Bill Gates:
IBM didn't make it easy. You had to sign all these funny agreements that sort of said I...IBM could do whatever they wanted, whenever they wanted, and use your secrets however they - they felt. But so it took a little bit of faith.
Jack Sams was looking for a package from Microsoft containing both the BASIC computer language and an Operating System. But IBM hadn't done their homework.
Steve Ballmer:
They thought we had an operating system. Because we had this Soft Card product that had CPM on it, they thought we could licence them CPM for this new personal computer they told us they wanted to do, and we said well, no, we're not in that business.
Jack Sams:
When we discovered we didn't have - he didn't have the rights to do that and that it was not...he said but I think it's ready, I think that Gary's got it ready to go. So I said well, there's no time like the present, call up Gary.
Steve Ballmer:
And so Bill right there with them in the room called Gary Kildall at Digital Research and said Gary, I'm sending some guys down. They're going to be on the phone. Treat them right, they're important guys.
The men from IBM came to this Victorian House in Pacific Grove California, headquarters of Digital Research, headed by Gary and Dorothy Kildall. Just imagine what its like having IBM come to visit - its like having the Queen drop by for tea, its like having the Pope come by looking for advice, its like a visit from God himself. And what did Gary and Dorothy do? They sent them away.
Jack Sams:
Gary had some other plans and so he said well, Dorothy will see you. So we went down the three of us...
Gordon Eubanks:
(Former Head of Language Division, Digital Research)
IBM showed up with an IBM non-disclosure and Dorothy made what I...a decision which I think it's easy in retrospect to say was dumb.
Jack Sams:
We popped out our letter that said please don't tell anybody we're here, and we don't want to hear anything confidential. And she read it and said and I can't sign this.
Gordon Eubanks:
She did what her job was, she got the lawyer to look at the nondisclosure. The lawyer, Gerry Davis who's still in Monterey threw up on this non-disclosure. It was uncomfortable for IBM, they weren't used to waiting. And it was unfortunate situation - here you are in a tiny Victorian House, its overrun with people, chaotic.
Jack Sams:
So we spent the whole day in Pacific Grove debating with them and with our attorneys and her attorneys and everybody else about whether or not she could even talk to us about talking to us, and we left.
This is the moment Digital Research dropped the ball. IBM, distinctly unimpressed with their reception, went back to Microsoft.
BOB: It seems to me that Digital Research really screwed up.
STEVE BALLMER: I think so - I think that's spot on. They made a big mistake. We referred IBM to them and they failed to execute.
Bill Gates isn't the man to give a rival a second chance. He saw the opportunity of a lifetime.
Bill Gates:
Digital research didn't seize that, and we knew it was essential, if somebody didn't do it, the project was going to fall apart.
Transcript snip http://www.pbs.org/nerds/part2.html:
Bill Gates: IBM didn't make it easy. You had to sign all these funny agreements that sort of said I...IBM could do whatever they wanted, whenever they wanted, and use your secrets however they - they felt. But so it took a little bit of faith.
Jack Sams was looking for a package from Microsoft containing both the BASIC computer language and an Operating System. But IBM hadn't done their homework.
Steve Ballmer: They thought we had an operating system. Because we had this Soft Card product that had CPM on it, they thought we could licence them CPM for this new personal computer they told us they wanted to do, and we said well, no, we're not in that business.
Jack Sams: When we discovered we didn't have - he didn't have the rights to do that and that it was not...he said but I think it's ready, I think that Gary's got it ready to go. So I said well, there's no time like the present, call up Gary.
Steve Ballmer: And so Bill right there with them in the room called Gary Kildall at Digital Research and said Gary, I'm sending some guys down. They're going to be on the phone. Treat them right, they're important guys.
The men from IBM came to this Victorian House in Pacific Grove California, headquarters of Digital Research, headed by Gary and Dorothy Kildall. Just imagine what its like having IBM come to visit - its like having the Queen drop by for tea, its like having the Pope come by looking for advice, its like a visit from God himself. And what did Gary and Dorothy do? They sent them away.
Jack Sams: Gary had some other plans and so he said well, Dorothy will see you. So we went down the three of us...
Gordon Eubanks: (Former Head of Language Division, Digital Research) IBM showed up with an IBM non-disclosure and Dorothy made what I...a decision which I think it's easy in retrospect to say was dumb.
Jack Sams: We popped out our letter that said please don't tell anybody we're here, and we don't want to hear anything confidential. And she read it and said and I can't sign this.
Gordon Eubanks: She did what her job was, she got the lawyer to look at the nondisclosure. The lawyer, Gerry Davis who's still in Monterey threw up on this non-disclosure. It was uncomfortable for IBM, they weren't used to waiting. And it was unfortunate situation - here you are in a tiny Victorian House, its overrun with people, chaotic.
Jack Sams: So we spent the whole day in Pacific Grove debating with them and with our attorneys and her attorneys and everybody else about whether or not she could even talk to us about talking to us, and we left.
This is the moment Digital Research dropped the ball. IBM, distinctly unimpressed with their reception, went back to Microsoft.
BOB: It seems to me that Digital Research really screwed up. STEVE BALLMER: I think so - I think that's spot on. They made a big mistake. We referred IBM to them and they failed to execute.
Bill Gates isn't the man to give a rival a second chance. He saw the opportunity of a lifetime.
Bill Gates: Digital research didn't seize that, and we knew it was essential, if somebody didn't do it, the project was going to fall apart.