This week in history: Microsoft is founded

Paul Allen and Bill Gates: a winning team

Up until the early 1970s, computers were limited to huge mainframes, restricting access to large businesses and universities. However, the development of the early Intel microprocessors led to the creation of the MITS Altair 8800, the first microcomputer, which enjoyed a big success.

Paul Allen and Bill Gates approached MITS offering to write a programming language called Altair BASIC. MITS founder Ed Roberts agreed, leading Gates to leave Harvard. Gates then set up Micro-Soft (later Microsoft) with Allen.

This was not their first company, since the duo had successfully run a company making traffic counters, while Gates was still at school. BASIC became extremely popular, though individuals copying the system without payment limited sales.

The next major breakthrough came in 1980, when IBM asked Microsoft to write an operating system for its first desktop computer, the IBM PC.

Gates bought the rights to a system called QDOS and then produced a modified version, called PC DOS. He sold it to IBM, but Microsoft retained the copyright, which allowed it to sell the overall system (called MS-DOS) to companies that made PC clones.

In 1985, Microsoft released the operating system Windows. Initially a flop, the success of Windows 3.0 in 1990 gave the firm a virtual monopoly. Claims that it abused this position to crush rival internet browsers prompted a US antitrust suit in 2000.

It escaped with only minor concessions, but a similar dispute with the EU resulted in fines of €1.4bn. Despite this, Microsoft is now the world’s sixth-largest listed firm.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

MoneyWeek magazine

Latest issue:

Magazine cover
Going bust

What happens when countries default?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Vote in the MoneyWeek Readers' Choice Awards

Vote for your favourite financial services companies in the inaugural MoneyWeek Awards, and you could win a year's subscription to MoneyWeek magazine. Find out more and vote here.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.