Book Summary: “Hard Drive: Bill Gates and the Making of the Microsoft Empire” by Wallace and Erickson

Title: Hard Drive: Bill Gates and the Making of the Microsoft Empire
Author: James Wallace & Jim Erickson
Scope: 3 stars
Readability: 4 stars
My personal rating: 4 stars
See more on my book rating system.

If you enjoy this summary, please support the author by buying the book.

Topic of Book

Authors describe the life of Bill Gates and the early days of Microsoft.

If you would like to learn more about the history of technology, read my book From Poverty to Progress: How Humans Invented Progress, and How We Can Keep It Going.

My Comments

Today it is hard for people to remember just how dominant Microsoft was in the software world. For a comparison with today, it would be like combining Apple, Google, Amazon and Facebook all into one company. Microsoft was both feared and respected. As a former Microsoft employee, I can attest to how the authors portray working for this company.

Key Take-aways

  • As a young teen Bill Gates had unprecented access to computer usage at a time when virtually no one else did (via Lakeside High School and a local companies called Computer Center Corporation and TRW). Gates took advantage of the opportunity by pouring himself into coding.
  • By the time that he graduated from high school, Gates and his friend, Paul Allen, were probably two of the best programmers in the world.
  • The release of the Altair 8080 by MITS, the world’s first microcomputer kit, in 1974 gave the two a huge opportunity. It was extraordinarily popular with computer hobbyists, but it lacked an operating system.
  • In a typical Bill Gates move, he told the owner of MITS that he had the BASIC software before he had even started coding.
  • Within 8 weeks Gates and Allen developed the first BASIC for a microcomputer without even having access to the Altair hardware. This program became the de facto standard in the microcomputer industry.
  • Microsoft’s partnership with IBM, the dominant player in business computer world, is ultimately what turned Microsoft into the largest software company in the world. Not understanding how valuable the operating systems would become, IBM agreed to pay Microsoft a licensing fee per copy.
  • In another typical Bill Gates move, he told IBM that he had an operating system that would run on their upcoming first personal computer. In fact, he had nothing. Gates then turned around and bought the right to license DOS from Seattle Computer. This enabled him to close the deal with IBM.

Important Quotes from Book

In 1980 the company had sold the MS-DOS operating system to IBM when it made its irresistible entry into the desktop computing marketplace and established industry standards that have yet to be supplanted. The revenue from that partnership gave Gates a guaranteed income stream and the push he needed to make his vision—Microsoft software on every desktop PC—come true.

[at Harvard] Gates and Allen were convinced the computer industry was about to reach critical mass, and when it exploded it would usher in a technological revolution of astounding magnitude. They were on the threshold of one of those moments when history held its breath . . . and jumped, as it had done with the development of the car and the airplane. Computer power was about to come to the masses. Their vision of a computer in every home was no longer a wild dream. “It’s going to happen,” Allen kept telling his friend. And they could either lead the revolution or be swept along by it. Allen was much more eager to start a company than Gates, who was worried about the reaction from his family if he dropped out of school.

“Paul kept saying, let’s start a company, let’s do it,”

 “I met several people in the math department who were quite a bit better than I was at math,” said Gates. “It changed my view about going into math.

Gates may not have been the best math student at Harvard, but he had no peers in computer science. His professors were impressed not only by his smarts, but his enormous energy.

On a cold winter day in December 1974, Allen was walking’ across Harvard Square in Cambridge on his way to visit Gates, when he stopped at a kiosk and spotted the upcoming January issue of Popular Electronics, a magazine he had read regularly since childhood. This issue, however, sent his heart pounding. On the cover was a picture of the Altair 8080, a rectangular metal machine with toggle switches and lights on the front. “World’s First Microcomputer Kit to Rival Commercial Models,” screamed the magazine cover headline.

“I bought a copy, read it, and raced back to Bill’s dorm to talk to him,” said Allen, who was still working at Honeywell in nearby Boston. “I told Bill, ‘Well here’s our opportunity to do something with BASIC.’ ”

Wired from excitement and lack of sleep. Gates and Allen made the long-distance call to MFTS in Albuquerque.

Gates proceeded to explain, with youthful bravado, that he and his friend had developed a BASIC that could be adapted for the Altair computer.

In fact, they didn’t have a program at all, and Roberts suspected as much. He had heard such boasts already. “We had at least 50 people approach us saying they had a BASIC,” recalled Roberts. “We just told everyone, including those guys, whoever showed up first with a working BASIC had the deal.”

Like a couple of school boys caught in a lie, they were furiously trying to cover their tracks. They had told Roberts they had a BASIC, and now they had to produce one.

Gates and Allen didn’t have an Altair, which made their task especially difficult. Roberts had the only up-and-running Altair in existence. And he was in New Mexico.

Gates said later that of all the code he ever wrote, he was most proud of the BASIC program developed in those eight weeks at Harvard. “It was the coolest program I ever wrote,” Gates said.

No one had ever written a BASIC for a microcomputer. In that sense, Gates and Allen were blazing the trail for future software developers and establishing the industry standard.

In the spring of 1975, Roberts offered Allen the job of MITS software director. Allen accepted and left for Albuquerque.

The response to the Popular Electronics article had been nothing short of phenomenal, firing the imagination of electronics “You’ve got to remember that in those days, the idea that you could own a computer, your own computer, was about as wild as the idea today of owning your own nuclear submarine. It was beyond comprehension,”

Microsoft—an abbreviation for microcomputer software— was born in the summer of 1975.

The computer clubs fueled the revolution that had begun in Albuquerque with the Altair and was sweeping across the country like an out-of-control prairie fire. Probably no computer club in the country reflected this communal spirit more than Homebrew. From its ranks would come numerous industry pioneers who blazed their own trails through the Silicon Valley and a new multi-billion-dollar industry.

Homebrew started in a garage on a rainy night in early March of 1975, in the town of Menlo Park, next to Palo Alto and Stanford University, on the edge of the Silicon Valley. More than thirty people turned out for the first meeting, including an electronics whiz kid working in the calculator division of Hewlett- Packard named Steve Wozniak. Within a year, Wozniak, with Steve Jobs, would build a personal computer of his own, the Apple I, which would transform the computer industry.

The BASIC that Gates and Allen had written in those eight frantic weeks at Harvard a year earlier had now spread all over the country, thanks in large measure to the very actions of hobbyists Gates had so bitterly denounced. BASIC had become a de facto standard in the young microcomputer industry. When new computer companies joined the revolution and needed a BASIC language, they came to Albuquerque and did business with Gates and Microsoft. And they came with pockets stuffed with money.

Gates proved himself to be a formidable businessman. At age 21, he was as comfortable sitting in his office negotiating tough deals with much older executives in three-piece suits as he was programming long into the night.

The character and flavor of Microsoft today is not all that different from the character of the company in suite 819 at Two Park Central Tower in Albuquerque in 1977.

The work ethic, intensity, hard drive, creativity, youthfulness, and informality were woven into the very fabric of Microsoft from the start.

His confrontational style of management helped Microsoft maintain its edge, its mental toughness. It made those who worked for him think things through. These are qualities that continue to distinguish Microsoft to this day. It is a culture that never gives employees a chance to get complacent because as soon as they do, someone is going to challenge them. Gates was not afraid to change his mind if someone made a convincing argument, a quality that Steve Wood came to admire.

Partnership with IBM:

Never before had Big Blue, as IBM was known, considered letting an outsider play such a critical role in developing one of its computers.

Time was short. The personal computer that IBM was developing had to be ready in ten months. Could a small language company like Microsoft meet such a demanding schedule?

Now Microsoft, a company with seven million dollars in annual sales and fewer than 40 employees, was about to go into business with IBM, an international giant with revenues approaching thirty billion dollars a year and a work force more than half as large as the population of Seattle.

He and Paul Allen had strategically positioned Microsoft so that it was in the right place at the right time when IBM broke with tradition and went looking for a software vendor for its entry into the personal computer market.

The [IBM] task force agreed the new computer should be an “open architecture” system. In other words, critical components of the machine, such as the microprocessor, would come from existing technology in the market place and would not be proprietary, like components in the Apple. This radical break from Big Blue’s tradition would turn out to be the key decision that made the IBM PC an industry standard.

But it was done out of necessity, to save time.

It was decided that the machine’s software, including the vital operating system, would also come from an outside vendor.

During the early years of the personal computer revolution, there was no standard operating system. Almost every new machine that came on the market used a different system to control the microprocessor. But gradually one operating system known as Control Program for Microcomputers, or CP/M, became something of an industry standard by 1979. It was developed by Gary Kildall of Digital Research.

Gary Kildall and Bill Gates went back a long way, to Computer Center Corporation when Gates was one of the bunch of crazy kids from Lakeside hired to try to crash the C-Cubed computer.

What happened the day IBM came courting Digital Research in Pacific Grove, California, just off scenic Highway 1, has become part of the folklore of the personal computer industry, a story that is told over and over whenever the talk at an industry convention or dinner party turns to Microsoft and its money-making monopoly, DOS. Gary Kildall blew the opportunity of the century, someone will say.

Luck once again would shine on Bill Gates. An operating system for the 16-bit Intel chips had just been developed by Tim Paterson at Seattle Computer Products, not more than a twenty-minute drive from Microsoft.

IBM was about to forge an alliance with an outside supplier unlike any in the company’s history. Microsoft would not be supplying nuts and bolts for the new PC but rather the vital operating system, the very soul of the machine.

Microsoft and Seattle Computer finally signed an agreement giving Microsoft a nonexclusive right to market 86-DOS.

Of course, no one at Seattle Computer knew that Microsoft’s unnamed customer for the operating system was IBM, with revenues approaching nearly thirty billion dollars.

For only $50,000, Gates bought all rights to 86-DOS previously owned by Seattle Computer Products. It was the bargain of the century. Once again. Gates had proved he was a master businessman.

The operating system that once belonged to Seattle Computer had by then become an industry standard; by 1991 Microsoft was making more than $200 million a year just from sales of MS-DOS.

Arguably, MS-DOS became an industry standard as much from the momentum generated by the huge success of the PC as anything Microsoft’s brash, competitive chairman did. As the IBM PC gained in popularity, more and more programmers wrote software for that machine and for the operating system Gates had acquired.

Before the PC announcement in August of 1981, Commodore, Apple, and Tandy’s Radio Shack had been the Big Three of the personal computer industry, with a 75 percent market share. None of them seemed to take IBM’s PC seriously, because there was nothing innovative about it. The computer used existing technology and software.

The IBM PC soon eclipsed the Apple II and every other machine on the market, thanks in part to a clever television ad campaign featuring Charlie Chaplin’s adorable “Little Tramp” typing away on one of the ivory-colored machines. The Tramp, with his ever-present red rose, made the PC seem like a friendly and easy-to-use machine. The market targeted for the PC was not the home but the work place, where IBM had long established its reputation. As it turned out, the company underestimated preliminary sales by as much as 800 percent.

If you would like to learn more about the history of technology, read my book From Poverty to Progress: How Humans Invented Progress, and How We Can Keep It Going.

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