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Microsoft's Big Deal

One fact is undeniable: Digital Research had yet to deliver a version of CP/M for Intel's 16-bit CPUs. So Tim Paterson, an employee of a small hardware vendor called Seattle Computer, wrote a CP/M-like operating system for that company's computer, which used Intel's 8086 processor (basically an 8088 with a 16-bit bus).

"I didn't have time to do it right," he recalls, "so I did it quick and dirty." In fact, his creation, officially called 86-DOS, was nicknamed QDOS--Quick and Dirty Operating System.

When IBM told Bill Gates about its problems with Digital Research, Gates had a solution. Microsoft acquired a license for, and later bought, QDOS from Seattle Computer, then licensed it to IBM. It was renamed IBM Personal Computer DOS (or PC-DOS) when sold by IBM, and MS-DOS if sold by anybody else.

But when the PC hit the market, PC-DOS was one of three operating systems that IBM offered. The others were existing ones with lots of apps: CP/M (Digital Research had come up with an 8088-compatible version) and Softech's UCSD p-System. How did an upstart like PC-DOS get any traction? Price played a big part: PC-DOS cost $40, while CP/M was $450 and UCSD p-System was $550.

Nobody was prepared for the IBM PC's instant, explosive success. And that clamor was for a machine whose $1265 base model didn't include a monitor, a video card, a parallel or serial port, an operating system, or a floppy drive. According to Bradley, IBM hoped to sell 241,683 PCs over five years. Before those five years were up, the company was selling nearly that many units a month.

And certainly no one expected the standard to last for decades. The PC industry "wasn't seen as having a present, much less a future," remembers Mitch Kapor, creator of Lotus's 1-2-3 spreadsheet.

Why was the PC a hit? For starters, it was a well-designed, well-built machine from a name that businesses knew. Clever ads, with an actor imitating comedy legend Charlie Chaplin, also helped.

And the PC was quickly supported by a raft of third-party applications, such as word pro-cessors (MicroPro's WordStar, SSI's WordPerfect, and others) and Ashton-Tate's DBase database manager.

Peter Norton developed the first version of Norton Utilities to restore a file that he'd accidentally deleted on his own system. And Andrew Fluegelman invented shareware with PC-Talk, a program that made it relatively easy for modem users to dial in to services such as CompuServe and the Source. (Later, Fluegelman helped start a magazine you may know: PC World.)

But it was Kapor's 1-2-3 that cemented the IBM PC's reputation as a business machine when the program debuted in early 1983. By taking advantage of the personal computer's 16-bit CPU, 1-2-3 could offer revolutionary features such as on-screen menus.

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