Bill Gates was a Harvard dropout. Paul Allen was a Honeywell programmer. They had a dream that sounds hilarious today: a computer on every desk and in every home. In the mid-seventies, that was basically science fiction. Most computers were the size of refrigerators and cost more than a suburban house. But everything changed because of a magazine cover.
The date Microsoft was founded is officially recorded as April 4, 1975.
It wasn’t a grand corporate gala. There were no press releases or sleek glass offices in Redmond. Instead, it was two guys in Albuquerque, New Mexico, fueled by caffeine and a specific piece of hardware called the MITS Altair 8800. They saw the Altair on the cover of Popular Electronics and realized the "software revolution" was starting with or without them. They chose "with."
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What really happened on April 4, 1975?
People often think Microsoft started in a garage in Seattle. That's the Apple story. Microsoft's origin is much dustier. They set up shop in Albuquerque because that's where MITS, the company that made the Altair, was located. Gates and Allen didn't even have the software ready when they called MITS. They told a "white lie" saying they had a BASIC interpreter for the 8080 chip.
They didn't.
They spent the next eight weeks coding like madmen in a Harvard lab. Paul Allen flew to Albuquerque to demo the code. He hadn't even tested it on a real Altair yet—only on a simulator he wrote himself. If that tape hadn't loaded, Microsoft might never have existed. It loaded. It worked. The date Microsoft was founded followed shortly after as a formal partnership.
Honestly, the "Micro-soft" name (with a hyphen) was Paul Allen's idea. It was a portmanteau of microcomputer and software. It's kinda funny to think about now, but they actually dropped the hyphen within a year. They were just two kids trying to sell a programming language to hobbyists who mostly liked to build their own circuit boards.
The Albuquerque Years: More than just a desert start
Why New Mexico? It seems so random. But MITS (Micro Instrumentation and Telemetry Systems) was the center of the universe for about five minutes in 1975. Gates and Allen lived in the Sundowner Motel. They worked around the clock.
Success wasn't instant.
By the end of 1976, Microsoft had only a few employees and was struggling with "software piracy." This is a famous bit of tech lore. Gates wrote an "Open Letter to Hobbyists" complaining that people were copying their BASIC tape instead of paying for it. He was basically the first person to argue that software had value independent of the hardware. Most people thought he was being a jerk. Turns out, he was just predicting the entire global economy for the next fifty years.
Transitioning to Washington
The company didn't stay in the desert forever. By 1979, they moved back to Bellevue, Washington. It was getting hard to recruit top-tier programmers to Albuquerque. Plus, the relationship with MITS had soured and eventually ended in a messy legal arbitration. Microsoft won. They kept the rights to their code. That victory is probably the most important moment in the company's early history because it meant they owned their intellectual property.
Beyond the date Microsoft was founded: The IBM pivot
If 1975 was the birth, 1980 was the growth spurt that changed the world. IBM was looking for an operating system for their new "Personal Computer." They originally went to Gary Kildall at Digital Research, but that meeting famously went nowhere.
Legend says Kildall was out flying his plane.
Gates saw the opening. Microsoft didn't actually have an operating system to sell to IBM, so they did what they do best: they bought one. They paid Tim Paterson of Seattle Computer Products roughly $50,000 to $75,000 for QDOS (Quick and Dirty Operating System). They refined it, renamed it MS-DOS, and licensed it to IBM.
The kicker? They didn't sell it exclusively.
They kept the right to license MS-DOS to other manufacturers. This is the single greatest business move in the history of technology. It allowed "PC clones" to explode, making Microsoft the standard for the entire industry while IBM eventually lost its grip on the hardware market.
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Misconceptions about the early days
- They were rich kids: While Gates came from a wealthy Seattle family, they weren't "venture capital" rich in 1975. They were scrappy. They were literally writing code on yellow legal pads during flights.
- Windows was the first hit: Not even close. It took years for Windows to become usable. For a decade, Microsoft was primarily a "languages" and "operating systems" company. Word and Excel came much later.
- It was always a massive team: In the beginning, it was just Bill, Paul, and a handful of friends like Ric Weiland and Monte Davidoff. The famous 1978 staff photo shows a group of eleven people who look like they belong at a Grateful Dead concert, not a multi-billion dollar corporation.
Why 1975 still resonates in 2026
Looking back from the vantage point of 2026, the date Microsoft was founded marks the moment the center of gravity shifted from hardware to software. Before April 4, 1975, the "machine" was everything. After that date, the "instructions" became everything.
We see this same pattern now with AI. The chips (like NVIDIA's) are crucial, sure, but the models and the software running on them are where the real power lies. Microsoft is still here, decades later, because they understood this fundamental truth before anyone else. They've survived the transition from desktop to web, web to mobile (mostly), and now mobile to AI.
Practical takeaways for entrepreneurs and tech historians
If you're looking at the history of Microsoft to find a blueprint for success, don't look for a "perfect" start.
First, start with a real problem. The Altair needed a language. Gates and Allen provided it. They didn't build a product and then look for a market; they saw a market and rushed to build the product.
Second, understand the power of licensing. Owning the "standard" is always more profitable than owning the "box." Microsoft didn't want to build computers. They wanted to be the brains inside every computer, regardless of who built the shell.
Third, be ready to pivot. Microsoft has been through several near-death experiences and massive shifts in strategy. The company that was founded on April 4, 1975, bears little resemblance to the cloud and AI giant we see today. But the DNA—the obsession with being the platform—is exactly the same.
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Next Steps for Your Research
- Search for the 1978 Microsoft Staff Photo: It’s an iconic piece of tech history that shows how humble (and hairy) the beginnings really were.
- Read the "Open Letter to Hobbyists": It’s a fascinating look at the birth of software copyright and the tensions between hackers and businesses.
- Visit the Living Computers: Museum + Labs (if available): Seeing a working Altair 8800 in person puts the sheer difficulty of their early coding work into perspective.
- Compare the MS-DOS/IBM deal to modern AI partnerships: Look at how Microsoft’s current deal with OpenAI mirrors their early strategy with IBM—securing a seat at the table of the next big platform.