INNOVATION

The year was 1974. Fuel shortages had led to a new 55 mph national speed limit. Congress was preparing impeachment proceeding against President Nixon. U.S. troops had pulled out of Vietnam, but Saigon had not yet fallen. Digital Equipment Corp. had pushed its way into the Fortune 500 listing of the nation’s top companies as its powerful, popular new PDP minicomputers challenged the market dominance of IBM’s bulky, expensive mainframes. Bill Gates (at lower left in photo) was a freshman at Harvard. His friend and fellow software enthusiast, Paul Allen, had driven cross-country from Seattle to Boston to take a minicomputer programming job at Honeywell. They had been fascinated by computers since they first met at Lakeside School in Seattle. There, calling themselves the Lakeside Programming Group, they had agreed to help a local computer company with debugging PDP-10 software in exchange for access to its minicomputer. As they gained experience, Gates and Allen had written scheduling software for the school, a payroll program for a company in Portland, Oregon, and software for a traffic-count analysis machine, the Traf-O-Data, for the Washington State Department of Transportation.

One spring day in 1974, Gates and Allen looked in the latest edition of Electronics magazine and spotted an announcement of a new computer chip from Intel – the 8080. It was 10 times more powerful than Intel’s 8008 chip in the Traf-O-Data that they had just written software for. The new chip also cost less than $200. To the two friends, it seemed obvious that if a tiny chip could be so powerful, the end of big unwieldy computers was near.