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Open Letter to Hobbyists

Open Letter to Hobbyists

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The Open Letter to Hobbyists was an open letter
Open letter
An open letter is a letter that is intended to be read by a wide audience, or a letter intended for an individual, but that is nonetheless widely distributed intentionally....

 written by Bill Gates
Bill Gates
William Henry "Bill" Gates III is an American business magnate, investor, philanthropist, and author. Gates is the former CEO and current chairman of Microsoft, the software company he founded with Paul Allen...

, the co-founder of Microsoft
Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions...

, to early personal computer
Personal computer
A personal computer is any general-purpose computer whose size, capabilities, and original sales price make it useful for individuals, and which is intended to be operated directly by an end-user with no intervening computer operator...

 hobbyists, in which Gates expresses dismay at the rampant copyright infringement
Copyright infringement
Copyright infringement is the unauthorized or prohibited use of works under copyright, infringing the copyright holder's exclusive rights, such as the right to reproduce or perform the copyrighted work, or to make derivative works.- "Piracy" :...

 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
Copyright infringement of software
Copyright infringement of software=The copyright infringement of software refers to several practices which involve the unauthorized copying of computer software. Copyright infringement of this kind varies globally...

 in effect discourages developers
Software developer
A software developer is a person concerned with facets of the software development process. Their work includes researching, designing, developing, and testing software. A software developer may take part in design, computer programming, or software project management...

 from investing time and money in creating high-quality software. He cited the unfairness of gaining the benefits of software authors' time, effort, and capital without paying them.

Altair BASIC

In December 1974 Bill Gates was a student at Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...

 and Paul Allen
Paul Allen
Paul Gardner Allen is an American business magnate, investor, and philanthropist. Allen co-founded Microsoft with Bill Gates...

 worked for Honeywell
Honeywell International, Inc. is a major conglomerate company that produces a variety of consumer products, engineering services, and aerospace systems for a wide variety of customers, from private consumers to major corporations and governments....

 in Boston when they saw the Altair 8800
Altair 8800
The MITS Altair 8800 was a microcomputer design from 1975 based on the Intel 8080 CPU and sold by mail order through advertisements in Popular Electronics, Radio-Electronics and other hobbyist magazines. The designers hoped to sell only a few hundred build-it-yourself kits to hobbyists, and were...

 computer in the January 1975 issue of Popular Electronics
Popular Electronics
Popular Electronics was an American magazine started by Ziff-Davis Publishing in October 1954 for electronics hobbyists and experimenters. It soon became the "World's Largest-Selling Electronics Magazine". The circulation was 240,151 in April 1957 and 400,000 by 1963. Ziff-Davis published Popular...

. They had written BASIC
BASIC is a family of general-purpose, high-level programming languages whose design philosophy emphasizes ease of use - the name is an acronym from Beginner's All-purpose Symbolic Instruction Code....

 language programs since their days at Lakeside School
Lakeside School
Lakeside School is a private/independent school located in the Haller Lake neighborhood at the north city limits of Seattle, Washington, USA, for grades 5–12....

 in Seattle and knew the Altair computer was powerful enough to support a BASIC
BASIC is a family of general-purpose, high-level programming languages whose design philosophy emphasizes ease of use - the name is an acronym from Beginner's All-purpose Symbolic Instruction Code....

 interpreter. They wanted to be the first to offer BASIC for the Altair computer and the software development tools they had previously created for their Intel 8008
Intel 8008
The Intel 8008 was an early byte-oriented microprocessor designed and manufactured by Intel and introduced in April 1972. It was an 8-bit CPU with an external 14-bit address bus that could address 16KB of memory...

 microprocessor based Traf-O-Data
Traf-O-Data was a partnership between Bill Gates, Paul Allen, and Paul Gilbert. The objective was to read the raw data from roadway traffic counters and create reports for traffic engineers...

 computer would give them a head start.

By early March, Paul Allen, Bill Gates, and Monte Davidoff
Monte Davidoff
Monte Davidoff is an American computer programmer. He graduated from Nicolet High School in Glendale, Wisconsin in 1974. He went on to Harvard University, where he majored in applied mathematics, the department at Harvard that, at the time, included computer science. He also worked at WHRB, the...

, another Harvard student, had created a BASIC interpreter that worked under simulation on a PDP-10
The PDP-10 was a mainframe computer family manufactured by Digital Equipment Corporation from the late 1960s on; the name stands for "Programmed Data Processor model 10". The first model was delivered in 1966...

 mainframe computer at Harvard. Allen and Gates had been in contact with Ed Roberts of MITS
Micro Instrumentation and Telemetry Systems
Micro Instrumentation and Telemetry Systems was an American electronics company founded in Albuquerque, New Mexico that began manufacturing electronic calculators in 1971 and personal computers in 1975. Ed Roberts and Forrest Mims founded MITS in December 1969 to produce miniaturized telemetry...

 and in March, 1975 Allen went to Albuquerque, New Mexico, to test the software on an actual machine. To both Paul Allen's and Ed Roberts's surprise the software worked.

MITS agreed to license the software from Allen and Gates. Paul Allen left his job at Honeywell and became the Vice President and Director of Software at MITS with a salary of $30,000 per year. Bill Gates was still a student at Harvard and just a contractor with MITS. The October 1975 company newsletter gives his title as "Software Specialist". On July 22, 1975 MITS signed the contract with Allen and Gates. They got $3000 at the signing and a royalty for each copy of BASIC sold; $30 for the 4K version, $35 for the 8K version and $60 for the expanded version. The contract had a cap of $180,000 and MITS got an exclusive worldwide license to the program for 10 years. MITS would supply the computer time necessary for development on a PDP-10 owned by the Albuquerque school district.

The April 1975 issue of MITS's Computer Notes had the banner headline "Altair Basic - Up and Running." The Altair 8800 computer was a breakeven sale for MITS. They needed to sell additional memory boards, I/O boards, and other options to make a profit. When purchased with two 4K memory boards and an I/O board the 8K BASIC was only $75. The initial standalone price for BASIC was $500.

MITS purchased a camper van and outfitted it with the complete product line. The "MITS-Mobile" team toured the United States giving seminars featuring the Altair Computer and Altair BASIC.

The Homebrew Computer Club
Homebrew Computer Club
The Homebrew Computer Club was an early computer hobbyist users' group in Silicon Valley, which met from March 5, 1975 to December 1986...

 was an early computer hobbyist club in Palo Alto, CA. At the first meeting in March, 1975 Steve Dompier gave an account of his visit to the MITS factory in Albuquerque where he attempted to pick up his order for one of everything. He left with a computer kit with only 256 bytes of memory. At the April 16, 1975 club meeting Dompier keyed in a small program that played the song "Fool on the Hill" on a nearby AM radio. In the July 1975 Computer Notes, Bill Gates described this as "the best demo program I've seen for the Altair…" Gates could not figure out how the computer could broadcast to the radio. (It was radio frequency interference or static controlled by the timing loops in the program.).

"Thieves" and "parasites"

The June 1975 Homebrew Computer Club Newsletter carried this item written by Fred Moore, Editor.

The MITS MOBILE came to Rickey's Hyatt House in Palo Alto June 5th & 6th. The room was packed (150+) with amateurs and experimenters eager to find out about this new electronic toy.

At the seminar, a paper tape
Punched tape
Punched tape or paper tape is an obsolete form of data storage, consisting of a long strip of paper in which holes are punched to store data...

 containing a pre-release version of Altair BASIC disappeared. The tape was given to Steve Dompier who passed it on to Dan Sokol who had access to a high speed tape punch. At the next Homebrew Computer Club meeting, 50 copies of Altair BASIC on paper tape appeared in a cardboard box.

MITS offered a complete Altair system with two MITS 4K Dynamic RAM boards, a serial interface board and Altair BASIC for $995. However the $264 MITS RAM boards were unreliable due to several component and design problems. An enterprising Homebrew Computer Club member, Robert Marsh, designed a 4K static memory that was plug-in compatible with the Altair 8800 and sold for $255. His company was Processor Technology
Processor Technology
Processor Technology Corporation was a microcomputer company founded by Bob Marsh and Gary Ingram in April 1975. Its best known product is the Sol-20 computer.-History:...

, one of the most successful Altair compatible board suppliers. Many Altair 8800 computer owners skipped the bundled package; purchased their memory boards from a third party supplier and used a "borrowed" copy of Altair BASIC.

Ed Roberts acknowledged the 4K Dynamic RAM board problems in the October 1975 Computer Notes. The price was reduced from $264 to $195 and existing purchasers got a $50 refund. The full price for 8K Altair BASIC was reduced to $200. Roberts declined a customer's request that MITS give BASIC to customers for free. He noted that MITS made a "$180,000 royalty commitment to Micro Soft." Roberts also wrote, "Anyone who is using a stolen copy of MITS BASIC should identify himself for what he is, a thief." Third party hardware suppliers drew this comment; "Recently a number of parasite companies have appeared."

The Processor Technology static RAM board drew more current than the MITS dynamic RAM board and two or three boards would tax the Altair 8800 power supply. Howard Fullmer began selling a power supply upgrade and named his company "Parasitic Engineering". Fullmer later helped define the industry standard for Altair compatible boards, the S-100 Bus standard.

The next year, 1976, would see many Altair bus computer clones such as the IMSAI 8080
IMSAI 8080
The IMSAI 8080 was an early microcomputer released in late 1975, based on the Intel 8080 and later 8085 and S-100 bus. It was a clone of its main competitor, the earlier MITS Altair 8800. The IMSAI is largely regarded as the first "clone" computer. The IMSAI machine ran a highly modified version of...

 and the Processor Technology Sol 20.

Open letter

"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. 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
Motorola 6800
The 6800 was an 8-bit microprocessor designed and first manufactured by Motorola in 1974. The MC6800 microprocessor was part of the M6800 Microcomputer System that also included serial and parallel interface ICs, RAM, ROM and other support chips...

. 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?

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.

In the letter Gates mentions they are writing APL for the 8080 and 6800 microprocessors. The APL programming language was in vogue with some computer scientists in the 1970s. The language uses a character set based on the Greek alphabet that required special terminals. Most hobbyist terminals did not display lower case letters much less Greek symbols. Gates was enamored with APL but Allen did not think they could sell this product. The interest in APL project faded and software was never written.


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. The future sales of BASIC for the Commodore PET
Commodore PET
The Commodore PET was a home/personal computer produced from 1977 by Commodore International...

, the Apple II
Apple II series
The Apple II series is a set of 8-bit home computers, one of the first highly successful mass-produced microcomputer products, designed primarily by Steve Wozniak, manufactured by Apple Computer and introduced in 1977 with the original Apple II...

, the Radio Shack TRS-80
TRS-80 was Tandy Corporation's desktop microcomputer model line, sold through Tandy's Radio Shack stores in the late 1970s and early 1980s. The first units, ordered unseen, were delivered in November 1977, and rolled out to the stores the third week of December. The line won popularity with...

 and others were all fixed-price contracts.

In early 1976 ads for its Apple I
Apple I
The original Apple Computer, also known retroactively as the Apple I, or Apple-1, is a personal computer released by the Apple Computer Company in 1976. They were designed and hand-built by Steve Wozniak. Wozniak's friend Steve Jobs had the idea of selling the computer...

 computer, Apple Inc made the claims that "our philosophy is to provide software for our machines free or at minimal cost" and "yes folks, Apple BASIC is Free"

Microsoft's software development was done on a DEC PDP-10
The PDP-10 was a mainframe computer family manufactured by Digital Equipment Corporation from the late 1960s on; the name stands for "Programmed Data Processor model 10". The first model was delivered in 1966...

 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. This was the $40,000 of computer time mentioned in the letter.

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?

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, and 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, but 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.
Jim Warren, Homebrew Computer Club Member and editor of Dr. Dobb's Journal
Dr. Dobb's Journal
Dr. Dobb's Journal was a monthly journal published in the United States by CMP Technology. It covered topics aimed at computer programmers. DDJ was the first regular periodical focused on microcomputer software, rather than hardware. It later became a monthly section within the periodical...

, wrote in the July 1976 ACM
Association for Computing Machinery
The Association for Computing Machinery is a learned society for computing. It was founded in 1947 as the world's first scientific and educational computing society. Its membership is more than 92,000 as of 2009...

 Programming Language newsletter about the successful Tiny BASIC
Tiny BASIC is a dialect of the BASIC programming language that can fit into as little as 2 or 3 KB of memory. This small size made it invaluable in the early days of microcomputers , when typical memory size was only 4–8 KB.- History :...

 project. The goal was to create BASIC language interpreters for microprocessor based computers. The project had started in late 1975 but the "Open Letter" motivated many hobbyists to participate. Computer clubs and individuals from all parts of the United States and the world soon created Tiny BASIC interpreters for the Intel 8080
Intel 8080
The Intel 8080 was the second 8-bit microprocessor designed and manufactured by Intel and was released in April 1974. It was an extended and enhanced variant of the earlier 8008 design, although without binary compatibility...

, the Motorola 6800
Motorola 6800
The 6800 was an 8-bit microprocessor designed and first manufactured by Motorola in 1974. The MC6800 microprocessor was part of the M6800 Microcomputer System that also included serial and parallel interface ICs, RAM, ROM and other support chips...

 and MOS Technology 6502
MOS Technology 6502
The MOS Technology 6502 is an 8-bit microprocessor that was designed by Chuck Peddle and Bill Mensch for MOS Technology in 1975. When it was introduced, it was the least expensive full-featured microprocessor on the market by a considerable margin, costing less than one-sixth the price of...

 processors. The assembly language source code was published or the software was sold for five or ten dollars.

Magazines that published the letter

Several responses to the letter were published, including one from Bill Gates.
Editor Art Childs writes about the letter he received from the "author of Altair Basic" and the resulting controversy on propriety software. Jim Warren, the editor of Dr. Dobbs Journal, describes how the Tiny BASIC
Tiny BASIC is a dialect of the BASIC programming language that can fit into as little as 2 or 3 KB of memory. This small size made it invaluable in the early days of microcomputers , when typical memory size was only 4–8 KB.- History :...

project is an alternative to hobbyist "ripping off" software. An article on software copyright law that discusses the "Open Letter to Hobbyists".

External links