Microsoft Turns 50: How Bill Gates & Paul Allen Built a Tech Giant

Microsoft turns 50: Why many early users were annoyed by Bill Gates and Paul Allen

50 years ago, Microsoft was founded in Albuquerque, New Mexico. To celebrate, Bill Gates made the Altair Basic code available for download – which caused quite a stir at the time.

The first thing that usually comes to mind when you hear the word Microsoft is probably Windows . Then, of course, Office , and for the early computer users among us, perhaps DOS as well – the operating system that propelled Microsoft to a software empire. But Microsoft’s origins go back much further. Its history began in the school days of Bill Gates and Paul Allen.

Gates and Allen: Computer enthusiasts learned more than just programming

Access to computers was a scarce commodity in the 1960s, available only on a few mainframe computers in companies and universities. The school Gates and Allen attended purchased a teletype terminal, computing time on a mainframe computer, and set up a computer class. The young computer enthusiasts quickly learned not only how to program, but also how to gain more access and computing time.

Gates was still a student, and Allen had just graduated, when the two founded their first company: Traf-O-Data. Together with hardware specialist Paul Gilbert, they developed a minicomputer designed to analyze traffic counting data. However, development of the device took longer than planned. Because they didn’t want to wait until the hardware was up and running, Allen programmed simulation software on the Washington State University computer, which Gates then used to write the software for Traf-O-Data.

How Basic was created

When the first affordable home computer, the Altair 8800, came onto the market in 1974, Gates—now enrolled at Harvard—and Allen decided to develop a BASIC for it. However, this led to disciplinary proceedings for Gates at Harvard University. He had not only diverted considerable amounts of expensive computing time for his private project, but had also given his friend Paul Allen access to the university’s computers. This software, with which the two transformed the previously rather useless Altair 8800 into a computer that even beginners could program, laid the foundation for the Microsoft empire.

However, at the time the two sold their software to the Altair manufacturer, it didn’t yet exist. The demo version wasn’t finished until the day before delivery. Paul Allen was supposed to deliver the precious punched tape – software was still stored on paper back then – to the Altair manufacturer. Because the two developers had forgotten, in their rush, to write a program to install their demo on the Altair, Allen created it on a notepad during the flight. Of course, the two hadn’t had time to test their software beforehand.

A problem Microsoft is still struggling with

The emulator on which they developed Basic was originally written for Traf-O-Data. Allen and Gates had to rewrite it for the new Altair 8800 processor in order to then develop the appropriate Basic. Later, they adapted Altair Basic, which would become Microsoft Basic, to a succession of new home computers – which made the organically growing code increasingly confusing. A problem that many users believe Microsoft is still struggling with today.

Even back then, Microsoft was developing according to its own hardware specifications: Because Gates wanted to integrate as many features as possible into his Basic, the software required an extremely large amount of memory for the time. When it finally shipped, many Altair users were annoyed to find that their memory was too small to run Basic. They had to purchase expensive additional memory.

Fun fact: Altair Basic, still unfinished at the time, was the first software to be pirated on a massive scale. To fuel interest, Gates and Allen announced the software long before it was available for purchase. However, a pre-release version, through a process still unclear, ended up with the Homebrew Computer Club, which duplicated the punched tape using a specially purchased copier. The rest is history. But for the anniversary, the story has come full circle: Bill Gates has made the 157-page code available (as a PDF) on his website.

50 years: How Gates and Microsoft shaped the PC world

For decades, Microsoft has not only dominated the PC market, the software giant has also been a driving force behind its success. The company’s strategies have not been without controversy, as numerous lawsuits demonstrate. Not everything Microsoft has done has been successful, such as the discontinued Zune music player. Nevertheless, the 50th anniversary of its founding is certainly a reason to celebrate for the software giant.

On April 4, 1975, Microsoft was founded by Bill Gates and Paul Allen in Albuquerque, New Mexico. They initially developed the computer language program BASIC, which was also used as an operating system. This was followed by MS-DOS, which IBM included as the factory-installed operating system for its personal computers (PCs), which were launched in 1981—laying the foundation for Microsoft’s dominance in the PC market.

In November 1985, after a long announcement period, Microsoft released the first version of Windows. Windows 1.0 introduced a graphical user interface. The goal was to make PC use accessible to a broader audience. In 1986, Microsoft went public and launched the spreadsheet application Excel – initially for Apple’s Macintosh. The Office suite subsequently became a key pillar of Microsoft’s business.

After a brief interlude with OS/2, Microsoft focused entirely on Windows. Windows 3.1, Windows NT, and Windows for Workgroups became best-sellers, as did Excel and the Office suite, and later Windows 95. Many features familiar to this day were introduced with Windows 95, such as the Start menu.

Bundling with computers consolidated dominance

Delivering computers pre-installed with Microsoft software solidified Microsoft’s market dominance. Accordingly, software developers also focused on Windows, making the operating system even more attractive. By 1995, when Windows 95 was launched, Microsoft had a 95 percent market share.

But things got bumpy, because Microsoft had missed the Internet. The Netscape browser initially prevailed as PC surfing software. With the seamless integration of its Internet Explorer and considerable pressure on PC vendors, Microsoft regained ground – and, as part of the “browser war,” was subjected to lawsuits and fines for distorting competition in the US and Europe.

The company subsequently repeatedly exploited its market power, relying on proprietary standards for software, for example, to eliminate or keep out the competition. As a counter product to the now freely available MP3 format for sound files, Microsoft developed its own proprietary WMA format, which would also help Microsoft’s Zune music player achieve its breakthrough as an alternative to Apple’s best-selling iPod.

Mobile phones and music players were not successful

However, Microsoft, like Apple’s iPhone and Google’s Android operating system, failed to compete with its own mobile phones or smartphone operating system. The Microsoft enjoyed significantly more success with its Xbox gaming console and, above all, its Windows operating system, although the manufacturer also suffered setbacks, such as with Windows Vista.

Microsoft has repeatedly made headlines with major acquisitions, such as the $8.5 billion takeover of internet telephony provider Skype, the $26.2 billion acquisition of business network LinkedIn, and the $68.7 billion purchase of game studio Activision Blizzard. Microsoft also acquired Nokia’s mobile phone division.

At the end of 1975, according to company history, annual sales were $16,005. For the second quarter of 2025. Microsoft reported sales of $69.6 billion (€64.48 billion) with a net profit of $31.7 billion (€29.37 billion).

Gates as a driving force

Gates was long the driving force behind Microsoft’s success and had a reputation as a tough businessman. Critics accuse him of using Microsoft’s market power unfairly and without significant innovations of his own. For example, against free software like Linux, but also Apple.

He also occasionally showed himself to be uncompromising toward business partners like Allen. Who died in 2018, as he noted in his autobiography. He had a love-hate relationship with Apple founder Steve Jobs. Jobs accused Gates, among other things, of copying the graphical user interface for Windows from him.

In the mid-1990s, Microsoft saved Apple from bankruptcy through a lawsuit and an out-of-court settlement. Which didn’t exactly help revive the relationship between Gates and Jobs. While their respective products were often disparaged, some statements suggest that secretly there was mutual respect. At a joint appearance in 2007, Gates admired Jobs’s taste.

Microsoft made founders billionaires

In 2000, Gates handed over the reins to Steve Ballmer. Who had been with Microsoft since 1980 and who occasionally elicited laughter from those interested with his sometimes extroverted manner. (“Developers, Developers, Developers!”) and his offensive remarks about the free Linux operating system. Upon his resignation as Microsoft CEO in 2014, Ballmer himself described Windows Vista as his biggest mistake.

Allen, Ballmer, and Gates became billionaires through and with Microsoft. After his retirement, Gates turned to philanthropy, while Ballmer bought a basketball team. Allen left the company in 1983, but remained a consultant and on the board of directors for a long time. Also heavily involved in social causes, as well as in many technology companies.

Microsoft, now under the leadership of Saty Nadella, has a very broad portfolio. In addition to Windows and the comprehensive Office suite. The provider is also active in server and cloud computing (Azure) and in the booming artificial intelligence (AI) business. Microsoft also produces hardware, but now only the Xbox game console and Surface tablets, along with the corresponding accessories.

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Sources used:

• With material from the Reuters news agency and Microsoft Official Website. With information from News Channels. Statement and reports from reputable news sources, including Reuters, Wikipedia, BBC, CNN. The content has been independently analyzed and rewritten to provide original insights.

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