Micro Instrumentation Telemetry Systems, more commonly known as
MITS, will forever be remembered as the very first
personal computer company.
The company was founded in Albuquerque in 1968 as a mail order distributor of model airplane radio transmitters. In 1970, Ed Roberts, co-founder of the company, bought out his partners, and switched to selling unassembled calculators in kit form. Unfortunately, his timing couldn't have been worse. The calculator market collapsed shortly after when chip maker Texas Instruments entered the market, undercutting prices and flooding supply.
In a deal with the magazine Popular Electronics, MITS designed the first (successful) personal computer. The MITS Altair 8800 was the result, featured on the cover of the January 1975 issue of Popular Electronics. For $397, you got an unassembled computer with an Intel 8080 CPU, 256 bytes of memory, a bank of switches for input and a bank of lights for output. The computer was an immediate success that pulled MITS away from the brink of bankruptcy, but orders weren't filled in bulk until the summer of 1975. Even then, there were serious quality control problems, but the customers kept coming.
Bill Gates and Paul Allen read the Popular Electronics article, and immediately recognized the potential of the machine. At this point Gates was studying at Harvard, and Allen was working for Honeywell. They called up Ed Roberts and offered to write a BASIC interpreter for the machine. Roberts said he would buy the first BASIC to actually run on an Altair. Six weeks later, Gates and Allen flew to Albuquerque with their BASIC in hand. They had coded both a BASIC interpreter, but also a simulator on which to test it. Amazingly it worked; Gates and Allen made their first sale. They called their company Micro-Soft. Shortly after, Paul Allen was hired on as MITS Software Director.
MITS started selling Micro-Soft BASIC bundled with a 4K memory card (which BASIC required to run) in late 1975. As the Altair sales were taking off, a relatively unsuccessful Motorola 6800 based computer, called the Altair 680b, was added to the MITS product line.
By mid-1976, the market was flooded with 8080 computers from companies like IMSAI and Processor Technologies. Still plagued with quality control problems and with growing competition, Roberts decided to get out while ahead, and sold MITS to Pertec, a minicomputer peripheral company. In 1977, MITS was sold for $8 million in Pertec stock.
The Pertec deal assumed that BASIC was included, but Gates and Allen had other ideas. The case went to aribitration and Micro-Soft came out on top. With the MITS relationship severed, Gates and Allen moved their company from Albuquerque back to their native Washington.
After the Pertec deal, MITS was mismanaged into the ground. The suit-wearing Pertec managers chased all the talent away, and tried to run it like a minicomputer company. By 1980, MITS was gone, written off as a bad investment by Pertec.