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After seeing the Altair 8800 on a magazine cover, Bill Gates and Paul Allen built BASIC for the machine and secured a deal with MITS. That first software agreement marked the start of Microsoft's business in personal computing.
Microsoft co-founders Bill Gates (L) and Paul Allen (R) (File Photo: Reuters)
UPDATED: Sep 2, 2026 21:08 IST
The cover of Popular Electronics featured a small computer kit called the Altair 8800 in January 1975, and for Bill Gates and Paul Allen, who had been interested in computers since their school days, the machine raised a practical question. Could they write software for it?
Personal computers were still a new idea at that time. The Altair 8800 was sold as a kit, and buyers had to assemble the machine themselves. It had no keyboard or screen and came with just 256 bytes of memory in its basic configuration, according to the Smithsonian Institution. But Gates and Allen noticed that if people were going to start buying their own computers, they would need software to make them useful.
SO, WHAT DID GATES AND ALLEN DO?
The problem was that they did not actually have an Altair. According to Gates' own account, Allen had seen the Popular Electronics cover and immediately showed it to him. They contacted MITS, the company that made the Altair, and told its president, Ed Roberts, that they had a version of the BASIC programming language that could run on the machine.
They hadn't written it yet, and now they had to build it. Gates and Allen used a computer at Harvard to create an Altair simulator. Allen wrote the simulator, while Gates and fellow programmer Monte Davidoff worked on the BASIC interpreter. They did not test it on an actual Altair until they travelled to MITS in Albuquerque, New Mexico, for a demonstration. The programme worked, and MITS agreed to distribute it as Altair BASIC.
FROM ONE PROGRAMME TO MICROSOFT
In July 1975, Gates and Allen signed a licencing agreement with MITS for their BASIC interpreter. According to the Computer History Museum, the agreement paid them $3,000 upfront, and royalties were based on copies sold. The two began working together more seriously, and on July 29, 1975, Gates used the name "Micro-soft" in a letter to Allen. Microsoft was not yet the name of an incorporated company, but the name had appeared. The first product was software that allowed people to programme the Altair 8800. That matters because Microsoft did not begin by making a computer; it began by making software for one.
WHY WAS BASIC IMPORTANT?
The Altair 8800 was a significant machine, but buying the hardware was only the beginning. BASIC was designed to be relatively easy to learn in comparison to many other programming languages of the time. Altair BASIC gave Altair owners a way to write and run programmes on their machines, which helped make the computer more useful to hobbyists who were buying these early machines.
The Smithsonian says the company had hoped to sell around 200 machines to break even, but had a backlog of about 4,000 orders within three months. The growing interest in the Altair and other early microcomputers created a new market for software, and Gates and Allen were in the right place to take advantage of it.
THE MAGAZINE COVER WAS ONLY THE BEGINNING
The cover showed Gates and Allen that a particular computer was about to become important, and had to follow it up with writing the software, persuading MITS to use it and turning that first deal into a business. The early success of Microsoft came from developing BASIC for different computers and processors. Over the following years, the company moved far beyond BASIC, and its software eventually became closely tied to the rise of personal computers, particularly after IBM selected Microsoft to provide an operating system for its first IBM PC in 1981.
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Published By:
Satyam Singh
Published On:
Sep 2, 2026 21:08 IST
