Interesting to read an archived Aug. 22, 1985, NY Times story MICROSOFT AND I.B.M. JOIN FORCES. From the article: “The International Business Machines Corporation has agreed with the Microsoft Corporation, a key software supplier, to develop fundamental software for personal computers, the companies said today.”
But what is most interesting is this additional note about the deal:
“But Microsoft will be able to sell the jointly developed operating systems to other computer manufacturers, which should allay industry fears that I.B.M. would one day migrate to its own, proprietary operating system. That could have locked others in the industry out of the market and made it impossible for existing software to run on future I.B.M. computers.”
Microsoft, at the time a newer, much smaller company, managed to move the incumbent giant IBM to make a major concession and allow Microsoft to “sell the jointly developed operating systems to other computer manufacturers”.
As the original article noted it appears this was to “allay industry fears that I.B.M. would one day migrate to its own, proprietary operating system”. It was feared that this would have allowed IBM to lock competitors out of the PC market. Ironically, by the 1990s that’s exactly what Microsoft, not IBM, was accused of doing.
There’s an interesting lesson in this story that a larger competitor, while having many potential tailwinds, may simultaneously be carrying a significant disadvantage. Being a new or small company can have its advantages.