The background is a bit complicated, but the high level is that many believe Bill Gates stole MS-DOS from Gary to license to IBM.
The nuance is that IBM contacted Bill first, who he directed to speak with Gary. While Bill was under NDA, he did give Gary a heads up "Someone is coming to see you. Treat them well, they are important people." Gary did not and missed their visit and IBM went back to Bill.
Bill then bought Q-DOS (a rip off of Gary's DOS) for $75k and rebranded it MS-DOS and licensed it to IBM.
Minor corrections: Gates bought Q-DOS for $50k and Tim Paterson, who wrote it, was happy to sell at that price and never felt ripped off. I worked with Tim at Microsoft and asked him about these points myself.
IBM visited Microsoft about the computer languages and apps for their new PC. When IBM asked about an OS as well, Bill Gates, following the gentlemen's agreement that MS had with Digital Research, deferred to Digital Research, telling IBM that they should go to Gary Kildall at Digital Research for an OS. Bill Gates gives a vague heads-up to Gary Kildall about a meeting with some important people soon.
There's a lot of she-said-he-said about the initial IBM-Digital Research meeting. Gary wasn't there at the start, his wife handled the meeting. In the end, Digital Research treated IBM as just another OEM - if IBM wanted CP/M, they'd pay the same royalty rate as any other OEM. The IBM folks weren't keen on paying a royalty per OS license installed. Plus, their Project Chess PC didn't use an 8-bit CPU. They'd need an OS that could run on a more recent CPU (16-bit or more), And they needed it fast - Project Chess was going to ship in one year, so Digital Research had less than one year to get a 16-bit OS shipping. Gary Kildall wouldn't commit, so IBM walked away empty-handed.
IBM met with Microsoft again and mentioned that IBM hadn't signed a deal with Digital Research. If there was no OS, there would no IBM PC and no revenue from licensing MS-BASIC et al. One of the Microsofties mentioned that they knew of an OS for the Project Chess PC, Intel's 8088. Did IBM want it? IBM said yes. Microsoft offered to act as a go-between or IBM could deal directly with the new OS company. IBM told Microsoft to handle everything.
When it came down to paying for the OS, PC-DOS, Microsoft offered several options:
- per PC license royalty
- flat fee for a non-exclusive license with unlimited installs
IBM chose the flat fee, which meant less accounting work over time, but we all know what that "non-exclusive" would enable - PC clones.
IBM would charge a relative pittance for their PC-DOS, $40. Digital Research came through with CP/M-86 for the IBM PC, but they were charging much more, almost $200 more, and shipped six months after the IBM PC launched. IBM paid $45K to Microsoft for PC-DOS, so after the first 1,125 PCs, PC-DOS revenue was pure profit for IBM.
Digital Research finally relented and lowered the price of CP/M-86 after one year, but IBM released the IBM XT and PC-DOS 2.0 with support for hard disks, subdirectories, etc.
But a couple of months before either of those events, an app written in assembly language was released for PC-DOS - Lotus 1-2-3.
Tim Paterson has basically said that he bought a book on CPM and then renamed the API calls for QDOS. For instance (hypothetical example) if CPM had "OpenSerialPort" then Paterson might have created the same API but named it "SerialPortOpen". Note I'm not saying that Paterson did anything illegal.
This is an interesting video but I am not able to determine what series it is from:
https://dai.ly/x2xzxzo it does have interviews with Gates, Ballmer, Paul Allen, Tim Paterson, and Jack Sams of IBM etc.
Tim Paterson appears about 5m50s into the video and directly states that he had a book on CPM and used that as the basis.
It was true -- but he was flying to visit a client, and he was a programmer not a lawyer. His wife, Barbara McEwen, was the company lawyer and she did the negotiating. It was her job, not Gary's.
I mean Gates made up the infamous apocryphal story that he was flying for fun, careless about IBM and whatnot. Not that he wasn't actually on a plane (coming back from a business meeting).
Gates told that story to reporters. That is fact. There's plenty of info on the internet, starting from Kildall' Wikipedia page and its sources. You don't have to dig that hard.
I'm sure Gary Kildall had his faults or negligence about the deal gone wrong with IBM. That's a complicated story. But still, he was haunted his whole life by the silly "went flying" story. And that's one thing that Bill Gates did to him.
