There were of course computers long before 1974 but these were very large and expensive and only used by governments and industry with only employees being allowed to use them for work purposes. Computer time was very expensive back then, so there was a great demand for a cheap personal computer that people could just use for playing about on. One American company in Albuquerque, New Mexico satisfied this demand. It was called MITS which stood for Micro Instrumentation Telemetry Systems. The company had been started by Ed Roberts and a couple of friends, who received his electronics training in the American Air Force. They had started by selling mail-order radio transmitters for model aeroplanes and then went on to selling kits for calculators. But then in 1972 Texas Instruments developed a microchip that allowed built calculators to be sold for half the price of the kits.
So MITS was desperately looking around for something to replace their calculator kits before they went bankrupt. Ed Roberts friend Les Soloman was looking for a personal computer to promote so Ed decided to try and design and build a computer kit that he could sell for under $500 but which could be easily upgraded, with individual circuit boards for specific purposes that could communicate internally. In essence, it should mimic a large mainframe in miniature. The name finally decided upon for the computer came from Soloman's 12-year-old daughter, Lauren. He asked here 'What's the name of the computer in Star Trek'. The answer was unfortunately 'Computer' so she suggested Altair instead, which was the destination for the Star Ship Enterprise during an episode of Star Trek that she was watching.
An article about the MITS Altair personal computer was published in the January 1975 issue of Popular Electronics described it as the "World's First Minicomputer Kit to Rival Commercial Models." This generated an incredible number of orders which the company had difficulty dealing with. Thousands of hobbyists wanted their own computer, and they could afford it at under $500 each. One guy even camped out in his camper van outside the factory for three days waiting for his kit. The computer couldn't actually do very much it was just a box with a CPU card containing an Intel 8080 processor (8-bit), 256 bytes of memory, and a toggle-switch-and-LED front panel. This was the bare minimum in order to get as many orders out as possible. The 8080 processor sold to industry for over $500 alone but Ed got a special deal on them from Intel where he bought cosmetically damaged chips cheap. The computer was no screen, no keyboard, and no software programs. To put any data in it required manipulating the switches on the front one at a time for every binary digit. The promised peripherals were not delivered with the original order.
Many kits didn't work as people didn't know how to construct them properly. But some did and hobbyists were soon writing programs for the Altair, this further stimulated the new personal computer market and new companies started bringing out their own computers.
Albuquerque at this time was the centre of the computer industry as it was the state capital of New Mexico where the Los Alamos nuclear research laboratory was which invented the Nuclear Bomb during the Second World War. Albuquerque is in fact the oldest start capital in the United States founded by the Spanish on the Rio Grande river. Computers were vital to nuclear research as scientific theories tend to require a lot of computational power. Before the first A-Bomb was tested no one knew whether the nuclear chain reaction would die out or continue and consume the entire atmosphere. As each atom hit by a particle releases 3 more particles which can hit other atoms it is theoretically possible that the chain reaction could have gone on unstopped, but luckily it loses momentum. So the scientists had to be absolutely sure their calculations were correct before they tested the bomb.
Two programmers in Boston, Paul Allen and Bill Gates (co-founders of Microsoft) saw the advert for the Altair computer and offered to write a BASIC program for it. BASIC stands for beginners all purpose symbolic instruction code and is a simple programming language which was developed in Dartmouth naval college, New England. They didn't actually have an Altair so simulated one on a mainframe computer in Boston, amazingly when they sent of the program after only six weeks it worked first time although it didn't do much. Input was feed in through a paper tape reader, Ed had found a cheap second hand supplier of these to add to his kit. So Ed offered Allen the position of Director of Software at MITS. Allen took the job, even though it turned out he was not only the director but the whole software department. Gates went back to school, but later in 1975, he also moved to Albuquerque to work part time writing MITS programs. Gates would later go on to write his disk operating system MSDOS which he converted from a programmer in Seattle, who original called it QDOS for Quick and Dirty Operating System, so the D in MSDOS really stands for Dirty.
Gates is now the richest man in the world, he or the Sultan of Brunei depending on the gas/oil price and stock market fluctuations. Of course most of his money is tied up in Microsoft stock options which he won't sell as he would loss control of the company. Gates made his fortune more through luck than planing, he offered his MSDOS program to IBM who said they wouldn't buy it but would pay a royalty on ever copy sold, probably the worst business deal of the century from IBM's stand point. Other PC manufacturers had to follow suit and as virtually every computer uses a Microsoft Operating System and people are continually buying newer models for which they have to buy the Operation System again that adds up to a lot of money. All Gates wanted to do in the first place was sell his BASIC language to IBM but they wouldn't buy it without an operating system which he had to hastily add. Paul Allen is one of the top ten richest men in the world and has even got the London Science museum to build a copy of Babbage's Arithmetic Engine which he keeps in his house.
Soon people began to realise how limited the Altair was with only 256 bytes of memory and having to program using switches. So add-ons were brought out to give it the 4096 bytes (4k) of memory which was required to run BASIC. A revolutionary disk drive was used also used for data storage leap-frogging the audio tape method of storage but greatly increasing the cost. The 4k boards didn't work well so a company called Processor Technology started making and selling ones that did work in April, 1975. Unfortunately MITS would only sell BASIC with their faulty 4k card so people started illegally copying it and used the other better 4k cards. This is probably the first case of software piracy. MITS lost out as it didn't sell the card or the program. Soon other companies were making their own computer kits after noticing how successful MITS had been, competed them with better and cheaper models. Notable examples are Apple and Commodore. Their was also a legal battle over who owned the rights to BASIC, Gates won.