Microsoft bought the system that became MS-DOS for 25,000 dollars
In July 1981, Microsoft needed an operating system for IBM's upcoming personal computer, so it bought one: 86-DOS, written by Tim Paterson at Seattle Computer Products, for 25,000 dollars. It renamed the software MS-DOS, and that modest purchase became the product that transformed Microsoft from a programming-language company into a software giant.
Paterson had built 86-DOS in just six weeks, essentially by cloning Digital Research's CP/M and adapting it to Intel's 8086 chip. His version differed in two notable ways, better buffering of disk sectors and the FAT12 file system in place of CP/M's. It first shipped in August 1980. Microsoft hired Paterson in May 1981 and licensed the renamed system to IBM, which offered it that August as PC DOS 1.0, one of three operating systems available for the IBM 5150.
Microsoft did not stop at IBM. Within a year it had licensed MS-DOS to more than 70 other companies, supplying a kit that let each manufacturer add its own hardware drivers to a standard Microsoft kernel. In principle any 8086-family machine could run it. In practice, programmers, especially game makers, bypassed the operating system to drive hardware directly for speed, so manufacturers soon copied IBM's design exactly and a single version of MS-DOS came to serve the whole market.
Using it meant typing. A command interpreter called COMMAND.COM waited whenever no program was running, matching what the user typed either to a built-in command or to a program file on the current drive or search path. Floppy disks initially held not only the system but every program and file, and later versions added support for bigger drives and newer processors.
MS-DOS dominated IBM-compatible PCs through the 1980s, and IBM's PC DOS developed in parallel until the two split in 1993. Rivals such as DR-DOS appeared from 1988. Early Windows ran on top of it, and version 6.22 of 1994 was the last sold on its own. Versions 7 and 8 lived on quietly beneath Windows 9x, until development ended in 2000.
Source: MS-DOS
