Bill Gates’ 1976 Open Letter to Hobbyists

A small historical insight about how it all started. In faraway 70’s, when computers were still big and expensive, a concept of small, lightweight and affordable personal computer was yet to gain widespread use and recognition. It was at that time that first microcomputers started to appear, Altair 8800 being one of them.

In mid-’70s William Gates III, today a biggest figure in software industry and longtime richest man on the planet, was student at Harvard University, where he and his mate Paul Allen spent longtime, practicing and perfecting their programming skills on DEC PDP-10 – one of those early big machines called mainframe that only big companies and big educational institutions could afford. So in 1975 those 2 guys spotted a magazine article about Altair 8800 – one of the first successful microcomputers, initially created to be sold in hobbyist kits “assemble it yourself”.

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The two then had an idea of being the first in creating a BASIC interpreter for this PC, so that users could write software in Basic – easy to use programming language, but they didn’t have that nice and small machine at Harvard, they only had access to a small-room sized DEC PDP-10. Ed Roberts from MITS, producer of Altair 8800 then received a letter from Traf-O-Data, asking him if he would be interested to buy their BASIC interpreter for his Altair computer.

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That interested MITS boss and he called the company to ask for a software demo at MITS headquarters. Instead of Traf-O-Data, he reached a private home 🙂 In fact two young but perspicacious entrepreneurs sent that letter from Boston area and they had no Basic to offer. But Bill managed to implement their idea on PDP-10 very quickly, using Altair simulator made by Paul, running on PDP-10 – a program that simulates behavior of another PC, so that you could write and run programs for the simulated machine, even though you don’t actually have it. So one month later, after that phone call, Paul Allen flew to Albuquerque, New Mexico, to MITS, to test Bill’s software on an actual machine. Surprisingly enough, the software worked! Paul Allen was then offered a paid position “Director of Development” at MITS that he accepted, in his turn Bill Gates was awarded a “Software Specialist” position. At that time 20 years old Bill was still student at Harvard. MITS offered them both a contract, to sale bundled copy of their BASIC with the Altair 8800 microcomputer for some small price, while sold separately it costed way more to purchase. The two agreed, Bill then quitted his degree at Harvard, to work fulltime at their newly formed partnership that was spelled at that time as “Micro-Soft”.

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It worked out well for both, Microsoft BASIC was a huge success among hobbyists, Bill and Paul had their royalties for each and every copy of their BASIC sold. Altair microcomputer enjoyed good sales, but sales of BASIC wasn’t that good. Meanwhile Gates hired a new developer, as he needed more resources to extend Microsoft product line.

Actually an early copy of BASIC interpreter had leaked into the community and was being widely “borrowed” = copied from one computer hobbyist to another. Bill was highly unhappy with that fact, so he wrote and published his famous open letter destined to those unfair people:

 

By William Henry Gates III
February 3, 1976

An Open Letter to Hobbyists

To me, the most critical thing in the hobby market right now is the lack of good software courses, books and software itself. Without good software and an owner who understands programming, a hobby computer is wasted. Will quality software be written for the hobby market?

Almost a year ago, Paul Allen and myself, expecting the hobby market to expand, hired Monte Davidoff and developed Altair BASIC. Though the initial work took only two months, the three of us have spent most of the last year documenting, improving and adding features to BASIC. Now we have 4K, 8K, EXTENDED, ROM and DISK BASIC. The value of the computer time we have used exceeds $40,000.

The feedback we have gotten from the hundreds of people who say they are using BASIC has all been positive. Two surprising things are apparent, however, 1) Most of these “users” never bought BASIC (less than 10% of all Altair owners have bought BASIC), and 2) The amount of royalties we have received from sales to hobbyists makes the time spent on Altair BASIC worth less than $2 an hour.

Why is this? As the majority of hobbyists must be aware, most of you steal your software. Hardware must be paid for, but software is something to share. Who cares if the people who worked on it get paid?

Is this fair? One thing you don’t do by stealing software is get back at MITS for some problem you may have had. MITS doesn’t make money selling software. The royalty paid to us, the manual, the tape and the overhead make it a break-even operation. One thing you do do is prevent good software from being written. Who can afford to do professional work for nothing? What hobbyist can put 3-man years into programming, finding all bugs, documenting his product and distribute for free? The fact is, no one besides us has invested a lot of money in hobby software. We have written 6800 BASIC, and are writing 8080 APL and 6800 APL, but there is very little incentive to make this software available to hobbyists. Most directly, the thing you do is theft.

What about the guys who re-sell Altair BASIC, aren’t they making money on hobby software? Yes, but those who have been reported to us may lose in the end. They are the ones who give hobbyists a bad name, and should be kicked out of any club meeting they show up at.

I would appreciate letters from any one who wants to pay up, or has a suggestion or comment. Just write to me at 1180 Alvarado SE, #114, Albuquerque, New Mexico, 87108. Nothing would please me more than being able to hire ten programmers and deluge the hobby market with good software.

Bill Gates

General Partner, Micro-Soft

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