Hard Drive - Bill Gates and the making of the Microsoft Empire 7

For my reading of Hard Drive – Bill Gates and the Making of the Microsoft Empire by James Wallace and Jim Erickson today, the authors accounted the prelude to the joint venture between IBM and Microsoft; How Microsoft positioned itself to seize the opportunity of being in a joint venture with IBM, and how it came to target the WordProcessing and Spreadsheet Program market.

Microsoft saw the potential of a better processing chip to become the industry standard for the personal computer. At Page 142 – “He[Bill Gates] and Paul Allen had strategically positioned Microsoft so that it was in the right place at the right time when IBM broke with tradition and went looking for a software vendor for its entry into the personal computer market. They made one of these strategic moves early in 1979, soon after Microsoft set up shop on the eight floor of the Old National Bank building in Bellevue. Intel had recently released a new chip called the 8086, and although some in the trade press suggested it would never become an industry standard like the 8080 chip, Gates and Allen believed otherwise. They were certain this new chip would become the engine for the next generation of personal computers. As a result, they asked Bob O’Rear to begin work immediately on a BASIC for the 8086. It had been four years since the Altair appeared on the cover of Popular Electronics. The 8080 chip had indeed become a standard, and the industry had invested heavily in programs that ran only on that chip. But it was never intended to supply the brain power for the advanced needs of microcomputers. Its makers at Intel had envisioned the 8080 chip going into such things as traffic light controllers. With the 8086, however, Intel’s engineers had designed a microprocessor especially for the personal computer. Technically speaking, the 8086 chip represented 16-bit architecture, rather than the 8-bit architecture of the 8080 chip. This meant it could process packages of information of up to a million characters at a time, while the 8080 chip was limited to 64,000 characters. Intel’s new chip could run rings around the old chip. Not only was the new chip many times faster, but it could run much more sophisticated software programs.

While displaying their 8086 chip model at the National Computer Conference and marketing it to business executives there, the Microsoft crew came across products being sold by other tech firms which caught their attention. At page 145 - 146 – “Microsoft’s 8086 BASIC drew a lot of attention at the National Computer Conference in New York City that June of 1979, but not nearly as much as a slick electronic spread sheet program that was unveiled on an Apple II computer….About the same time VisiCalc hit the market in the fall of 1979, a company called MicroPro began selling a word processing program called WordStad. Application products such as VisiCalc and WordStar represented a potentially vast and lucrative new market for software developers.

Steve Smith, Microsoft’s first marketing director and genuine business manager saw the need for Microsoft to move into those software markets. At page 147 - “What we realized at that time was we had a lot of products, we dominated the languages business, but the only product that really made a lot of money for us was BASIC. That’s because you had to have a copy of BASIC on every computer to make the applications run. And then we saw WordStar, and realized that MicroPro was a one product company. And then we saw VisiCalc. Now we had no intention of being a one product company. What we realized was we needed to be in those markets.”

It transforms to what we see today as the Microsoft Words and the Microsoft Excel as the standard software application used in most computers of today. I wonder though how Microsoft developed their own version of these applications without running afoul of intellectual property laws, and would be interested in reading about this aspect further in the book