Bill Gates and Paul Allen entered the computer software market almost by accident, and certainly without the strategic vision that is generally now ascribed to entrepreneurs. The pair were computer enthusiasts who knew each other from high school; Allen had worked for Honeywell while Gates attended Harvard. Playing with a small Altair computer intrigued the pair, and they set about writing BASIC, a simple programming language designed to bring computers into the homes of everyday Americans who were not necessarily technically-minded. Based on the success with Altair, the pair approached other companies in order to "bundle" their software with computers as the computers were sold, rather than selling to consumers directly. This strategy was designed to gain widespread acceptance for their product.
Gaining acceptance for BASIC and using that as a springboard to writing one of three operating systems for IBM's personal computer proved the company's most successful points during the early years. With IBM, Microsoft focused on gaining acceptance for its operating system at the expense of other operating systems, and their strategy worked to the point that the Microsoft operating system (MS-DOS) became the standard on which other computer makes based their systems.
If Gates and Allen had a better understanding of business principles, they might have done better in their first years. The pair suffered financial difficulties during a protracted legal battle, and having a better way to formulate pricing strategies might have enabled the company to assume a dominant role earlier in its history. In fact, hiring professionals instead of amateurs at key positions in the company might have fostered an even more powerful organization. Or the company might have become bogged down in traditional thinking, which would not have enabled it to achieve the success it did.
Today, the company exists in a very different environment than it di...