Microsoft, formed in 1975, is a portmanteau of the microprocessor and software, a name created by founder Paul Allen. Speaking to Forbes magazine in 1995, Bill Gates and Allen said:
Gates: When we signed that first contract with MITS, we referred to ourselves as 'Paul Allen and Bill Gates doing business as Micro-Soft.' I don't remember why we spelled it with a hyphen and a capital 'S.' We put a credit line in the source code of our first product that said, 'Micro-Soft BASIC: Bill Gates wrote a lot of stuff; Paul Allen wrote some other stuff.''
Allen: We had talked about a lot of different names back in Boston, and at some point I said, 'Well, the totally obvious name would be Microsoft.'
Sources: Forbes magazine interview with Microsoft cofounders Bill Gates and Paul Allen: