This week in history: Microsoft is founded

On 4 April 1975, Paul Allen and Bill Gates created Microsoft after writing a programming language for the world's first microcomputer.

Dr Matthew Partridge
By
published
in Features

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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 calledAltair 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.

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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.

Dr Matthew Partridge
Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri

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