This is one of the more suprising myths. Most Microsoft software has been aimed at the corporate market and is shockingly over-priced - that is why Microsoft and Gates have become staggeringly rich, after all.

This first graph's red line shows the retail price of Microsoft's operating systems, starting at 29 ($40) for DOS 1.0 in 1981, rising to around 150 ($225) in the early 1990's and declining to 100 ($150) for the disastrous Windows 8.1 in 2015. The blue line is the price of a typical desktop PC (including the usual compulsory pre-loaded Microsoft operating system), and the yellow line is the percentage of the PC price which goes to Microsoft. For the latter I have assumed that the price of the pre-loaded operating system is half the retail price; this varies with the deal and is always secret, but a half is thought to be typical.

The price of Microsoft's operating systems has increased by a factor of 4 between 1981 and the present, while PC prices fell by a similar factor even though the price included that operating system. This is despite the fact that the market today is orders of magnitude larger than it was in 1981, and the cost to Microsoft of producing every additional copy of Windows today is zero, apart from the administration of collecting the licence fee.

The period when home computing became affordable was the 1980's and a computer had arrived on "every" office desk by the early 1990's. Far from making (or even helping to make) personal computers affordable, Microsoft's price increased fivefold during that decade. Of course, their systems were becoming more sophisticated, with Windows being loaded on top of DOS, but so was the hardware. The 1981 IBM PC did not even have a hard drive.

This next graph shows the prices (in dollars) of some word processors, the most widely used application software before the rise of the Internet :-

This shows a very different trend from that of Microsoft's operating systems. Microsoft Word was the second most expensive word processor until 1990. and then prices fell steeply more like the prices of PC hardware in the first graph. Some have claimed that this price drop was to Microsoft's credit, but there is no evidence for that here; on the contrary Microsoft lags the drop. The real reason is simpler - there was competition. As a footnote to the graph, in January 2015 a single-user copy of Microsoft Word costs 110 ($167) in the UK, so the price has crept up again. This is because Microsoft have by now established their Office software as a monopoly in the business world.

The graph above is for business word processors for IBM compatible PCs, but the early non-Microsoft micros had far cheaper word processors or text editors for home users - adequate for writing letters and their "Book". The Amstrad PCW of 1985 cost 400 ($600) in 1985 and came with a fairly decent word processor called Locoscript; the price also included the machine itself, the CP/M operating system, and a printer. For the IBM PC, WordPerfect allowed installation on a home computer free of charge if the user had a copy at work; a total contrast to Microsoft's grimly venal attitude.

Software is an unusual product in that the cost to the maker is almost entirely in the first copy. It can cost millions or billions to make the first copy, but subsequent copies cost little or nothing. In the 1980's it was still not a sure thing that personal computers would take off in the business world, so makers of business software pitched their prices to cover their development expenditure based on pessimistic sales estimates. By the early 1990's however it was evident that the PC market was becoming massive, so unit prices could reduce, in competiton with rivals. It was not Gates who enabled this, it is natural economics, and where Gates had no competition he did not reduce his price. Whatever software had been adopted for the PC, whether DOS, CP/M or Unix based, its price would have dropped in this way, as long as there was no monopoly.

There is another reason for the fall in software prices : the makers ceased providing comprehensive paper manuals. Originally, software such as operating systems and word processors came in heavy-duty boxes with perhaps a dozen floppy disks and manuals of a thousand pages or more, often in quality ring binders; all expensive to provide. By the mid 1990's this had declined to a thin booklet and a CD. One buyer of Windows 95 complained that the manual was "thinner than a copy of Hello! magazine".

So far we have discussed only software, which is Microsoft's area, but the overwhelming reason that personal computers became affordable was the drop in hardware prices. It is difficult to make comparisons over the years because the power of personal computers has increased by orders of magnitude; but even neglecting both that factor and monetary inflation, the drop in prices has been spectacular. The Hewlett Packard 9825A of 1976 cost 3900 ($5900), and the original IBM PC of 1981 cost 1030 ($1565). However by the mid 1980's home computing was already "affordable" and thriving away from Gates' involvement : for example the Amstrad CPC464 was launched in 1984 for 250 ($380) including Amstrad's own operating system, and the Sinclair Spectrum of 1982 was even cheaper at 125 ($190) (without a monitor).

This was while IBM and clone PCs with Microsoft's DOS still cost more than 1000 ($1500) - corporate prices aimed at the corporate market and even there only a few users had them yet. The real price drops for IBM PC clones, leading to their mass adoption (and the demise of non-IBM compatible micros), came in the early 1990's when hardware manufacture largely moved to the Far East, which had nothing to do with Gates.