Tag: Digital Research

Bill Gates and The Guy Who Could Have Been Him (Part 10 of 10)

Appreciate more the story, read the previous post:

Part 1, Part 2, Part 3, Part 4, Part 5, Part 6Part 7, Part 8, and Part 9.

 

By the end of 1980s, Digital Research had entered a death spiral and Kildall wave the white flag of surrender. He approached Gates and asked him to consider buying Digital Research for a fair price of $26 million. Gates rejected the offer and told Kildall the company might be worth only $10 million. A humbled Kildall had to look elsewhere to find a savior for his declining company.

Kildall’s hubris may be the culprit. Having fathered a revolution in personal computing, he assumed that all the other players would continue their childlike dependency on him. He thought that a dominant thing would always be dominant. Kildall was blind to how the delayed release of CP/M-86 had pushed IBM, Microsoft,and Seattle Computer Products to their breaking points.

He couldn’t imagine that all three companies might work around him to steal CP/M’s market. The irony is that the people at all three companies would have preferred to help Kildall and CP/M-86 succeed. Instead, they were forced to go to the extreme lengths of launching a competitor to CP/M-86, solely because Kildall left them no choice.

Kildall’s more fundamental mistake, however is he didn’t follow where the money is like Bill Gates. Kildall ridiculed IBM’s clumsy technology and overlooked its enormous market power, probably because technical subjects interested Kildall and marketing strategy didn’t.

Meanwhile, Bill Gates sets his priorities in exact opposite order. He was willing to hand IBM a shoddy product derived from other people’s work because what mattered most to Gates was that the mighty IBM get its project done on time.

Kildall, the innovator, followed his passion for technical excellence and was shocked at that IBM wouldn’t follow him. Gates, the imitator, took his cues from IBM every step of the way, because he believed that following IBM was the smartest way to follow where the money is. Gates guessed right, and became one of the richest in the world.

 

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Bill Gates and The Guy Who Could Have Been Him (Part 7 of 10)

Appreciate more the story, read the previous post:

Part 1, Part 2, Part 3, Part 4, Part 5 and Part 6.

 

Once they got pass the hurdle, Kildall was cold to IBM’s insistence that Digital Research negotiate a flat licensing fee for CP/M and forgo Digital Research’s usual per unit royalty rate. It didn’t help matters that Kildall was generally disapproving of IBM because so many IBM products struck him as slow, unimaginative and clumsily designed.

But the biggest stumbling block preventing a deal was Kildall’s timing, or rather, his utter disregard for timing. IBM planned to build its personal computer around a new, faster Intel Chip called the 8086, but CP/M would need an upgrade in order to run on it.

Kildall already had such an upgrade in the works, called CP/M-86. But Kildall either wouldn’t guarantee to Sams that it would be delivered enough to meet IBM’s development deadlines.

Sams tried to explain that IBM needed a schedule and a commitment by October 1980, but Kildall resisted. Perhaps Kildall assumed that IBM would bend to his schedule, since it appeared that IBM needed him and CP/M’s 90% market share more than he needed IBM.

But what Sams gathered from Kildall’s attitude was that Kildall would never be a reliable partner and that the IBM PC project needed an alternative plan for an operating system.

Not long after, he stopped returning Kildall’s calls. Kildall’s fate was sealed forever as “the man who could have been Bill Gates.”

By giving up on Kildall and CP/M, Sams put himself in a tight spot. But Sams also knew that Gates, more than anyone, would be highly motivated to help him find a way out. During the time that Kildall was giving Sams a runaround over royalties and deadlines, Gates was back in Seattle bending over backward to accommodate IBM’s development schedule.

He had put almost Microsoft’s personnel to work on the IBM effort, shoving other projects to the side. Now Gates needed IBM PC project to succeed, if only out of a sense of survival of Microsoft.

 

Continue reading Part 8Part 9, and Part 10.

Bill Gates and The Guy Who Could Have Been Him (Part 6 of 10)

Appreciate more the story, read the previous post:

Part 1, Part 2, Part 3, Part 4 and Part 5.

 

Even though the Softcard was a slight diversion from Microsoft’s normal focus on computer language software, Gates embraced it because it represented yet another strategic opportunity to extend CP/M’s market domination while also binding Microsoft BASIC to CP/M. Microsoft eventually sold hundreds of thousands of Softcards, which told Sams that it was a popular and reliable product.

Sams started his software hunt by contacting Gates and proposing IBM license the Softcard, along with all other programming languages Microsoft offered.

What Sams didn’t understand was that although Softcard was a Microsoft product, its most valuable feature was the CP/M operating system, owned by Digital Research. Gates told Sams that IBM needed to license CP/M directly from Kildall and offered to help Sams make the deal happen.

At the time, Gates accepted his subordinate position in the software food chain. He had positioned Microsoft so that the company’s success was dependent on CP/M’s continued market domination. If CP/M were paired with Microsoft BASIC inside the new IBM PC, Gates saw how the two complementary programs might be inseparable as industry leaders for years to come.

Gates arranged the initial meeting with IBM and Kildall. With Sams in the room, Gates called Kildall and said he was sending an important client and that Kildall should, according to sources, “treat them right.”

Gates’ phone call, however didn’t do much good. Almost nothing went right when Sams and his team sat down with Kildall and his wife Dorothy, who managed the business side of Digital Research. At first, Dorothy absolutely refused to sign IBM’s strict, strongly worded confidentiality agreement. An entire day wasted discussing what, if anything, the two parties could discuss.

 

Continue reading Part 7Part 8Part 9 and Part 10.

Bill Gates and The Guy Who Could Have Been Him (Part 3 of 10)

Do not miss out Part 1 and Part 2.

 

With virtually no competition, CP/M earned Digital Research $85cents of profit on every dollar of revenue that came in. Officials at Digital Research’s bank once called to double-check some figures because they didn’t think it was possible for every company to have such high profit margins.

By mid-1980s, Kildall and Digital Research were both on the road to oblivion and today Kildall ranks as a mere footnote in computer history. The reason lies with a few crucial miscalculations he made in 1980, part of a cautionary tale about how imitation often trumps innovation.

One of the first computer entrepreneurs to hitch his wagon to CP/M’s rising start in the late 1970’s was a precocious young programmer named Bill Gates.

In 1979, when Gates was just 24y/o, he was running a software company called Micro-Soft. The company had secured an early, profitable niche in the personal computer industry by creating popular versions of BASIC and other programming languages that communicate between a computer’s hardware and its operating system software.

Gates and his partner, a high school friend named Paul Allen, didn’t stumble into the software industry the way Kildall had with Digital Research. Since their teenage years, Gates and Allen had been looking for ways to turn their passion for code-writing into cash. They originally wrote the Microsoft version of BASIC in 1976 because they saw a chance to get into the ground floor with one of the earliest makers of homebuilt personal computer kits.

After that, Gates often sought licensing deals that would pair Microsoft’s BASIC with Kildall’s CP/M, to the hope that Microsoft BASIC could ride CP/M’s coattails and become an industry standard of its own.

 

Continue reading Part 4Part 5Part 6Part 7Part 8, Part 9, and Part 10.