In late 1974, Paul Allen, then working as a programmer at Honeywell, noticed the January 1975 issue of Popular Electronics while walking through Harvard Square. The magazine cover displayed the Altair 8800, a new machine manufactured by Micro Instrumentation and Telemetry Systems (MITS) that was recognized as the first commercial microcomputer. Allen bought the magazine and headed straight to Currier House at Harvard College to present the article to his high school friend, Bill Gates. That single magazine issue triggered a project that would shift personal computing from a hobbyist pastime into a commercial software industry.
The Harvard Square Discovery
When Allen shared the magazine cover with Gates at Currier House, both programmers recognized an immediate technical hurdle and a commercial opportunity. MITS had produced a compact microcomputer hardware chassis, but the system lacked high-level programming software that would allow users to write and execute code easily. Gates contacted MITS in Albuquerque, New Mexico, offering to demonstrate a working implementation of the BASIC programming language tailored specifically for the Altair 8800. At the moment Gates made the pitch, however, neither he nor Allen possessed an Altair 8800 machine, nor had they written an interpreter for the platform.
The Eight-Week Sprint
To build a functional interpreter without physical access to the target hardware, Allen and Gates had to simulate the Altair 8800 environment on other computing equipment. Working alongside programmer Monte Davidoff over an intensive eight-week period, the team developed the software interpreter from scratch. They wrote the code to translate BASIC instructions into the specific machine instructions required by the Altair's processor, relying entirely on hardware specifications rather than live system testing. Without an actual Altair unit in their possession, the software codebase remained untested on genuine microcomputer hardware until the moment of demonstration.
Testing in Albuquerque
Once the eight-week development stretch concluded, Allen traveled to Albuquerque to present the completed interpreter at MITS headquarters. Loading the code into an actual Altair 8800 microcomputer for the very first time during the meeting, Allen watched as the interpreter initialized and executed software commands successfully without crashing the machine. Impressed by the live trial, MITS signed an agreement to distribute the software under the product name Altair BASIC, securing the first commercial license for the pair's code.
The Birth of Micro-Soft
Following the licensing deal with MITS, Allen moved to Albuquerque, and Gates soon left Harvard College to join him full-time in New Mexico. The partners co-founded their business venture in Albuquerque, choosing the name Micro-Soft as a portmanteau of microcomputer and software. The young company established its initial operations and began hiring staff, generating $16,005 in total revenues by the end of 1976.
The successful deployment of Altair BASIC proved that microcomputer software could exist as a standalone, commercially viable product independent of hardware manufacturing. By turning eight weeks of focused software creation into an agreement with MITS, Allen and Gates established a licensing model that defined their company's trajectory as it expanded beyond Albuquerque and evolved into Microsoft.
AI-generated editorial illustration; not a documentary photograph.
Source: History of Microsoft
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