A Month of Gates #1

On June 30, Microsoft's chairman steps down from day-to-day activities. Some people will celebrate his departure; others will lament his going. Here, I simply want to look back at the man over three decades at Microsoft.

This first installment appropriately starts at the beginning, or what I believe constitutes it. Bill Gates published "An Open Letter to Hobbyists" in the Feb. 3, 1976, Homebrew Computer Club Newsletter. Bill revealed the letter a few days earlier.

The letter admonishes other software developers for reusing code created by others. Microsoft's co-founder lays out principles of intellectual property and licensing that have defined the company's business practices for 32 years. The letter also philosophically separates Microsoft IP concepts from what would later become open source.

There was no "open source" name in 1976 nor a GPL. But the concepts of sharing and reusing software code derive lineage from 1970s hobbyist practices that Microsoft IP licensing helped squash in the 1980s.

Following is text of the letter, as preserved by the Digibarn Computer Museum:

"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 percent 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 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 is rather direct in his accusation: "Most of you steal your software." In other words: Sharing is bad. If I develop something, it's mine. You can't use it unless I'm paid.

I don't make a value judgment. Some people believe that knowledge applied is intellectual property to be owned. Others believe that all knowledge belongs to all people. It's not rocket science which philosophy more reflects Microsoft corporate perspective or that of open source.

But there are questions about how intellectual property rights are applied. Microsoft took more of a publishing perspective to IP ownership. The copyright holder retains rights, while the buyer essentially owns an expression of the work. The distinction is important with respect to how Bill's philosophical stance affected Microsoft business practices. People license the software; they don't own it. If you buy a TV, you own the product (but most certainly not the concepts for creating an identical television). If you buy a Windows PC, you own the hardware but not the software.

Microsoft's pursuit of software pirates through mechanisms such as Windows Genuine Advantage suggests that the "most of you steal the software" concept is ingrained in Microsoft's corporate psyche. Its co-founder put it there, methinks.

Something else about the company's origins: Microsoft understands the value computer hobbyists bring to any platform. Today, Microsoft provides free "Express" editions of developer tools and platforms to enthusiasts. But the licensing terms are set by Microsoft, which more sacredly protects its IP rights today than Bill tried to in 1976.