Code Like It's 198x

Microsoft

The BASIC in the ROM, then DOS, Windows and Xbox

Companies & StudiosSource-checked

Bill Gates and Paul Allen's Micro-Soft began in Albuquerque in 1975 by writing BASIC for the Altair. Its BASIC went on to sit in the ROMs of the Commodore PET, VIC-20 and 64, the TRS-80, the Apple II Plus, the Tandy Color Computer, the Dragon and every MSX machine. MS-DOS for the IBM PC made it the PC's software company, DirectX brought games to Windows, and from 2001 the Xbox made it a console maker and, through Rare, Bethesda and Activision, one of the largest game publishers.

Type WAIT 6502,1 on a Commodore PET with the newer ROMs and the machine prints the word MICROSOFT! across the screen. The joke was left there by the company that wrote the PET’s BASIC, and a 1981 book of PET games let its readers in on it: “The company that wrote the BASIC interpreter for your PET is MICROSOFT.” By then the same company’s BASIC was the first thing millions of people saw when they switched on a home computer: on the Commodore PET, VIC-20 and 64, the TRS-80, the Apple II Plus, Tandy’s Color Computer, the Dragon and, from 1983, every MSX machine. Microsoft later made the PC’s operating system, turned Windows into a games platform and became a console maker with the Xbox, but its home-computer story is the BASIC.

Fast facts

  • Founded: 1975 in Albuquerque, New Mexico, as Micro-Soft, by Bill Gates and Paul Allen.
  • First product: Altair BASIC, for MITS’s Altair 8800 kit, written by Gates, Allen and Monte Davidoff.
  • BASIC in ROM: Commodore PET, VIC-20 and 64; TRS-80 Level II; Apple II Plus (Applesoft); Tandy Color Computer and Dragon 32; MSX.
  • Operating systems: MS-DOS (1981, sold to IBM as PC-DOS); Windows (1985).
  • Consoles: Xbox (2001), Xbox 360 (2005), Xbox One (2013), Xbox Series X and S (2020).
  • Studios bought: Bungie (2000, independent again 2007), Rare (2002), Lionhead (2006), Mojang (2014), Obsidian and inXile (2018), ZeniMax Media, Bethesda’s owner (2021), Activision Blizzard (2023).
  • Headquarters: Albuquerque, then Bellevue, Washington, from 1979, and Redmond, Washington, from 1986.

Altair BASIC and Micro-Soft

MITS sold its Altair 8800 in 1975 as a kit for hobbyists, for $395. Gates and Allen wrote a BASIC for it. In November 1975 BYTE, then in its third issue, printed a letter signed “William H. Gates, President, Micro-Soft, Albuquerque NM”. Gates wrote that he had spent the last three years programming microcomputers, “most recently writing ALTAIR BASIC with Paul Allen and Monte Davidoff”. He also explained how MITS priced it: software from MITS cost “about six times as much” if you had not bought the hardware from MITS, because as long as you had, “MITS is willing to just break even on the software”.

Most hobbyists did not pay at all. In early 1976 Gates wrote “An Open Letter to Hobbyists”, printed in the February 1976 Computer Notes, MITS’s newsletter, and in the Homebrew Computer Club’s newsletter, complaining that people were copying the BASIC instead of buying it. The letter was reprinted widely, and BYTE returned to it in September 1976 in an article on software ownership: “it now appears that more copies of Altair’s BASIC have been pirated than have been legally sold.” Gates was still making the same argument four years later. “Looking at the amount of software we offer, we are the most ripped-off company around,” he told 80 Microcomputing in 1980, and he warned that if there were not “enough honest people out there to buy the stuff”, Microsoft would stop selling its cheaper packages.

A BASIC for every machine

Micro-Soft’s BASIC was soon the one other manufacturers came to. Chuck Peddle visited the company’s Albuquerque office to ask for a version for Commodore’s new PET. How that deal was paid for is told by Commodore’s side. Jack Tramiel said in 2007 that Gates had asked for $3 a machine: “I told him that the highest price I’m willing to pay is $25,000, and about six weeks later he came and took the $25,000.” Kit Spencer, who ran Commodore’s British marketing, called it “an operating system that we put on 20 million computers and it didn’t cost us anything in reality”.

Commodore kept that BASIC for years. Sheldon Leemon’s Mapping the Commodore 64 described the 64’s interpreter as “almost identical to the Microsoft BASIC interpreter found on the VIC-20”, both “slightly modified versions of PET BASIC 2.0”. Microsoft published the source of this BASIC in September 2025, under the MIT licence: version 1.1 of its 6502 BASIC, dated 1978, which assembles for the Commodore PET, the Apple II, the KIM-1 and Ohio Scientific machines. Microsoft’s announcement confirms that Commodore licensed the BASIC for a flat fee of $25,000 in 1977, and that version 1.1, with garbage-collection fixes made by Commodore’s John Feagans and Gates in 1978, shipped in the PET as BASIC V2, the BASIC that the VIC-20 and 64 also used.

That is why BASIC V2 on the Commodore 64 has no commands for its sprites or sound chip: it was a BASIC written for machines that had neither.

The same code went elsewhere:

  • Tandy. The TRS-80’s Level II BASIC was Microsoft’s; a 1980 guide to its ROM names it as “Level II ROM BASIC written by Microsoft’s Paul Allen and Bill Gates”. Microsoft also wrote Color BASIC for the Tandy Color Computer, which the Welsh Dragon 32 shared in a close variant.
  • Apple. Wozniak’s own Integer BASIC had no floating-point arithmetic, so Apple licensed Microsoft’s. The Applesoft II Reference Manual of August 1978 carries two copyright lines, Apple’s for 1978 and “Copyright 1977 Microsoft Inc.” William Luebbert’s guide to the Apple’s memory, What’s Where in the Apple, explained that it was “mostly a transfer to the Apple hardware/firmware environment of Microsoft’s MITS BASIC”. From 1979 the Apple II Plus had it in ROM.

The shared ancestry helped programmers. A 1983 book on the Commodore 64 explained that Microsoft BASIC had become “closest to a ‘standard’ version of BASIC for tiny computers”, though versions for the TRS-80, the Apple II and the Commodores still differed enough that a program could not always move between them unchanged. COMPUTE!’s First Book of PET/CBM noted that because “both APPLESOFT and PET BASIC were written by Microsoft”, programs had “exactly the same format in memory”.

Microsoft also sold hardware for the Apple II: the Z-80 SoftCard, a plug-in card with a Z80 processor that let the Apple run the CP/M operating system. Computers That Made Britain counts it among the best-selling expansions for the Apple II Plus.

Games for the 8-bit machines

Microsoft published games from early on. Microsoft Adventure was its version of the original cave adventure, Colossal Cave Adventure, for the TRS-80 and Apple II. A December 1980 advertisement in SoftSide sold it “from the people who wrote BASIC for personal computers” as “the granddaddy of the computer Adventure games”, at $29.95 on a 32K disk for either machine. Microsoft Adventure was also one of the games available for the IBM PC when that machine went on sale in 1981.

Microsoft Flight Simulator came from outside the company. subLOGIC wrote it and Microsoft published the IBM PC version; a mail-order advertisement in BYTE in May 1983 listed “MICROSOFT. Flight Simulator (by Sub-Logic)” at $50.

MS-DOS and the IBM PC

In 1980 IBM was building a personal computer and wanted to buy its software rather than write it. According to Computers That Made Britain, IBM’s Jack Sams went to Microsoft first. Microsoft had no operating system of its own, but Seattle Computer Products had one: Tim Paterson’s 86-DOS, written for Intel’s 8086 and modelled on Digital Research’s CP/M. Paul Allen negotiated its purchase for $50,000, and the deal with IBM, signed in November 1980, left Microsoft free to license its DOS to other manufacturers. “The key to the structure of our deal was that IBM had no control over our licensing to other people,” Gates said later.

IBM announced the Personal Computer on 12 August 1981. PC-DOS, IBM’s name for Microsoft’s DOS, cost $40; CP/M-86, when it arrived six months later, cost $240. Most of the companies that copied IBM’s hardware licensed MS-DOS for their machines, and that is how the PC, and in time PC games, came to run on Microsoft’s software.

Microsoft has since published the source of early DOS. It gave the code of MS-DOS 1.25 and 2.0 to the Computer History Museum in March 2014 and republished it on GitHub under the MIT licence in September 2018. In April 2024, with IBM, it added the source of MS-DOS 4.00 under the same licence.

MSX

Microsoft’s BASIC was also the centre of MSX, the home computer standard announced in Tokyo on 16 June 1983 by ASCII, Microsoft and fourteen Japanese manufacturers. Kazuhiko Nishi of ASCII had earlier signed ASCII’s deal with Microsoft over its BASIC in the Far East, and COMPUTE! called him “the prime force behind MSX development”, as president of Microsoft’s Far East division. Microsoft, the magazine said, “owns the rights to MSX and licenses the technology to the manufacturers”. Computer and Video Games described MSX BASIC as Microsoft BASIC 4.5 “with considerable enhancements”, and COMPUTE! added that MSX-DOS was “written by the author of MS-DOS” and could read disks formatted on an IBM PC.

Windows and DirectX

Microsoft released Windows 1.0 in November 1985, as a graphical extension that ran on top of MS-DOS. For years PC games stayed on DOS, because Windows did not give programmers the direct control of the hardware that DOS games relied on. Microsoft’s answer was the Windows Game SDK, released in September 1995 and soon renamed DirectX: a set of interfaces that gave games on Windows 95 fast access to graphics, sound and input hardware. Microsoft was publishing PC games too. Edge wrote in 1998 that its first games, such as the “dire” Microsoft Soccer, had cost it credibility, but that “with the likes of Age of Empires”, Ensemble Studios’ strategy game, “it has begun to address that particular problem”. See Age of Empires.

Xbox

In June 2000 Microsoft bought Bungie. Edge reported the doubts this raised among Bungie’s Macintosh fans, and that Bungie had “moved to work on X-Box software”; Ed Fries was Microsoft’s vice-president of games. Bungie’s Halo became the main launch game for the Xbox, which Bill Gates had announced at the Game Developers Conference in 2000 and which went on sale in North America on 15 November 2001, built from PC parts with a hard disk and an Ethernet port in every box. In September 2002 Microsoft bought the British studio Rare for $375 million, and its online service, Xbox Live, opened in the US that November.

The Xbox 360 followed in November 2005. Edge described its British launch in December, where demand “far outstripped supply” and shops restocked within days only to sell out again. Microsoft bought Lionhead in 2006. In 2007 Bungie became independent again, and Microsoft kept Halo.

The Xbox One, unveiled in 2013, had a harder start. Edge’s report on the reveal summed up the confusion over its online requirement: “Xbox One is always connected, except when it isn’t”. Microsoft’s Phil Harrison said that a console left offline would stop playing games after a set time: “I believe it’s 24 hours.” Games were to be registered to an Xbox Live account. After a public backlash Microsoft dropped the online check and the limits on lending and reselling games in June 2013, before the console launched that November, and from June 2014 it sold the console without the Kinect camera it had first insisted on.

The largest buyer of studios

From 2014 Microsoft bought studios on a larger scale. It bought Mojang, the maker of Minecraft, for $2.5 billion in 2014, and launched Xbox Game Pass, a subscription to a library of games, in June 2017. In November 2018, at its X018 event, it announced that it had bought two role-playing studios with roots in Interplay: Obsidian and inXile. The Xbox Series X and S went on sale on 10 November 2020. In March 2021 it completed the purchase of ZeniMax Media, the owner of Bethesda, a deal announced at $7.5 billion.

The largest purchase was Activision Blizzard, which Microsoft agreed to buy for $68.7 billion in January 2022 and, after nearly two years of regulatory review, took over in October 2023. Cuts followed: 1,900 games jobs in January 2024, and in May 2024 the closure of four studios, among them Arkane Austin and Tango Gameworks, the Japanese studio behind Hi-Fi Rush. Krafton bought Tango that August and brought back about half of its staff.

Sources

  • BYTE issue 3, November 1975, letters, p. 86: William H. Gates, “President, Micro-Soft, Albuquerque NM”; Altair BASIC written with Paul Allen and Monte Davidoff; MITS software pricing.
  • BYTE issue 13, September 1976, p. 16: Calvin N. Mooers, “Are You an Author?”; the piracy of Altair BASIC and Gates’s letter in the February 1976 MITS Computer Notes.
  • Dennis Bathory Kitsz, “Have the Courts Smashed…”, 80 Microcomputing issue 10, October 1980, pp. 52–65: Gates as one of the creators of Level II BASIC (p. 56); “the most ripped-off company around” (p. 63).
  • Mac Oglesby, Len Lindsay and Dorothy B. Kunkin, PET Games and Recreations (Reston, 1981), pp. 231–232: WAIT 6502 and the MICROSOFT message.
  • Tim Danton, The Computers That Made Britain (Raspberry Pi Press, 2021): “Commodore PET 2001” chapter and “The computers that came before” (Micro-Soft and the Altair, the Altair’s $395 kit price, Peddle’s visit to Albuquerque, the Tramiel and Kit Spencer quotations); “Apple II” chapter (Applesoft licensed from Microsoft; the Z-80 SoftCard; the Homebrew newsletter printing of the open letter, 31 January 1976); “IBM Personal Computer (5150)” chapter (Jack Sams, 86-DOS, the $50,000 purchase, the November 1980 deal, Gates’s quotation, PC-DOS at $40 and CP/M-86 at $240, Microsoft Adventure at launch).
  • Sheldon Leemon, Mapping the Commodore 64 (COMPUTE! Books, 1984), introduction to the BASIC ROM: the 64’s BASIC as a modified PET BASIC 2.0.
  • Tim Onosko, Commodore 64: Getting the Most From It (Brady, 1983), p. 51: Microsoft BASIC as the “standard” for small computers.
  • COMPUTE!’s First Book of PET/CBM (COMPUTE! Books, 1981), pp. 199–200: Applesoft and PET BASIC both written by Microsoft.
  • Robert M. Richardson, Disassembled Handbook for TRS-80, volume 2 (Richcraft Engineering, 1980), introduction: Level II BASIC by Paul Allen and Bill Gates.
  • Applesoft II Reference Manual (Apple Computer, August 1978), title page: “Copyright 1977 Microsoft Inc.”
  • William F. Luebbert, What’s Where in the Apple (Micro Ink), Applesoft section: Applesoft adapted from Microsoft’s MITS BASIC, and its floating-point arithmetic, which Integer BASIC lacked.
  • SoftSide, December 1980, p. 68: Microsoft Adventure advertisement.
  • BYTE, May 1983: mail-order advertisement listing Microsoft’s Flight Simulator “by Sub-Logic” at $50.
  • Koen De Brabander, 8-Bit Kids: Growing Up With The Commodore 64 (Amicom Retro Books, 2017), timeline, “MS-DOS released with the IBM PC”: most makers of IBM PC imitations licensed MS-DOS.
  • COMPUTE! issue 55, December 1984, p. 52: MSX feature (Nishi, Microsoft’s rights, MSX-DOS).
  • Computer and Video Games issue 37, November 1984, pp. 48–49: MSX feature (the 16 June 1983 press conference, MSX BASIC and Microsoft BASIC 4.5).
  • Edge issue 88, September 2000, news: Bungie after Microsoft’s purchase; Ed Fries.
  • Wireframe issue 2, November 2018, p. 14: Microsoft buys Obsidian and inXile at X018.
  • “Obsidian and inXile Join Microsoft Studios”, Xbox Wire, 10 November 2018 (web, secondary). https://news.xbox.com/en-us/2018/11/10/obsidian-inxile-join-microsoft-studios/
  • Edge issue 59, June 1998: Microsoft’s early games publishing, Microsoft Soccer and Age of Empires.
  • Edge issue 158, January 2006, news: the Xbox 360’s British launch.
  • Edge issue 255, July 2013, news: the Xbox One reveal, its online requirement and Phil Harrison’s “24 hours”.
  • For the Xbox’s launch and Rare’s purchase, see the Xbox and Rare entries and their sources; for Lionhead and Activision Blizzard, the Lionhead and Activision entries.
  • Microsoft Open Source Blog, “Microsoft open-sources historic 6502 BASIC”, 3 September 2025 (web): the release, Commodore’s $25,000 licence, version 1.1 as the PET’s BASIC V2. https://opensource.microsoft.com/blog/2025/09/03/microsoft-open-source-historic-6502-basic/
  • Microsoft, BASIC-M6502 repository, GitHub (web): Microsoft BASIC for 6502 version 1.1, MIT licence, build targets. https://github.com/microsoft/BASIC-M6502
  • Rich Turner, “Re-open-sourcing MS-DOS 1.25 and 2.0”, Microsoft Command Line blog, 28 September 2018 (web): the 2014 Computer History Museum release and the GitHub republication. https://devblogs.microsoft.com/commandline/re-open-sourcing-ms-dos-1-25-and-2-0/
  • Microsoft Open Source Blog, “Open sourcing MS-DOS 4.0”, 25 April 2024 (web): MS-DOS 4.00 source under the MIT licence, with IBM. https://opensource.microsoft.com/blog/2024/04/25/open-sourcing-ms-dos-4-0/
  • Microsoft, MS-DOS repository, GitHub (web): versions 1.25, 2.0 and 4.0, all under the MIT licence. https://github.com/microsoft/MS-DOS
  • Wikipedia, “Microsoft” (web, secondary): founding date, moves to Bellevue (1979) and Redmond (1986), Windows 1.0 (20 November 1985), Mojang ($2.5 billion, 2014), Xbox Series X and S (10 November 2020). https://en.wikipedia.org/wiki/Microsoft
  • Wikipedia, “DirectX” (web, secondary): the Windows Game SDK of September 1995 and why it was made. https://en.wikipedia.org/wiki/DirectX
  • Wikipedia, “Bungie” (web, secondary): purchase announced 19 June 2000; independence and Microsoft’s retention of Halo, 1 October 2007. https://en.wikipedia.org/wiki/Bungie
  • Wikipedia, “Xbox 360” (web, secondary): launch dates, 22 November 2005 (North America) and 2 December 2005 (Europe). https://en.wikipedia.org/wiki/Xbox_360
  • Wikipedia, “Xbox One” (web, secondary): the reversal of 19 June 2013, launch on 22 November 2013, and Kinect-free bundles from June 2014. https://en.wikipedia.org/wiki/Xbox_One
  • Wikipedia, “Xbox Game Pass” (web, secondary): launch on 1 June 2017. https://en.wikipedia.org/wiki/Xbox_Game_Pass
  • Wikipedia, “ZeniMax Media” (web, secondary): announced at $7.5 billion in September 2020, completed 9 March 2021. https://en.wikipedia.org/wiki/ZeniMax_Media
  • Wikipedia, “Tango Gameworks” (web, secondary): the May 2024 closures and Krafton’s purchase in August 2024. https://en.wikipedia.org/wiki/Tango_Gameworks

See also

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