- GATES: The event that started everything for us business-wise was when Paul found an article in 1971 in an electronics magazine, on page 73 or something, about Intel's 4004 chip, which was the world's first microprocessor. Paul comes up and says, "Whoa," and explains that this microprocessor thing's only going to get better and better. Sure enough, a year later Intel came out with the 8008 and it was lots better.
- ALLEN: That's when it hit us how Moore's Law really worked--that each generation of microprocessor chip was basically twice as fast as the previous one and that they got cheaper too. So Bill and I went out and bought our own 8008 for 360 bucks. The chip was all wrapped up in aluminum foil, and we were almost afraid to touch it .
- GATES: In designing the Traf-O-Data machine, the two had written a version of BASIC--a popular and compact language that, with a few tweaks, might work on the Altair. In weeks they cobbled together a version for the MITS machine, finishing it up on the plane, and by April had persuaded MITS to sell it.MITS offered Allen a job and provided the two with office space in its ramshackle headquarters in an Albuquerque strip mall. Soon after, Microsoft was born.
- GATES: Our basic business strategy was to charge a price so low that microcomputer makers couldn't do the software internally for that cheap. One of the bigger early contracts was Texas Instruments, where we bid $99,000 to provide programming languages for a home computer they were planning. We picked that price because we were too shy to make a bid in the six figures. Afterward we realized they would have paid a lot more, and we thought, "I guess this is what the big shots do: They bid big numbers."
- GATES: In our very first contract with MITS, we set them up to sell our BASIC to their customers, rather than us selling to computer buyers directly. We thought it was a good deal because they agreed to make "best efforts" to sell it. But later they decided not to sell to anybody at all because there were so many illegal, free copies of our BASIC floating around, so why try to charge people for it? That really made us mad because we thought it encouraged piracy. We eventually went into arbitration to determine if they were in compliance with the contract. In the meantime we were totally out of money...
- GATES: By the end of 1978, a wave of impressive personal computers, including Apple Computer's landmark Apple II, had left MITS in the dust.
- GATES: (IBM came to ask about buying our BASIC for their new PC project in 1980) But then we had this really cool discussion about where the technology was going, and how personal computers were about to make a great leap forward. Then they said they'd also like to buy our FORTRAN and COBOL languages, and maybe even more from us.