Bill Gates and his partner Paul Allen had written a version of the BASIC programming language for one of the first mass-produced personal computers, the Altair. Without it, there wasn't a whole lot that you could do with an Altair. But to Gates' dismay, he had discovered that less than 10 percent of all Altair owners were paying for a copy of his BASIC -- instead, hackers were making their own copies and giving them away. To Gates, this was outright thievery.

"As the majority of hobbyists must be aware," wrote Gates, "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?"

"Who can afford to do professional work for nothing?" continued Gates. "What hobbyist can put three 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 ... Most directly, the thing you do is theft."

Like the Homebrew Computer Club, Gates' letter is an indelible icon of computer history. For some, it marks the birth of a billionaire, outlining in bald terms the psychology of one of the most successful businessmen of the 20th century. For others, it foretold the death of the hacker dream that information should be free. And to still others, it marks the line drawn in the sand between the world of free software and the empire of Microsoft. Want to know why so many hackers despise Microsoft? Read the letter.

But didn't Gates have a reason to be angry? Weren't the Homebrew hobbyists stealing BASIC? Well, in a sense, sure.

"We would say 'bring back more copies than you took,'" recalls Lee Felsenstein, remembering Homebrew Club meetings held in the Stanford Linear Accelerator Center (SLAC) auditorium. "Altair BASIC showed up first as a paper tape that had been ripped off or liberated in late '75 and was being passed around or copied -- a teletype could copy it. Sometimes I would hold up the black board pointer and say 'put them here,' and people would skewer their rolls of tape on the pointer."

I meet Lee Felsenstein, designer of the Sol and Osborne personal computers, in a nearly unfurnished office in Palo Alto which he is using as a temporary work space while he looks for a new job. Just a few weeks earlier, his previous employer, the Paul Allen-funded Interval Research think tank, closed its doors. While he negotiates a purchase involving his credit card information on his cellphone, I examine the only part of the room that shows signs of life. On a large workbench stretching along one wall are the tools of his inventor's trade: a fancy digital oscilloscope, a heat gun, a power supply, and trays upon trays of silicon chips: the basic building blocks of the modern computer.

By now I have read "Giant Brains" and have learned the basics of how information can be moved from register to register, and what kind of operations can be enacted on that information. At Bob Lash's home, I have had the chance to examine both his homemade computer and the reams of code he wrote to make that computer work. Now, I'm looking at a more contemporary version of the same concept, the silicon-based chips that embody those operations. And I am realizing: hardware, software, chips, wires -- for me too, it is becoming difficult to make any clear distinctions. And as I probe Felsenstein's memory of the letter from Bill Gates, I begin to see exactly why the Homebrew hackers got so mad at being called thieves even as they blithely admitted that they were copying someone else's copyrighted software.

Did Felsenstein remember the moment he read that letter?

He rolls his eyes.

"Yes, absolutely," says Felsenstein. "I read it aloud from the floor of the Homebrew Computer Club. To great derision. I read it to the multitudes assembled in the SLAC auditorium. Everybody thought that was hilarious, and they were damned if they were going to send them $500."

Felsenstein draws a detailed picture of the moment. The SLAC auditorium holds 275 people, he says, but it was only about two-thirds full.

"The people involved were not at the top of any stratum," says Felsenstein. "They were second string and below ... They were people who wanted desperately to have access to computers. The majority of them worked in the electronics industry in Silicon Valley, and some in the computer industry, but they were not permitted access to computers at their work."

So when MITS, a company in Albuquerque, New Mexico, announced the arrival of the Altair, one of the very first inexpensive personal computers, they jumped at the chance to buy it. And then were almost immediately disappointed. The Altair was little more than a box of parts that barely worked. For one thing, it came with no devices for getting information into and out of it, which meant that the Homebrew hackers were faced with quite a bit of extra tinkering, at extra cost.

"At the time when the Altair personal computer was being delivered it was found to be difficult to get it running," says Felsenstein. "It was poorly designed in several ways. And once you finally got an Altair hooked up together, it didn't do anything."

"The machine is not complete until the software defines what it is doing," says Felsenstein. "I view software as another component of the system. Our view of this was, this is like the last part of the machine that everybody sweated bullets to not only buy but to learn how to put it together and so forth, and what the hell, what business do they have trying to jack us up for another $500? This makes the thing go and I want to make it go ... It seemed like a kind of a bait-and-switch at the time to say 'You can buy a computer for $297 but oh, sorry, all you get is a bunch of parts that don't give you any I/O [input/output] and oh, sorry, once you get that set up at great cost to yourself you don't get any software that lets you do anything but you can pay more for that."

"We didn't really know who Bill Gates was," continues Felsenstein. "He seemed to be involved with MITS. He started out as a MITS employee ... As far as we could tell that's all that he was. Somebody had come along with a BASIC and attached themselves to MITS and said 'Now we can really clean up because these bozos don't realize they need software for their boxes.'"

"And then he comes in with this letter," says Felsenstein, "saying 'we haven't gotten the kind of money we wanted and you guys are all crooks -- most hobbyists steal their software.' Well, you know, for people who were out about ten times what they thought they were going to be out when they answered the ad for the Altair, the concept of thievery is a little different. [We said] 'You guys in effect stole our money, and now you want another $500? I'm sorry, we want our computers to work.' The general feeling was, let them ask nicely, don't call us crooks to begin with, we see who the real crooks are."

The letter, says Felsenstein, drew a line that could never be erased. Once and for all, Bill Gates declared that he was not a hacker -- that, on the contrary, hackers were his enemy.

"The oppositional stance kind of presaged everything else," says Felsenstein. "We wanted somebody to say, 'Look, I am one of you and here is what is going on.' He removed himself from our society and our culture with that letter and with his subsequent actions."

I ask Felsenstein if he recalls the reaction of the Homebrew audience the moment he read the line "most of you steal your software."

"There was much hooting," says Felsenstein. "We had a good time laughing at that letter. And as I like to say now, what a shame that Bill Gates didn't get his money. He could have been a contender. "

The Free Software Project
Read Andrew Leonard's book-in-progress on Linux and open source -- and post your comments.