Creation of PC DOS
Microsoft purchased a nonexclusive license for 86-DOS from Seattle Computer Products in December 1980 for $25,000. In May 1981, it hired Tim Paterson to port the system to the IBM PC, which used the slower and less expensive Intel 8088 processor and had its own specific family of peripherals. IBM watched the developments daily, submitted over 300 change requests before it accepted the product and wrote the user manual for it.
In July 1981, a month before the PC's release, Microsoft purchased all rights to 86-DOS from SCP for $50,000. It met IBM's main criteria: it looked like CP/M, and it was easy to adapt existing 8-bit CP/M programs to run under it, notably thanks to the TRANS command which would translate source files from 8080 to 8086 machine instructions. Microsoft licensed 86-DOS to IBM, and it became PC DOS 1.0. This license also permitted Microsoft to sell DOS to other companies, which it did. The deal was spectacularly successful, and SCP later claimed in court that Microsoft had concealed its relationship with IBM in order to purchase the operating system cheaply. SCP ultimately received a 1 million dollar settlement payment.
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