Advent of Computing - Episode 17.5 - Bill's Problem with Piracy

Episode Date: November 25, 2019

In this mini-episode we look at a strange event in Microsoft's early history and their first case of piracy. Along the way you will learn about the best advetrizing campaign in history: the MITS MOBILE Computer Caravan! Like the show? Then why not head over and support me on Patreon. Perks include early access to future episodes, and stickers: https://www.patreon.com/adventofcomputing Important dates in this episode: 1976: 'Open Letter to Hobbyists' Written by Bill Gates http://tee.pub/lic/4jnwv7m_ZPw

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 that? 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 that the people who worked on it get paid? End quote. The year is 1976. Microsoft had been in operation for around a year, and they were already having to deal

with the problems of piracy. That quote is from the beginning of Bill Gates' open letter to hobbyists. It's a page-long manifesto declaring how computer enthusiasts were ruining the industry by sharing software. Or at least that was Gates' view of things. But here's the thing, this is 1976 we're talking about. Decades before the internet would enable mass software piracy, and way before you could torrent copies of Windows from your own home.

I mean, Microsoft Windows version 1 wouldn't even be released for another 9 whole years. But what makes Gates mad enough to write an angry letter to the entire hobbyist community at large is something much more tangible than digital piracy. He's mad because someone physically stole a copy of his software from a traveling computer roadshow. physically stole a copy of his software from a traveling computer roadshow. So, let's look at the first time Microsoft's software got pirated, and how it has anything to do with this magical thing called the Mitsmobile Computer Caravan. Welcome back to Advent of Computing. I'm your host, Sean Haas.

Now, it seems like it's been forever since I've put out a bonus episode. And I think it's about time to rectify that. So here's another bite-sized story. This one is Bill's Problem with Piracy. For those of you already subscribed to the show, then these events are occurring directly after the episode concerning Microsoft and the Altair 8800. For those of you who haven't listened, that's episode 12 in the archive. So anyway, let's get to it. It's no secret that software piracy is a really big problem for any company that plans to sell software. And there's no larger target for piracy

than Microsoft. Over the years, they've gone to great lengths to keep people from stealing their software, but where did that all begin? As it would turn out, stealing from Bill Gates is somewhat of a tradition, and it goes back as far as Microsoft's very first product. The first thing Microsoft would ever produce or sell was a programming language and environment called BASIC. In 1975, through somewhat dubious means and some stolen government computer time, Bill Gates and Paul Allen wrote their very own version of BASIC for the Altair 8800 microcomputer that had just started being manufactured by MITS. The Altair was one of the first computers that a consumer could buy for a reasonable

price, and the duo that was soon to become Microsoft wanted to get in on the ground floor of this brand new market. Their new product, BASIC, was essentially a way to get more out of the existing Altair hardware and make it a little more user-friendly. You see, out of the box, the computer could only be programmed via a series of switches and blinking lights on the front panel. Once loaded onto the computer, basic would extend that by presenting a text interface, so a user could just type in a program instead of trying to toggle them

in via switches. And on release, it was the only thing like it, really making it the killer app for the Altair. And here's where things start to get a little more interesting. Microsoft wasn't selling software direct to the consumer. That wasn't really a popular business model in the 70s. Instead, MITS licensed BASIC and then sold copies of BASIC either bundled with hardware or on its own. Users could get BASIC as either a punched paper tape or

a floppy disk, with Microsoft receiving royalty payments for each unit sold. The arrangement also meant that Microsoft never had to advertise or promote their software, MITS would take care of all of that for them. Out of all the ways that MITS would advertise and promote the Altair and its accompanying software, I think the best is a bizarre scheme called the MITS Mobile Computer Caravan. And yes, it's almost exactly what it sounds like. The Mobile was a converted mobile home that had been turned into a makeshift showroom. It traveled across the country, and at every stop it would unload,

give a seminar about the wonders of the Altair 8800, and show off the machine. MIT's employees would also hand out pamphlets and catalogs, as well as prizes and merch. And hopefully along the way they'd make a few sales of units. And of course, their best demo was the new flagship product, Microsoft Basic. And since everything was just a demo, the Mitsmobile team was actually running a beta version of this Basic. The final build wouldn't be complete yet for a few more months. But hey, bugs don't really matter when you're just out there for the wow factor, right? Anyway, the computer caravan left MIT's headquarters in Albuquerque in April of 75, and by June of that year, it would make its way all

the way to Palo Alto, California. Now, even as far back as the 1970s, Silicon Valley was still a seat of power in the computing world. So there was already an enthusiastic audience for the MITS mobile on arrival. One of the groups that came for a seminar was the Homebrew Computer Club, a group of hobbyists that would end up becoming a real staple in the early Silicon Valley scene. And it was during that seminar that the event in question happened. While a MITS employee was fumbling around setting up a demo, someone stuck their hand into a box of paper tapes and made off with a copy.

But that's just the start. To this day, no one really knows who stole the tape. But eventually it found its way to a man named Dan Sokol. In the IT field at this time, it was kind of an open secret that employees would often use company resources for their personal hobbies during downtime at work, and Sokol was no exception. At his office, he had access to a fancy high-speed punched tape duplicator. So he started to run off copies of the BASIC tape in his spare time. And at the next meeting of the Homebrew Computer Club, Sokol brought along a box of 50 fresh copies of the stolen Microsoft BASIC tape.

Once all those copies were out in the wild, it really started to spread unchecked. This new pirated BASIC went in two directions. Some folk in the Homebrew Computer Club actually started modifying the program. It was a beta version after all, so a few members worked on fixing bugs and adding in new features. From there, improved versions of the original stolen BASIC started spreading around the community. On the exact other side of the spectrum, we have the opportunists. Some more business-savvy enthusiasts started to sell copies of the stolen BASIC code. While being pretty unethical, it was a cheap and easy way to make some cash if you had a way to copy paper tape. Any way you slice it, this made one big problem for Microsoft.

Altair users could now just get a copy of BASIC from a friend, or even worse, they could buy a bootleg copy off the street. And each illegal copy of BASIC in circulation took a chunk out of returns for Gates and Allen. While the Altair and MSBASIC would be a huge success, Gates would never get this rotten taste out of his mouth. Microsoft wasn't big enough to do anything, they only had a handful of employees at this point. Even MITS, while considerably larger than Microsoft, didn't have any way to prosecute the pirates, in a lot of cases they just didn't know who had stolen software.

They just didn't know who had stolen software. Adding to the convoluted situation was the fact that most of Microsoft Basic was developed using government funded computers at Harvard. In effect, this meant that Gates stole computer time from Harvard to make the program in the first place, so it might not be the brightest idea to bring this up in court. They couldn't really get back at the pirates in any meaningful way, but Bill Gates was mad, so he did what anyone in his situation would do. He sat down, and he wrote an angry letter. In 1976, he wrote an open letter to hobbyists. In it, he chastised the community for stealing software and argues that doing so will only hurt the

computer industry at large. However it's doubtful that Gates' open letter stopped anyone from pirating his software. And despite his warning that software piracy would destroy computing as we know it, Gates would go on to make so much money with Microsoft that today he's one of the richest people in the world. So even if he wasn't able to stop the pirates, I think it's pretty fair to say the Gates would win in the end. So that's the story of how Microsoft's first product also became their first case of computer piracy. It's hard to say what kind of lasting impact it had on Microsoft policy, but regardless, it's still one of my favorite events from the company's early days.

Thanks for listening to Advent of Computing. I'll be back in a week with a regularly scheduled full-length episode. Until then, if you like the show, why not take a second to share it with a friend? You can also rate and review on Apple Podcasts. If you have any comments or suggestions for a future topic, go ahead and shoot me a tweet. I'm at Advent of Comp on Twitter. And if you want to be a super fan, you can always buy some merch from my TeePublic shop. I'll have a link in the description. And as always, have a great rest of your day.