, which developed its own hardware and software, and IBM, which had a lot of experience with both.
Microsoft with an IBM PC in a photo session to promote Windows (1985). Photo: Reason
The opportunity that Bill Gates did not miss
This last detail was beneficial for Gates and, although it is not known for sure if he knew it or not, the truth is that he was able to take advantage of the exact moment that destiny would present him.
In 1981, Apple and IBM they were the companies that would lead the most important battle in the emerging PC industry. Apple had achieved success as a new startup, founded by two twentysomethings who had become overnight rockstars thanks to the Apple II. IBM was the ‘conservative company’, the large corporation whose machines occupied an entire room and could terrify anyone with just their sounds.
Great anticipation was expected for the personal computer that IBM was going to launch to enter that market, the long-awaited IBM PC, with which they would compete with Apple. It was at that moment that Bill Gates made sure to be part of history.
When Bill Gates painted birdies for IBM
On November 6, 1980, Bill Gates and Paul Allen visited the IBM offices. The intention was programmed: to offer them an agreement to license an “operating system” that IBM could put in their future computer.
This Was The Precise Moment Bill Gates Probably Made His Entire Fortune. At first, IBM was suspicious, but the truth is that finding an operating system for your computer was not something that worried them much. In fact, they had no intention of developing it themselves, since, as many authors who collect this anecdote affirm, IBM did not believe that the personal computer was going to be the success that it turned out to be..
For the company that had dominated the computer industry since the 1950s, “computers for ordinary people” was a fad, a trend that would last a couple of years and that they had to take advantage of at that time to make money.
The mythical meeting of Bill Gates with IBM has been represented a few times in the cinema. Here in the movie ‘Pirates of Silicon Valley’ (1999). Photo: TNT
It was for this reason that IBM devoted few resources to this project, and this is also the reason why said computer was created with an open architecturewith parts (such as RAM, motherboard, CPU, etc), which could be obtained from other manufacturers in retail.
Since the IBM PC was not “of great importance,” the managers who met with Bill Gates had no qualms about accepting his license agreement, which involved a one-time payment of $430,000 in total for DOS, other 16-bit languages, and more. the rest.
However, there was a much more important requirement that Gates managed to impose and that is exactly the reason why he would become rich: that IBM allows Microsoft to sell DOS to other companies. For the traditional company that was not very interested in the personal PC industry, this was not a problem.
Stroke of luck or pure vision?
The rest is history. The IBM PC turned out to be a total success in the market worldwide, despite not standing out in many aspects (such as its only four-color screen). Due to the fame of the company, the machine became a very desired object and suddenly every office wanted to have it, it was the perfect computer for professionals.
The millions made by the IBM PC
The decision that Bill Gates imposed in November 1980 had its greatest effect here. The IBM PC was heavy and not very cheap. Its price at that time was around US $ 1,500 (about $ 5,000 in 2022) and it was also bulky. However, what made it such an industry wonder and standard for many was its open architecture.
As we mentioned above, this PC was made of components that you could find in an ordinary technology store, so it did not take long for the market to be filled with the already known ‘IBM PC clones’ or ‘IBM PC Compatible’.
A collection of clones of the IBM PC. All chose to use the Microsoft operating system. Photo: JRN4
These were cheaper systems, portable and focused on other uses, but they were almost identical in their structure, so they were compatible with all the software that the IBM team had in its catalog. Many manufacturers emerged, such as Compaq, who developed their portable version of the IBM PC and adopted that name for their ‘compact’ computers.
Millions multiplied for Microsoft
Well, maybe you are wondering. How did Bill Gates make even more money than IBM itself from the success of the IBM PC? After all, the deal that licensed DOS to them was a one-time payment, and Microsoft didn’t make more money for each computer sold.
The fortune that Microsoft achieved at that time came from the specific agreement that Bill Gates had secured in 1980: being able to sell DOS to other manufacturers. In this way, all clones of the IBM PC that appeared on the market had to turn to them to sell them a version of DOS, and this is when the Seattle company became very ambitious.
PC-DOS (or 86 DOS) on an IBM PC. Over the years, IBM would lose ground in the personal computer industry. Photo: Xataka
Microsoft had renamed DOS PC DOS for IBM; however, the other manufacturers offered the same system under the name of MS-DOS (Microsoft Disk Operating System) and under a profit model for each copy sold.
The company’s practices at the time were even monopolistic. Microsoft required manufacturers of IBM PC clones to will pay you a fee regardless of whether they included MS-DOS on your system or not.
Since the fact of not including MS-DOS in their computers did not represent any savings for Compaq, Tandy, HP, and other manufacturers, so they finally chose to include it anyway. Thus, Microsoft’s operating system became the most popular and used in the industry.
These were the facts that made Bill Gates the richest person in the world at the beginning of the 90s. Microsoft managed to surpass IBM, which little by little became less relevant in the PC market and with the arrival of the “Wintel” paradigm ( Windows and Intel) the fortune of the former Harvard student would increase even more, but that is another story.