
An open letter to hobbyists by Bill Gates (1976) - janogonzalez
http://cryptnet.net/mirrors/texts/gates1976.html
======
Ologn
Regarding the commercial BASIC project mentioned in this letter - Gates
facilitated non-student Allen coming onto the Harvard campus, to use a
computer they did not have permission to use for their commercial project. The
computer they were using without authorization was one which was being used by
the US military. Like Mark Zuckerberg in later years, Gates was called up
before the Harvard Ad board for this.

From Paul Allen's book "Idea Man" -

"Returning to Aiken late one night after a fast-food run, we were stopped by
the campus police and asked for our IDs...Harvard split the computer’s
maintenance costs with the U.S. Defense Department, based on usage. I’d relied
on Bill’s password account for my work on the simulator, which ate a lot of
processor time. When the January bills came due, Harvard’s share was up
conspicuously, with one student the prime culprit: William Henry Gates III.
(he appeared before the university’s administrative board that summer...)"

~~~
adventured
At the time of that letter, how much of their software being sold was
developed at Harvard? And did they specifically sell any software they
developed while at Harvard (and on Harvard's dime)?

Gates of course has given Harvard tens of millions of dollars. Harvard got an
amazing return on its computing bills.

------
pcunite
My software title "FileSearchEX" is so pirated that I can no longer continue
to work on it full time. Indeed, search engines show more "free crack here"
links than legitimate ones. Imagine going to the supermarket and having "free"
eggs next to the $5 carton ... which would you choose? I know what 90% of them
go with.

~~~
vidarh
While it sucks to not be able to work on it full time any more, it boggles my
mind that it'd be possible to earn enough from a tool like that to work on it
full time for any amount of time in the first place. Not meant as a criticism
of you - in fact if you've managed to do that, hats off, clearly you must have
done something right with it.

~~~
polemic
There always have been, and continue to be, people making perfectly good money
from this sort of software. I'm not sure why you're surprised, given that
people make profitable fart apps for phones, and that it is apparently
rational to bury people with money to run any number of fundamentally useless
startups.

~~~
zura
While we are at it, any advice of how to market such software? I mean, when
there is more or less saturated market.

Thanks!

------
belorn
_> "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?"_

Yes who can do professional interpreters for free. Guido van Rossum could not
possible put 3-man years into programming, finding all bugs, and document his
product for free.

This is after all what this letter is about. An interpreter for a programming
language, and the complain is about hobbyist and other non-commercial entities
using it without paying money for it.

~~~
wmf
I don't think anecdotes are that helpful at understanding Gates's message
here. Yes, today there are open source versions of pretty much all developer
tools (and that's something to celebrate, since I remember when a "cheap" C
compiler was $500). But there's still plenty of software that has no open
source equal; if we had a world where nobody paid for software, much of it
wouldn't have ever been written.

~~~
belorn
When looking back at letters like this, its important to be at least aware of
the context. I don't think ignoring the context of the letter is helpful at
all in understanding why it was written by Bill Gates.

Taken outside the context, one can surely have a discussion about how much
software would be made if developers can't use government help as basis for
their business model.

------
analog31
I think that in the long run, Microsoft profited from piracy. My rationale is
that piracy gave a market advantage to the OS with the widest selection of
"free" software. So long as folks could copy MS-DOS and Windows software from
their workplace, there was little incentive to consider any other OS.

~~~
ollysb
It also cemented their file formats as the industry standard. The network
effect is still strong even today.

~~~
morganherlocker
This cannot be understated. Different company and a smaller niche, but
proprietary file formats have plagued the GIS industry for decades. The most
widely used format (shapefile) is about as terrible as it gets as far as
functionality goes, but it is used everywhere. There has been a mounting
effort to persuade governments to use open formats for publishing data, but it
has been slow going.

------
bushido
From the letter:

*> 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."

I'll have to dig around but I recall reading a few articles about 60%+ windows
OS being pirated, this number is much lower in US and other developed markets,
but is as high as 93% in some[0].

[0] [http://www.nationmaster.com/graph/cri_sof_pir_rat-crime-
soft...](http://www.nationmaster.com/graph/cri_sof_pir_rat-crime-software-
piracy-rate)

edit: site seems to be unavailable. Link @ archive.org:

[https://web.archive.org/web/20100316174220/http://www.cryptn...](https://web.archive.org/web/20100316174220/http://www.cryptnet.net/mirrors/texts/gates1976.html)

~~~
bqpro1
But it is not about windows OS. In 1976 there were no windows OS. It's about
this:
[http://en.wikipedia.org/wiki/Altair_BASIC](http://en.wikipedia.org/wiki/Altair_BASIC)

~~~
bushido
I know.

Was just stating the problem that plagued them in 1976 is still persistent
today.

Though on re-reading my previous comment I can see that I was not clear on
that.

------
ds9
Why was Gates hectoring the hobbyists?

1\. The hobbyists had a culture of freely sharing code, which Gates was trying
to break up (now known as Linux, Github, C)

2\. Software was about 5 years away from Congress making software definitely
copyrightable in the US [1] (there had been some court decisions)

1\.
[https://en.wikipedia.org/wiki/Software_copyright](https://en.wikipedia.org/wiki/Software_copyright)

------
einhverfr
Fascinating write-up which puts the economics of proprietary vs open source in
full view. Gates was unhappy in the letter because it was hard to make money
charging license fees in arrears. In my business, I charge for a lot of
development up front.

The lesson I take away from this is that conventional software licensing,
while it addresses a legitimate need in some areas of software (the need to
diffuse development costs), means effectively not only shifting risk onto the
developer but increasing it by orders of magnitude. The sort of risk that one
has from investing in a feature for an open source project is far less than
the risk that a software house takes in building the next version, because
they take on all risk, centralize it, and then hope to make it back through
control. This doesn't reduce risk for the end user though by very much.

------
bqpro1
Bill Gates experienced in 76 what now is quite obvious: any content + computer
= unlimited number of copies.

~~~
goldenkey
Photocopiers and books never stopped authors. It's all about the packaging and
the full-service offered. A book is nice because it is bound, or comes with
extra goodies. If your software is just software, well, step up your sales
game.

------
JetSpiegel
"stealing" You keep using that word...

~~~
johnpmayer
Is there a better word for using non-free software without a license?

~~~
maxk42
You're only losing opportunity cost. Not COGS. Meanwhile, the user who is
pirating your software might be someone for whom the price is prohibitive or
who would otherwise not be a user at all if there weren't a cracked
alternative. So the the loss to this "theft" is actually much lower because
(1) there was no price associated with materials for the software -- it costs
you the same to produce one copy as it does a million and (2) the majority of
cracked copies of the software wouldn't have resulted in a sale anyway.

~~~
pfraze
(1) is debatable. The cost of living during development and the loss of
potential savings count for price. If you estimate that as, say, 50k for a
year-long project, then you need to do 50k of sales to break even on your
investment. That shouldn't be a high number for a niche product that gets
used, but I think it tends to be in software.

(2) I agree with. It doesn't matter what's best if your product doesn't sell.
I think developers need publishing labels (read: app stores) to monetize.
Users might pay not pay for note-keeping applet, but they might pay for a fork
of it in their GitHub account that's been audited for security & privacy by a
reputable publisher. Social P2P software can also be designed to exchange
receipts of purchase on connection. Users would be able to disable it, but
failing to publish a receipt for software would be awkward in business
contexts.

~~~
maxk42
Re: Your response to point (1). My statement stands. A development cost of
$50k is a development cost of $50k regardless of how many copies are sold.
Pirated copies do not cost the developer extra production expenses the way
stolen physical merchandise would. If someone stole copies of Excel from a
Best Buy, there would be costs associated with the packaging, DVD production,
distribution, etc. that would need to be absorbed in order to replace the lost
product. The only added cost per item online is the bandwidth cost, but that
is absorbed by the person distributing cracked software rather than the
original developer.

------
DonGateley
So what the hell happened to 8080 and 6800 APL? That would have truly changed
the landscape. It wasn't quite the low hanging fruit Basic was though.

------
fossuser
There was a good write up of the context surrounding this letter in Steven
Levy's book, Hackers
([http://en.wikipedia.org/wiki/Hackers:_Heroes_of_the_Computer...](http://en.wikipedia.org/wiki/Hackers:_Heroes_of_the_Computer...)).

It pissed off lots of people in the community and seemed to be against the
spirit of what the hackers were doing at the time (writing and sharing code).

I recall another programmer being irritated by the letter and writing his own
basic interpreter and asking $5 for it (which was far less than what Gates was
asking).

Book is worth reading for the historical context of computing if you weren't
around to see it.

####

Edit [Relevant part of wikipedia page]: Tiny BASIC: Altair BASIC was an
interpreter that translated instructions from the BASIC programming language
into assembly instructions that the Altair 8800 could understand. It was
developed by Bill Gates and Paul Allen, the founders of Micro-soft,
specifically for the Altair 8800 and it would fit in 4K of memory. Unlike
previous hackers and against the Hacker Ethic, Micro-Soft and MITS felt that
people should pay for BASIC just like they paid for any add-on card. Many
hackers had in fact put in orders for BASIC, but still had to wait for the
order to be shipped. During a show put up by MITS, someone got hold of and
copied a paper tape containing Altair BASIC.

The tapes were duplicated and passed around freely before the commercial
product was even shipped to customers. Gates and Allen did not appreciate this
turn of events since they were actually paid commission for each copy of BASIC
that MITS sold. Gates responded by writing an open letter titled “Open Letter
to Hobbyists” that considered the sharing of software to be theft. Tiny BASIC
was a similar interpreter that would fit in only 2K of memory as it supported
a subset of the functionality of Micro-Soft BASIC (which itself was a subset
of Dartmouth BASIC).

It was developed by Dick Whipple and John Arnold in Tyler, Texas and
distributed freely in PCC magazine. Many more people sent in improvements and
programs developed in Tiny BASIC to be published. This eventually led to the
creation of Dr. Dobb's Journal edited by Jim Warren that distributed free or
very inexpensive software in response to Gates' claims of theft. Tom Pittman
was someone else who did not take kindly to Gates' words. He wrote a version
of Tiny BASIC for the Motorola 6800 microprocessor.

Although he sold it to AMI for $3,500, he retained the rights to sell it to
others and decided to charge only $5 for it. He received many orders and even
money from people who had already gotten a copy and simply wanted to pay him
for his efforts. Pittman also wrote the essay “Deus Ex Machina” on the AI and
hardware hackers and what tied them together. Lee Felsenstein and Bob Marsh
banded together to create a fully contained computer for an issue of Popular
Electronics that they called SOL that sold for under a thousand dollars.

####

~~~
NAFV_P
> _I recall another programmer being irritated by the letter and writing his
> own basic interpreter and asking $5 for it (which was far less than what
> Gates was asking)._

What price was Gates asking for?

I did a quick calculation using:

[http://www.dollartimes.com/inflation/inflation.php](http://www.dollartimes.com/inflation/inflation.php)

$5 in 1976 works out as just over $20 in 2013.

HNer _wmf_ has left a comment below:

> _Yes, today there are open source versions of pretty much all developer
> tools (and that 's something to celebrate, since I remember when a "cheap" C
> compiler was $500)._

If this was in 1976 - $2000 for a cheap C compiler. I had a quick look at the
price of the Intel C/C++ compiler - $699, but the annual renewal fee is $249.
In 1976, that would be roughly $175.

Her is an article with estimates of the development cost of the Linux kernel.

[http://www.linuxfoundation.org/sites/main/files/publications...](http://www.linuxfoundation.org/sites/main/files/publications/estimatinglinux.html)

I had a quick peek for an estimation of the cost of a compiler, but no luck.

------
xacaxulu
It looks like he eventually got paid ;-)

------
xname
Damn. I read "to lobbyists".

~~~
einhverfr
me too, the first time... Such a sad state of the world....

------
rmrfrmrf
For those who aren't familiar with this saga, Richard Stallman went on to
found the Free Software Foundation about 10 years later and, in my opinion,
has proven to Gates that you don't need to make software proprietary in order
to make money.

~~~
thaumasiotes
Frankly, if I were choosing which of Richard Stallman and Bill Gates had
demonstrated a more effective way to make money, I'd probably go the other
way.

