An Open Letter to Hobbyists
He cited the unfairness of gaining the benefits of software authors' time, effort, and capital without paying them as a rationale for refusing to publish the source code for his company's flagship product, thereby making it unavailable to lower-income hobbyists who could have borrowed such program blueprints from their local library and entered the program into their hobby computer by data entry.
In December 1974, Gates, a student at Harvard University, alongside Microsoft co-founder Paul Allen, who worked at Honeywell in Boston, both saw the Altair 8800 computer in the January 1975 issue of Popular Electronics for the first time.
Allen left his job at Honeywell, and became the Vice President and Director of Software at MITS with a salary of $30,000 (equivalent to $169,870 in 2023) a year;[b][4] Gates remained a student at Harvard, and worked under MITS as a contractor instead, with the October 1975 company newsletter giving his title at the company as "Software Specialist".
At the first meeting in March 1975, Steve Dompier gave an account of his visit to the MITS factory in Albuquerque, where he had attempted to pick up his order for one of everything.
At the next Homebrew Computer Club meeting, 50 copies of Altair BASIC on paper tape appeared in a cardboard box.
An enterprising Homebrew Computer Club member, Robert Marsh, designed a 4K static memory that was plug-in compatible with the Altair 8800, and sold it for $255.
The price was reduced from $264 to $195, and existing purchasers got a $50 rebate; the full price for 8K Altair BASIC was reduced to $200, though Roberts declined a customer's request that MITS give BASIC to customers for free, noting that MITS had made a "$180,000 royalty commitment to Micro Soft".
Roberts also wrote that "Anyone who is using a stolen copy of MITS BASIC should identify himself for what he is, a thief", and described third-party hardware suppliers as "parasite companies".
As a consequence, Howard Fullmer began selling a power supply upgrade for the Altair, naming his company Parasitic Engineering as a nod to Roberts' comments.
Though Gates was enamored with APL, Allen did not believe it could be sold as a product; interest in the project soon faded, and the software itself was never completed.
[21] Following the difficulties with receiving piecemeal royalties, Microsoft switched to a fixed-priced contract with MITS, who would pay $31,200 for a non-exclusive license of 6800 BASIC.
The company was charged by the hour and by the amount of resources (such as storage and printing) used,[citation needed] the "$40,000 of computer time" mentioned in the letter.
[26] Hal Singer of the Micro-8 Newsletter published an open letter to Roberts, pointing out that MITS promised a computer for $395, but that the price for a working system was $1000.
Hal also noted that rumors were circulating that Gates had developed BASIC on a Harvard University computer funded by the US government, and that customers should not pay for software already paid for by the taxpayer.
[28] In 2008, Homebrew member Lee Felsenstein recalled similar doubts about Gates' $40,000 number: "Well, we all knew [that] the evaluation of computer time was the ultimate in funny money.
[29]There is a viable alternative to the problems raised by Bill Gates in his irate letter to computer hobbyists concerning "ripping off" software.
Jim Warren, Homebrew Computer Club Member and editor of Dr. Dobb's Journal, wrote in the July 1976 ACM Programming Language newsletter about the successful Tiny BASIC project.
Computer clubs and individuals from all parts of the United States and the world soon created Tiny BASIC interpreters for the Intel 8080, the Motorola 6800 and MOS Technology 6502 processors.
