This story has been told and retold on the Internet so many times that it should be old-hat by now. Unfortunately, it’s almost always told incorrectly. I don’t claim to have any special knowledge of the subject, but I have read several books on the birth of personal computers; I have also seen the documentary “Revenge of the Nerds” and the TNT film “The Pirates of Silicon Valley”, so I think that entitles me to weigh in on the subject.
IBM long prided itself on making the best computers in the world. IBM made huge mainframe computers, elegant, power-hungry monsters that were as big as a refrigerator on the small end and as big as a tractor trailer on the large end. IBM made billions making “real” computers like these, so it’s not entirely surprising that they initially looked at the “personal computer” of the late 1970s as a toy. Much to their distress, however, companies like Apple, Commodore and Timex were shipping personal computers by the millions. While IBM scoffed at the notion that a personal computer could be useful for anything more than storing recipes, entire industries were being built up around the Apple II and the Commodore 64. IBM’s absence from the personal computer market thus started to become quite noticeable. After all, IBM was seen by most Americans as the computer company… yet they offered nothing for the home consumer, enthusiast or even smaller businesses that needed a computer but couldn’t afford one of IBM’s mainframes.
A working group was thus created within IBM to bring a personal computer to market as quickly as possible… which presented a problem. IBM had long prided itself on designing and manufacturing every single part of their computers. That was just “the IBM way”. But the working group quickly discovered that designing a brand-new personal computer from scratch would take years. Since IBM management wanted to enter the personal computer market as quickly as possible, designing a brand-new machine was therefore not an option. The new IBM PC was thus designed with off-the-shelf parts to allow the company to start shipping PCs as quickly as possible.
But then another problem surfaced… what operating system would the new IBM PCs use? It can take just as long (usually longer, in fact) to create an operating system than the hardware it runs on, and IBM didn’t have the time to create one of their own. So they looked to an outside source. And one of the first places they went was a small Seattle company called Microsoft.