Bill Gates' Open Letter to Hobbyists

http://www.digibarn.com/collections/newsletters/homebrew/V2_01/gatesletter.html

by acangiano • 17 years ago

36 45 17 years ago

"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?"

Now, this is practically a prerequisite for getting a job at a good company.

DarkShikari2• 17 years ago

What hobbyist can put 3-man years into programming, finding all bugs, documenting his product and distribute for free?

This statement also sounds much more ironic from today's perspective, when there are thousands of open source projects that literally run off this concept.

borism3• 17 years ago

let's rephrase that a bit:

What hobbyist can put 3-man years into programming, finding all bugs, documenting his product and distribute for free for a living?

spot2• 17 years ago

they found all the bugs??

but seriously, gates continues to maintain the fiction that open source = hobbyists not getting paid.

almost• 17 years ago

This letter was written quite some time ago, it's certainly not an attack on open source never mind a continuing one :p

chriseppstein• 17 years ago

I've heard of a few companies that have this prerequisite, but only a few. I think open source contributions can tip the scales if you're up against a bunch of great candidates, but I don't think the business world works like you make it sound. In fact, I know lots of companies would actually shy away from open source contributors.

DarkShikari2• 17 years ago

I know lots of companies would actually shy away from open source contributors.

That's great--a perfect way to filter out companies that I would never want to work for.

falsestprophet• 17 years ago

I know lots of companies would actually shy away from open source contributors.

Which companies? Why do you think they do?

RevRal• 17 years ago

The amount of royalties we have received from sales to hobbyists makes the time spent on Altair BASIC worth less than $2 an hour.

I once calculated my per hour wage from the work I did. About $1.50

Hang in there Bill!

staunch• 17 years ago

His $2/hour in 1976 is ~$8/hour in 2009 dollars.

blhack• 17 years ago

You guys laugh...

Keep in mind that, at this point, microsoft was pretty much nothing...

Here was a guy that built something with the intent to sell it, and people said "too bad". Of course he was upset about that.

Now, should he have been philanthropic enough to have just given it away to the community? Maybe, but it doesn't really matter...he coded it, and he did so thinking he would be able to sell it.

I equate those that copied BASIC then to the people that use adblock now. No, they're not really harming the author, but it is a bit discourteous. I think he was just trying to illustrate that "C'mon, guys...I worked really hard on this...I'm not suing you, but just please buy it instead :)"

CamperBob2• 17 years ago

That's funny, I equate someone who uses intrusive ads on his website to someone who writes a free BASIC interpreter that stops after every 12 lines and PRINTs an ad to my console.

If you're going to put something out there, free or otherwise, it's your problem to make sure that it's fit for my purpose.

txxxxd• 17 years ago

For any product there will always be someone who feels its not fit for their purpose. Its not your problem or the author's problem, its inevitable.

tptacek2• 17 years ago

If it's not fit for your purposes, fine. Don't use it.

thwarted2• 17 years ago

The amount of royalties we have received from sales to hobbyists makes the time spent on Altair BASIC worth less than $2 an hour.

This was an early version "I did it, I should get paid for it" feeling of entitlement. If your intent is to make serious money, why would you spend your time doing something that ultimately paid only $2/hr? Why are you trying to sell to people who are unwilling or unable to pay for the product or service? These sound like an obvious recipe for failure. Fortunately for Microsoft, the deals they did that gave them a captive business audience who wanted to pay for DOS, as it became the defacto standard, this ranting was later moot.

And now Microsoft offers deep discounts and free stuff just to get you to use their products (for various business and marketing reasons).

Dilpil• 17 years ago

It is one thing to make a product no one wants and complain about making no money. Expressing dissapointment over not making money off of a product because it is universally stolen is a reasonable sentiment.

thwarted2• 17 years ago

It's reasonable to complain. It's also reasonable, and I'd like to think expected, that if you created something that you can't get people to pay for, and they are stealing it, you'd get out of the business of providing that specific thing that can be stolen, or you invest in copy protection (which is a losing game anyway). Eventually Microsoft did get out of the business of trying to sell to hobbyists.

He acknowledges that it wasn't universally stolen: the income was approximately $2/hr. If it was universally stolen, the income would have been $0/hr. But what he was missing was that it was universally wanted, there was a demand for it. This means he didn't set a price that the market was willing or able to bear, and the market told him the price that it was willing to bear. One way to adjust prices in the face of piracy is to take the total income divided by the total number of users (this is an iterative process, because this might not be immediately measurable). Considering what people had to go through to obtain copies on the Altair (making copies of paper tapes), the price set ($500 for the standalone version according to http://en.wikipedia.org/wiki/Open_Letter_to_Hobbyists ; approx $1900 in 2009 dollars) was way too high considering the effort of copying. At some lower price point, the effort of copying is too much for the price set.

While it's nice to be able set whatever price you want and think you're going to get it, that isn't the case. And banking on being able to sell at some arbitrary price is folly. Because you'd be in the same situation if the people DIDN'T even bother to copy it in the first place, the only difference is that you get to complain that people are using it without paying.

Charging $500 for something that is in high demand and is easily copyable, well, that's a huge mistake. The market is telling you there is interest, but you're not meeting the buyers, so they subvert you. And while it's unfortunate that all this effort and money and time was expended up front and now the bill comes due for, setting the wrong price, which discourages sales and encourages piracy, is bad market research. And Microsoft changed in that regard too, for a long time now Microsoft has been known for its marketing juggernaut.

jacquesm3• 17 years ago

So, nothing changed in all that time. Micro-Soft found out the hard way that hobbyists are 'cheap'. And managed to sell a veritable fortune of software to nicely locked in businesses.

Meanwhile the 'hobbyists' slowly grew in numbers until they outnumbered the 'professionals' (and plenty of them were professionals during the day and 'hobbyists' in the evenings and weekends). And then the web happened, and Microsoft blinked and open source took it and ran with it.

And now, because of that they're facing the first real competition since their inception.

Google would not have happened if it hadn't been for linux, and Sun and SGI would still be in business as well.

The world is changing, rapidly. Let's hope it changes fast enough.

btilly4• 17 years ago

The bit about "Microsoft blinked" is more complicated than that. The period where they blinked and Linux took off was one where they were distracted by a US anti-trust case. Then when they got ready to come back in force there was a European anti-trust case with large enough fines to actually get their attention.

jacquesm3• 17 years ago

From the history of microsoft in wikipedia:

"On, May 26, 1995, Bill Gates sent the "Internet Tidal Wave" memorandum to Microsoft executives. The memo described Netscape with their Netscape Navigator as a "new competitor 'born' on the Internet." The memo outlines Microsoft's failure to grasp the Internet's importance, and in it Gates assigns "the Internet this highest level of importance" from then on."

Read it for yourself at:

http://www.usdoj.gov/atr/cases/exhibits/20.pdf

That's an exhibit from the lawsuit, which came much later.

astine• 17 years ago

Sun and SGI would still be in business as well.

Sun is still in business. They're just owned by another company now.

dkeskar• 17 years ago

One ventures into a market hoping it would be profitable. It does not, so one tries to "train the customers".

That letter probably didn't increase sales.

But this guy and his company managed to hang around making revenues until they were approached as a partner by some large company that knew how to get customers to pay through their noses.

ScottWhigham• 17 years ago

It stands the test of time - 33 years later, developers are still complaining about the same things. I found that rather amusing - so much has changed yet much is still the same.

If you believe anything out of the BSA, last year was a record year with more than $50 billion in software piracy: http://global.bsa.org/globalpiracy2008/index.html

nkassis• 17 years ago

I don't believe anything they say so... how much was really stolen?

alexgartrell• 17 years ago

At the end of the day, someone stole his stuff, so he got pissed. He over-generalized and argued the wrong point, and hindsight kind of made it so he made an ass of himself.

That said, there really are very few people alive who haven't gotten mad and made an ass of themselves at some point, so we should probably forgive this "Open Letter to Hobbyists".

(I saw Gates talk when we opened a new building on Campus and someone asked him about the huge piracy rates in China so he brought up this letter in particular and said he's since learned to not get bent out of shape about it)

tomjen2• 17 years ago

And now you can download the lastest version of basic directly from Microsoft completely legal. Oh well.

lurkinggrue• 17 years ago

Didn't the hobbyists respond this way: LOL!

Not sure if I am remembering my history correctly.

Bill Gates' Open Letter to Hobbyists

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