The best place to understand how and why Microsoft structured the IBM PC relationship as it did is to read the books that Bill Gates and Paul Allen wrote. The most relevant chapter in Paul's book is chapter ten. Other books (including three biographies) on are often fictional.
https://twitter.com/trengriffin/status/1426282981178503170
2/ Paul's account of what happened between IBM's arrival in Seattle during the summer of 1980 and the launch of the IBM PC in the fall of 1981 is in Chapter 10: erenow.net/biographies/id… They had learned about the value of a standard during its time selling software for the Altair 
3/ The accounts of Bill Gates about IBM PC are:
PC Magazine interview in 1981:
in.pcmag.com/operating-syst…
Smithsonian interview:
americanhistory.si.edu/comphist/gates…
The only time Bill talks about the IBM deal in one of his books is in the Road Ahead. I was involved in writing that book.
PC Magazine interview in 1981:
in.pcmag.com/operating-syst…
Smithsonian interview:
americanhistory.si.edu/comphist/gates…
The only time Bill talks about the IBM deal in one of his books is in the Road Ahead. I was involved in writing that book.
4/ The reasons why Microsoft's deal with IBM was the "best deal ever made in the history of computing" are not completely identified in this recent article: pcmag.com/news/the-rise-… Like many authors who write about Microsoft he's led astray by fictional accounts of what happened.
5/ IBM did not like dealing with Gary Kildall from the start. The existence of CP/M wasn't enough to overcome the downside working with Digital Research. IBM came back to Microsoft and asked Bill if they could supply an OS in addition to languages and other software.
6/ "Microsoft’s goal was not to make money directly from IBM, but to profit from licensing MS-DOS to computer companies that wanted to offer machines more or less compatible with the IBM PC.” Microsoft had seen cloning happen with Altair. Owning the standard was key to success.
7/ Question: How did Microsoft end up owning the standard software for IBM PCs?
Four word answer: "No per copy royalties for IBM."
"Bill and I were willing to forgo per-copy royalties if we could freely license DOS software to other manufacturers."
Kildall didn't do that.
Four word answer: "No per copy royalties for IBM."
"Bill and I were willing to forgo per-copy royalties if we could freely license DOS software to other manufacturers."
Kildall didn't do that.
8/ "The original IBM PC actually shipped with a choice of three operating systems–our PC‑DOS, CP/M‑86, and the USCD Pascal. We knew that only one of the three would be the standard."
"We knew from the beginning we weren’t the BASIC company. We were a software company."
BG
"We knew from the beginning we weren’t the BASIC company. We were a software company."
BG
9/ Paul: “IBM paid Microsoft $75k for testing, and consultation; $45k for DOS; and $310k for an array of 16-bit language interpreters and compilers."
The relationship involved more than the license of an operating system. Controlling the software standard was Microsoft's goal.
The relationship involved more than the license of an operating system. Controlling the software standard was Microsoft's goal.
10/ That IBM charged $240 per copy for CP/M, and only $40 for DOS wasn't an accident. Microsoft knew the value of being patient based on their experience with Altair. Bill and Paul also knew IBM would want the enhanced versions of the standard PC software. computerhistory.org/blog/microsoft…
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