Microsoft-Paul Allen

Just to be clear, it wasn't that the CGA hadn't been designed and put into production by the launch of the PC, the demand for the CGA was simply overwhelming compared with the much lower demand and relatively greater supply of the MDA. Plus, IBM had no experience selling into retail, let alone non-business consumer channels, which had come to expect "high-resolution" color graphics built into a system (e.g., on the Apple ][ motherboard). There were all sorts of distribution mismatches for the PC where various package combinations were offered through various channels that had no relation to reality, demand-wise. They offered employee discounts thinking that the PC would need to be promoted from as many directions as possible, not realizing what kind of tiger they had by the tail. Its suppliers suddenly had to start a world-wide scramble just to meet the sudden increased demand for resistors, let alone color graphics video ICs. IBM wasn't even aware of the penetration of dial-up among consumers and very small businesses, or they would have initially offered modems, at least as options, if not in package combos. Retailers who understood the consumer and very small business markets quickly began offering modems in response to the vacuum that IBM had created. Another sign that IBM wasn't confident about the longevity of the PC is that they outsourced the development of its OS to Microsoft, believing that Microsoft owned CP/M because of an Apple ][ compatible product described in the next paragraph. A small business to IBM was much larger than the sizes of businesses that Apple was typically serving at that time. Many are unaware that the largest fraction of CP/M licenses ever sold were for the Microsoft Softcard for the Apple ][ (about 300,000 sold, all told), not S-100 systems (somewhere around 150,000 systems built by hobbyists, or sold by small manufacturers). The Softcard was a Z-80 based single-board computer that plugged into an Apple ][ slot, equipped with its own 80x24 character x line black-and-white video output, RAM, etc., and that shared Apple ][ electrical power and floppy disk drives. The Softcard was Microsoft's first really successful product, responsible for its first tens of millions of dollars in revenue and profits. The Softcard was developed by Seattle Computer Products, the same two-man company in a Seattle garage that later sold its prototype 8086/8088 OS to Microsoft for $50,000. Microsoft turned around within a day and sold it to IBM via a _non-exclusive_ license (a critical factor that allowed them to field MS-DOS, their self-branded version of IBM's PC-DOS), for $3 million _plus_ about $50 per computer sold with PC-DOS. That model, updated for Windows, is the cash cow that's still printing profits for Microsoft to this day.