Bill Gates and Paul Allen Found Microsoft

Context

In the early 1970s, electronic computing existed primarily in institutional settings through large mainframe systems operated by corporations, universities, and government agencies. Advances in microprocessor technology from firms such as Intel began to enable smaller, more accessible machines. Enthusiasts and hobbyists responded by building and experimenting with kit computers that required assembly and custom programming.

The Altair 8800, produced by Micro Instrumentation and Telemetry Systems (MITS) in Albuquerque, New Mexico, marked a notable step forward. Featured on the cover of Popular Electronics magazine in January 1975, the machine sold for a relatively low price and drew intense interest from individuals seeking personal computing capability, despite its limitations in memory and user interface.

At the time, most software remained tied to specific hardware or required users to write their own code in low-level languages. This environment created openings for specialized interpreters and tools that could make the new machines more practical for a wider audience.

What Happened

Paul Allen, then employed as a programmer in Boston, encountered the Popular Electronics issue featuring the Altair 8800 and contacted his friend Bill Gates, a sophomore at Harvard University. The two decided to develop a version of the BASIC programming language compatible with the Altair’s Intel 8080 processor. Allen constructed a simulator on a different computer while Gates wrote the interpreter code.

In March 1975, Allen traveled to Albuquerque to present the working Altair BASIC interpreter to MITS. The demonstration succeeded, leading MITS to agree to distribute the software. Shortly afterward, on April 4, 1975, Gates and Allen officially formed their company as Micro-Soft (later stylized Microsoft) in Albuquerque. Gates took the role of chief executive officer from the outset, while Allen handled key technical contributions. The partnership focused exclusively on software rather than hardware production.

Aftermath

Microsoft secured additional contracts in its first years and expanded its product line to other microcomputers. By late 1978, annual sales exceeded one million dollars. In 1979 the company relocated its headquarters to Bellevue, Washington, nearer the founders’ Seattle origins. Paul Allen left the firm in 1983 after a cancer diagnosis but retained a significant ownership stake.

The company’s early licensing model proved durable. In 1981 Microsoft provided the operating system that became MS-DOS for IBM’s first personal computer, an arrangement that allowed the software to reach many hardware platforms through subsequent licensing deals.

Legacy

Microsoft’s establishment helped shift the computer industry toward standardized, licensable software that operated across multiple machines. Its later operating systems, including successive versions of Windows, and productivity applications became foundational to personal and business computing worldwide. The company grew into one of the largest and most valuable technology enterprises, generating substantial wealth for its founders and early employees while shaping daily technology use for billions of people.

Historians regard the 1975 founding as a key inflection point in the transition from hobbyist and institutional computing to widespread personal technology adoption. The emphasis on software as a distinct, scalable product influenced countless subsequent technology ventures.