Btukfyl

It is well-known that on a sunny day in 1980, when the IBM representatives came knocking on the door of Digital Research, Gary Kildall was still in the air on the way back from visiting another customer, which got the meeting off to a bad start. By the time he got there, his wife Dorothy had objected to signing the one-sided IBM nondisclosure agreement, which further displeased the blue-suited contingent. From the accounts I can find, the third strike came in a subsequent meeting when IBM wanted to purchase CP/M outright for a flat fee and DR insisted on royalties.

IBM subsequently licensed MS-DOS (nee QDOS) from Microsoft in a deal that involved royalty payments and a nonexclusive license; the latter aspect turned out to be consequential indeed. I find it interesting that they gave Microsoft better terms than they were willing to offer DR. Perhaps they liked Microsoft better, perhaps Microsoft being also the vendor of languages had more bargaining power, perhaps word came down from on high that the son of Mary Gates was due some slack, perhaps IBM just realized they were running out of time and options? I haven't been able to find any clear indication of why.

I am particularly curious though about exactly what deal DR was offered. The phrase 'purchase outright' could be taken as a proposed sale of CP/M in its entirety, but since it was essentially their only product, that would have amounted to a sale of the company, so that sounds unlikely. I'm guessing most likely it would've been the deal Commodore gave Microsoft for what became CBM BASIC 2.0: a perpetual nonexclusive royalty-free license for that particular version. But would it have allowed or involved IBM maintaining it themselves from that point on? Or would they have come back to buy future versions from DR? (Bill Gates hoped Commodore would do that; he didn't count on Jack Tramiel seeing too little value in software.)

And if it would indeed have been a nonexclusive license, does that mean history would have unfolded essentially as it did in our timeline, just with the PC clones running CP/M instead of MS-DOS?

So: what exactly were the terms that IBM offered and Digital Research turned down?

The sticking point: IBM wanted to pay a flat $200,000 license fee to
get a royalty-free license in perpetuity. Kildall wanted more.

Bill Gates came up with a similar operating system. He gave DOS away
to IBM for $50,000 and figured, correctly, that he could get rich by
licensing the system to other computer manufacturers.[1]

Now, earlier in the year Seattle Computer Products who produced an
8086 computer kit hired Tim Patterson to create an operating system to
run on their machine. Digital Research were slow in producing CP/M-86
and SCP thought it was hurting sales of their computer, so Tim wrote a
system with the look-and-feel of CP/M for the new machine and called
it the Quick and Dirty OS, QDOS. SCP started shipping QDOS in August
and they showed it to Microsoft in September when Microsoft modified
the BASIC for the machine. So, there right under Microsoft's nose was
an operating system just at the time when they needed one. In October
Paul Allen from Microsoft contacted SCP and for just $50,000 bought
the rights to sell QDOS, without telling SCP that it was for IBM.[2]

References:

[1] Young, J. (1997, July 7). Gary Kildall The DOS that wasn't. Retrieved from https://www.forbes.com/forbes/1997/0707/6001336a.html

[2] (1998, 1 August). A Short History of CP/M. Retrieved from http://landley.net/history/mirror/cpm/history.html

To my knowledge there was never an intention by IBM to 'purchase' CP/M. They planned the same deal as with any other package, OS, language or application, they acquired to be available under their brand at system introduction:

A single, non exclusive, one time license fee, independent of sales figures or time.

This strategy is quite understandable, considering that IBM wasn't sure about the success of the PC. A one time payment also did fit quite well IBMs internal project accounting structure, as it could be booked like a purchase .. one of the usual strange effects of a large company:))

For CP/M this almost was changed, as the OS was seen by IBM as a must as only machine independent OS within the capabilities of the PC, promising easy conversion of customers from other systems due compatibility. The often cited NDA was only a minor issue, and they where already about to give in, when Mr. Gates made his pitch. And the rest is history.