Micro Instrumentation and Telemetry Systems - Altair Computer - Altair Basic

Altair Basic

In December 1974 Bill Gates was a student at Harvard University and Paul Allen worked for Honeywell in Boston. They saw the Altair 8800 computer in the January 1975 issue of Popular Electronics and knew it was powerful enough to support a BASIC interpreter. They wanted to be the first to offer BASIC for the Altair computer, and the software development tools they had previously created for their Intel 8008 microprocessor based Traf-O-Data computer would give them a head start. While their friend, Paul Gilbert, was building the computer, Allen wrote a program that ran on a DEC PDP-10 time-sharing computer that simulated the 8008 system. He also modified DEC's macro assembler to produce the machine code for the 8008 microprocessor. The Traf-O-Data software could be written and debugged before the computer hardware was complete.

Harvard had a DEC PDP-10 that was available for student use. They would use it to develop BASIC. While Allen modified their development software for the new 8080 microprocessor, Gates began writing 8080 assembly language by hand on yellow legal pads. They enlisted another Harvard student, Monte Davidoff, to write the math routines.

By early February the program coding switched from legal pads to the PDP-10 and a preliminary version was completed by March 1975. Gates and Allen had been in contact with Roberts and MITS and the older looking Paul Allen would travel to Albuquerque in March. MITS needed more time to get a computer with 7k bytes of memory working, and they needed more time to get the software finished. When Allen arrived at MITS it took a day to get the software running; Allen remembers this being caused by computer memory problems while Roberts remembers the delay was due to software problems.

The April 1975 issue of the Altair Newsletter, Computer Notes, had a banner headline "Altair BASIC - Up and Running". The software was to begin shipping on June 23, 1975. The software price was $500, but discounted to $75 with the purchase of an Altair computer with 8k bytes of memory and a serial I/O card.

On July 22, 1975 MITS signed a contract for the Altair BASIC with Bill Gates and Paul Allen. They received $3000 at signing and a royalty for each copy of BASIC sold; $30 for the 4K version, $35 for the 8K version and $60 for the expanded version. The contract had a cap of $180,000. MITS received an exclusive worldwide license to the program for 10 years. They also had exclusive rights to sub-license the program to other companies and agreed to use its "best efforts" to license, promote and commercialize the program. MITS would supply the computer time necessary for development; a PDP-10 owned by the Albuquerque school district. Paul Allen left his job at Honeywell and became the Vice President and Director of Software at MITS with a salary of $30,000 per year. Bill Gates was still a student at Harvard and just a contractor with MITS. The October 1975 company newsletter gives his title as "Software Specialist".

The price of Altair BASIC to customers who purchased additional memory and I/O boards from MITS was $75. Users may have gone along with that if the memory board were reliable. Customers bought the computer from MITS, and working memory from companies like Processor Technology. Rather than pay $500 for BASIC, they would acquire bootleg copies of the software. Only about ten percent of the early customers actually purchased BASIC. With a royalty due of $30 per copy, Gates felt that the computer hobbyist were stealing money from him. In February 1976 Bill Gates, "General Partner, Micro-Soft", wrote an "Open Letter to Hobbyists" that was sent to every computer publication inferring that the hobbyists were thieves.

MITS had announced a new computer based on the Motorola 6800 microprocessor in November 1975, the Altair 680. The machines were supposed to ship in January 1976, but hardware design problems delayed shipment until May. Paul Allen rewrote their 8080 simulator to support the 6800 microprocessor. Ric Weiland, a high school friend of Gates and Allen, converted the Altair BASIC's 8080 assembly language to 6800 assembly language. To eliminate the per copy royalty loss issue, the 6800 BASIC was licensed to MITS on a non-exclusive basis for a flat fee of $31,200. Weiland and Marc McDonald were impressed with the new MOS Technology 6502 microprocessor that was a derivative of the 6800. They modified the 6800 development system to support the 6502 and "cranked out" a 6502 edition of BASIC. This version was later sold to Commodore and Apple.

The January 1976 issue of MITS's newsletter, Computer Notes, carried an ad for 8080 BASIC. The last paragraph stated: "Licenses for source listing and rights to distribute the binaries are also available to OEM buyers. Write or call Mr. Paul Allen at the MITS plant in Albuquerque for more detailed information." Microsoft found several corporate customers for BASIC and proceeds were evenly split with MITS. Pertec acquired MITS in December 1976 and refused to allow any more OEM deals, even though the agreement required MITS to uses their "best efforts" to license the software. The contract required MITS and Microsoft to use binding arbitration to settle disputes. In September 1977, the arbitrator ruled in favor of Microsoft, MITS could continue to use BASIC on their machines but lost the exclusive license. Microsoft could license the software to anyone and keep all of the royalties.

There was no longer a business requirement to remain in Albuquerque so Microsoft wanted to relocate to a larger city that would be more attractive to new employees. The San Francisco bay area was considered but Allen and Gates decided to return home to Seattle. Microsoft moved to Bellevue, Washington in January 1979.