QDOS, the "Quick and Dirty Operating System," was a simple 16-bit operating system originally written in just four months by Tim Paterson for an Intel 8086-based computer kit sold by Seattle Computer Products, which became famous as a part of one of the greatest legends in computer folklore. QDOS was a 16-bit clone of the CP/M operating system, the most popular 8-bit operating system of the 1970s and early 1980s. QDOS was created because sales for the Intel 8086 computer kit were languishing due to delays in developing CP/M-86, a version of CP/M that would run on that system. QDOS was developed quickly, but it lacked many features of CP/M. It was marketed as SCP-DOS.
In late 1980, IBM was developing what would become the original IBM Personal Computer. CP/M was by far the most popular operating system in use at the time, and IBM felt it needed CP/M in order to compete. There are at least two rumors about why IBM ended up licensing QDOS instead of CP/M.
One story is that Gary Kildall, of Digital Research and creator of CP/M (and subsequently DR-DOS) simply refused to answer the door when representatives from IBM rang his doorbell. However, the most prevalent story, and the one relayed by Bill Gates, is that when IBM approached Gary Kildall, author of CP/M, for a license, Kildall kept the IBM executives waiting for hours while he went flying in his airplane. He missed one of the great opportunities of the century when IBM then turned to Microsoft, who was already supplying a version of the BASIC computer language, to provide an operating system.
Neither story is generally accepted as true. By many accounts, Kildall did not handle business negotiations and left that to his former wife, Dorothy McEwen and his attorney, neither of whom was willing to sign IBM's nondisclosure agreement. In addition, they refused to modify CP/M-86, and insisted on a higher royalty than IBM proposed. As a result, IBM turned to Microsoft, who had licensed SCP-DOS and hired Tim Paterson to port it to the IBM-PC, which was now using the slower and more cost-efficient Intel 8088 processor. IBM fixed over 300 bugs in the sample version, and wrote the user manual for it.
QDOS met IBM's main criteria: It looked like CP/M, and it was easy to adapt existing 8-bit CP/M programs to run under it. Microsoft licensed QDOS to IBM, and it became PC-DOS 1.0. This license also permitted Microsoft to sell DOS to other companies, which it did.
When IBM released DOS, it sold for $60 USD, and was much more attractively priced than the $240 USD CP/M. Digital Research considered suing Microsoft, since DOS replicated nearly all of the CP/M system calls, program structure, and user interface, but decided against it. Digital Research realized that they would have to also sue IBM, and decided that they were not have the resources to sue a company of that size, and would not likely win.
By 1982, when IBM asked Microsoft to release a version of DOS that was compatible with a hard disk, Microsoft extesnsibly rewrote DOS to the extent that Digital Research had lost their opportunity to sue. PC-DOS 2.0 was an almost complete rewrite of DOS, so by March 1983, very little of QDOS remained. The most enduring element of QDOS was its primitive line editor, EDLIN, which remained the only editor supplied with Microsoft versions of DOS until the release of MS-DOS 5.0 in June 1991.
Since Microsoft was a CP/M subcontractor—Microsoft sold a plug-in Z80 board that made the Apple II capable of running CP/M—IBM asked if they could subcontract CP/M for the IBM PC. Microsoft's contract would not permit it. However, Microsoft was acquainted with Paterson, and purchased a nonexclusive license for QDOS—by then being marketed under the name 86-DOS—from Seattle Computer Products in April 1981 for $25,000. In July 1981, Microsoft purchased all rights to the operating system for $50,000.