You ask a very interesting question with many facets. People have written book about how Bill Gates became the richest man in the world. And every top rated Business School is still trying to accurately figure this out.
But a quick synopsis is that he had a combination of high intelligence, an uncanny business sense, very lucky timing, a little help from his mother, and pure ruthlessness.
Microsoft's rise to dominates as a corporation was quick in term of the business world but did not happen overnight. The whole story started when Bill Gates dropped out of Harvard to start his own software company. This is where the lucky timing came into play. Shortly after Gates' decision, IBM wanted to get into the personal computer market; however, they myopically did not see this as a major revenue stream. They only wanted to offer a competing product to Apple's personal computer. So, IBM, instead of building their own personal computer decided to make a PC based on an existing chip set and operating system. Right before this, in 1980, Bill Gates bought an operating system called QDOS (which ironically stood for Quick and Dirty Operating System) for $50,000, which he renamed DOS. This is where the help from his mother comes in. His mother was on the board of a few influential company including Berkshire Hathaway. His mother helped convince IBM to use her son's operating system, DOS, for their venture into the PC market.
This is what started Microsoft to empire, and Bill Gates to the wealthiest man on earth. This is where the uncanny business sense came into play. During the 80s and early 90s there were competitors to Microsoft's DOS. Somehow I do not know if anyone really knows how and why this happened, but an agreement was made that if you used an Intel chip based computer, you had to buy a DOS license, and of course each license meant money in the pocket of Bill Gates and Microsoft. This was the first step to Microsoft's dominance. Next, came the broken agreement with Apple computers. Bill Gates and Steve Jobs agreed that each would focus his company on the type of operating system each company offered. For Microsoft, it was a command line based OS; and for Apple that was the graphical based OS. Microsoft wanted this because at the time Apple was planning to port their OS to the PC platform. Of course, everyone knows a graphical user interface based OS is easier to use than a command line based OS. That is why there really are no command line base operating systems anymore, everyone uses either Windows, Mac OS X, or Linux.
Next came the pure ruthlessness. In the early 90s before the rise of the Internet, the PC market was becoming more and more valuable and money being made in the PC business passed all other computer segments. As the PC market grew Microsoft's and hence Bill Gates' wealth also grew. At this time, Microsoft launched a new produced called Windows, which was almost a clone of Apple's original Mac OS. This chipped away even more from Apple's dwindling market share; and, of course added to Microsoft's. The near universal adoption of Windows led to Microsoft's next growth phase. Domination of the Windows Application market (Applications are products like Word, Excel, and Internet Explorer).
This was done by what many call underhanded sneaky practices, and some may say these comments are unfounded. First, I have to give you a little background on how you write applications for a computer. In order to work properly, the code you write to build an application has to interact with operating system that runs your computer. The interaction is done through what is called an API (Application Programming Interface). This is a set of instructions that an operation system's builder (in this case Microsoft) provides to you that tells you what commands to issue to the operating system to get your application to do what you want it to do. Supposedly, Microsoft did two things. First, they published two different Windows API sets. One for the non-Microsoft software companies, and one for Microsoft software developers. The API given to external companies was an incomplete set and purposely had instructions that would run slower than the same ones provided in Microsoft software developers' API set. The other thing Microsoft did was provide the API to its own developers first, before giving other companies theirs. This gave Microsoft a head start to release new products and new version of products faster. And using the better API allowed Microsoft to deliver software applications that worked better than their competitors. Which in the end allowed products like Word, Excel, and Power Point to outsell and eventually put out of business their respective competitors
Once Microsoft had firm control of the PC operating system market and the PC application market, they shifted their focus to the rising Internet market. Back in the early days of the Internet Netscape was the dominate player in the Internet content delivery market. Microsoft wanted to change that. They tried one of their old tricks by attempting to get Netscape to agree to make their browser only for UNIX based computers (at the time these where not PCs) and allow Microsoft to develop a browser for Windows based machines; however, Netscape would not go for it. Microsoft then did what finally brought down the wrath of the Federal Government. They merger their own browser, Internet Explorer, into the Windows operating system. They hoped that people would not bother to download Netscape, and just use Internet Explorer since it was already available as part of the OS. They were right, that is exactly what happened and they captured the Internet content delivery market as well. They were sued by Netscape, Sun, and others; and Microsoft lost each case, in turn. However, nothing really came of it.
And that brings us to today, where Bill Gates is the richest man in the world. He essentially made his money my dominating a small market segment, the PC market, this small market eventually grew into a very large market. When the market grew and his dominance of the market grew his wealth also grew.
Answered By: Amp - 9/14/2006