In order to understand how the relationship between Apple and Microsoft developed, we have to travel back to 1976, the year Apple was founded. The Apple I was released in early April of that year and Steve Wozniak built it around the idea that it would run a custom version of Microsoft’s BASIC operating system. When the Apple I system was phased out in September of that year and development on the Apple II began, Microsoft caught wind of it and asked Apple if they wanted to license a more full featured version of BASIC. Steve Jobs declined, as they were happy with their version of the operating system Wozniak wrote. But when they showed off the Apple II at the West Coast Computer Faire in April 1977, they were overwhelmed with complaints since their operating system didn’t have floating-point, which basically means the machine didn’t understand numbers below −32,768 or any numbers above 32,767. As trivial as this might sound for consumer-level apps, it became a big problem as businesses began using computers for accounting and couldn’t use the machines to process any sizable numbers. After Apple heard all these complaints, they ultimately licensed Microsoft’s BASIC software for a flat rate of $31,000, or around $130,000 in today’s money. This license, which ultimately created an operating system called AppleSoft BASIC, actually saved Microsoft from near bankruptcy. Microsoft had previously licensed BASIC to Commodore for their PET system and ended up loosing a ton of money on the agreement. But the Apple II was a run away hit, with over six million units sold over its 16 year run on the market.
