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CP/M or DOS?

In late 1980 IBM sent some of the first prototypes of the PC to software developers so they could begin writing applications for it. But months earlier, before the project even had a name, the team had gone out looking for two crucial pieces of software: the operating system and a version of BASIC tailored to the PC.

IBM’s first stop was Microsoft, then a tiny company in Bellevue, Washington. They arrived with a nondisclosure agreement that said, basically, “Anything you tell us, we own.” Bill Gates—who moments earlier they had mistaken for an office boy—signed the agreement straightaway and got down to business. They discussed all of Microsoft’s products—BASIC, Fortran, COBOL—and then someone mentioned CP/M, the operating system that was part of Microsoft’s SoftCard package. The Microsoft team explained that CP/M belonged to Gary Kildall’s Digital Research in California. Gates got on the phone with Kildall and introduced him to the IBM representatives, who set up a meeting for the next day.

The story of that meeting may never be settled, but it seems that Dorothy Kildall, who handled business matters for Digital Research, made the mistake of calling in the company lawyer to look at the nondisclosure agreement. What Bill Gates had dispensed with in a minute or two turned into a tedious legal discussion at Digital Research that dragged on for hours. When they finally agreed to talk, IBM learned that Digital Research didn’t have an operating system ready that would work with the 16-bit PC, and Kildall didn’t seem enthusiastic about working on one. The IBM representatives left Digital Research baffled and somewhat peeved.

They returned to Microsoft to see what could be done. Microsoft, not wanting to lose the opportunity to work with IBM, offered to supply an operating system. They didn’t have one, of course, and they had no time to develop one from scratch, but they knew where to find one. Tim Paterson at Seattle Computer Products was writing a sort of 16-bit CP/M clone to use with one of their processor boards in the absence of a real 16-bit CP/M. He called it QDOS, for “Quick and Dirty Operating System.” Microsoft bought QDOS and hired Paterson to adapt it for the PC.

When Kildall got wind of what was happening he reportedly threatened to sue, but settled when IBM agreed to include CP/M as an option for the PC. CP/M was not ready for the August 1981 introduction of the PC, and when it did appear it carried a price tag about four times that of DOS. It was a case of too much too late for CP/M. IBM had committed to DOS, which became the standard operating system of the PC and all the PC’s imitators—and a huge source of income for Microsoft.

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Related Links

CP/M History
History of CP/M from The Online Software Museum.

Gordon Eubanks Oral History
Some interesting insights on Gary Kildall by Gordon Eubanks, who knew him well. From Computerworld Honors Foundation International Archives.

Triumph of the Nerds
Transcript of the episode covering the creation of the IBM PC.