Bill Gates writes "Open Letter to Hobbyists"

The Open Letter to Hobbyists was an open letter written by Bill Gates, the co-founder of Microsoft, to early personal computer hobbyists, in which Gates expresses dismay at the rampant copyright infringement taking place in the hobbyist community, particularly with regard to his company's software.
In the letter, Gates expressed frustration with most computer hobbyists who were using his company's Altair BASIC software without having paid for it. He asserted that such widespread unauthorized copying in effect discourages developers from investing time and money into creating quality software. He cited the unfairness of gaining the benefits of software authors' time, effort, and capital, without paying that author anything.

"Micro-Soft" received a $30 to $60 royalty for each copy of BASIC that MITS sold. At the end of 1975, MITS was shipping a thousand computers a month but BASIC was selling in the low hundreds.[17] There were additional software projects that required more resources. The MITS 8-inch floppy disk system was about to be released as was the MITS 680B computer based on the Motorola 6800. A high school friend of Allen and Gates, Ric Weiland, was hired to convert the 8080 BASIC to the 6800 microprocessor. Gates would attempt to explain the cost of developing software to hobbyist community.
David Bunnell, Computer Notes Editor, was sympathetic to Gates's position. He wrote in the September 1975 issue that "customers have been ripping off MITS software".
Now I ask you--does a musician have the right to collect the royalty on the sale of his records or does a writer have the right to collect the royalty on the sale of his books? Are people who copy software any different than those who copy records and books?[18]
Gates' letter restated what Bunnell wrote in September and Roberts wrote in October. However, the tone of his letter was those hobbyists were stealing from him, not from a corporation.
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?
One of the principal targets of the letter was the Homebrew Computer Club and a copy would be sent to the club. The letter would also appear in Computer Notes. To ensure the letter would be noticed, Dave Bunnell sent the letter via special delivery mail to every major computer publication in the country.

The letter was noticed and the reaction was strong. Many felt the software should be bundled with the machine and the current distribution method was Gates' problem. Others questioned the cost of developing software.
Microsoft had already addressed the royalty issue; MITS would pay a fixed price, $31,200, for a non exclusive license for the 6800 BASIC.[20] The future sales of BASIC for the Commodore PET, the Apple II, the Radio Shack TRS-80 and others were all fixed price contracts.
Microsoft's software development was done on a DEC PDP-10 mainframe computer system. Paul Allen had developed a program that could completely simulate a new microprocessor system. This allowed them to write and debug software before the new computer hardware was complete. They were charged by the hour and by the amount of resources used (storage, printing, etc.) The 6800 BASIC was complete before the Altair 680B was finished.[21] This was the $40,000 of computer time.
Hal Singer of the Micro-8 newsletter published an open letter to Ed Roberts of MITS. Hal pointed out that MITS promised a computer for $395 but the price for a working system was $1000. He suggested a class action law suit or a Federal Trade Commission investigation into false advertising was in order. Hal also noted that rumors were circulating that Bill Gates developed BASIC on a Harvard University computer that was funded by the US government. Why should customers pay for software already paid for by the taxpayer?[22]
Bill Gates, Paul Allen, and Monte Davidoff did use a PDP-10 at Harvard's Aiken Computer Center. The computer system was funded by the Department of Defense through its Defense Advanced Research Projects Agency. The computer was delivered in the middle of the night in 1969 at the height of the Vietnam War protests. Harvard officials were not pleased that Gates and Allen (who was not a student) had used the PDP-10 to develop a commercial product. They determined that this military computer was not covered by any Harvard policy. The PDP-10 was controlled by Professor Thomas Cheatham who felt that students could use the machine for personal use. Harvard placed restrictions on the computer's use and Gates had to use a commercial time share computer until MITS provided access to a PDP-10 in Albuquerque.

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 that $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 resell 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 meetings they show up at.

I would appreciate letters from any who wants to pay up, or has a suggestion or comment. Nothing would please me more than being able to hire ten programmers and deluge the hobby market with good software.

/s/ Bill Gates

General Partner


1180 Alvarado SE, #14

Albuquerque, NM 87108