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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.<ref>Manes (1994), 90. "Roughly 900 copies had been accounted for between July and year's end." "MITS was shipping maybe a thousand machines a month, yet BASIC was selling in the low hundreds."</ref> 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 insinuating that the hobbyists were thieves.
[[File:Altair 680.jpg|thumb|Altair 680]]
MITS had announced a new computer based on the [[Motorola 6800]] microprocessor in November 1975, the {{visible anchor|Altair 680}}. The machines were supposed to ship in January 1976, but hardware design problems delayed shipment until May.<ref name="CN Apr 1976">{{cite journal|last=Pollini |first=Steve |title=680-b ready for production |journal=Computer Notes |volume=1 |issue=11 |page=8 |publisher=MITS |date=April 1976 |quote=MITS is now ready to begin full production of the Altair 680b |url=http://startup.nmnaturalhistory.org/gallery/notesViewer.php?ii=76_4&p=8 |url-status=unfit |archive-url=https://web.archive.org/web/20120323162008/http://startup.nmnaturalhistory.org/gallery/notesViewer.php?ii=76_4&p=8 |archive-date=March 23, 2012 }}</ref> 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.<ref>Manes (1994), 95.</ref> 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.<ref>Manes (1994), 99–100. "Weiland cranked out a 6502 edition of BASIC."</ref>
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."<ref name="CN Jan 1976">{{cite journal|title=8080 BASIC |journal=Computer Notes |volume=1 |issue=7 |page=6 |publisher=MITS |date=January 1976 |url=http://startup.nmnaturalhistory.org/gallery/notesViewer.php?ii=76_1&p=6 |url-status=unfit |archive-url=https://web.archive.org/web/20120323162008/http://startup.nmnaturalhistory.org/gallery/notesViewer.php?ii=76_1&p=6 |archive-date=March 23, 2012 }}</ref> 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 use 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.<ref>Manes (1994), 111-113.</ref>
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