"I don't think it's that significant." - Tandy president John Roach on IBM's entry into the microcomputer field
On August 12, 1981, IBM introduced its new revolution in a box, the "Personal Computer" complete with a brand new operating system from Microsoft and a 16-bit computer operating system called MS-DOS 1.0.
Operating System : /n./ [techspeak] (Often abbreviated `OS') The foundation software of a machine, of course; that which schedules tasks, allocates storage, and presents a default interface to the user between applications. The facilities an operating system provides and its general design philosophy exert an extremely strong influence on programming style and on the technical cultures that grow up around its host machines. - The Jargon Dictionary*
In 1980, IBM first approached Bill Gates and Microsoft, to discuss the state of home computers and Microsoft products. Gates gave IBM a few ideas on what would make a great home computer, among them to have Basic written into the ROM chip. Microsoft had already produced several versions of Basic for different computer system beginning with the Altair, so Gates was more than happy to write a version for IBM.
As for an operating system (OS) for the new computers, since Microsoft had never written an operating system before, Gates had suggested that IBM investigate an OS called CP/M (Control Program for Microcomputers), written by Gary Kildall of Digital Research. Kindall had his Ph.D. in computers and had written the most successful operating system of the time, selling over 600,000 copies of CP/M, his OS set the standard at that time.
IBM tried to contact Kildall for a meeting, executives met with Mrs. Kildall who refused to sign a non-disclosure agreement. IBM soon returned to Bill Gates and gave Microsoft the contract to write the new operating system, one that would eventually wipe Kildall's CP/M out of common use.
The "Microsoft Disk Operating System" or MS-DOS was based on QDOS, the "Quick and Dirty Operating System" written by Tim Paterson of Seattle Computer Products, for their prototype Intel 8086 based computer.
QDOS was based on Gary Kildall's CP/M, Paterson had bought a CP/M manual and used it as the basis to write his operating system in six weeks, QDOS was different enough from CP/M to be considered legal.
Microsoft bought the rights to QDOS for $50,000, keeping the IBM deal a secret from Seattle Computer Products.
Gates then talked IBM into letting Microsoft retain the rights, to market MS DOS separate from the IBM PC project, Gates proceeded to make a fortune from the licensing of MS-DOS.
In 1981, Tim Paterson quit Seattle Computer Products and found employment at Microsoft.