The thing that strikes me most about this letter is that the business was initially flagging. A few decades later, it is the 800 pound gorilla of the software industry.

I don't agree with everything Micro-soft has done and they have certainly had some luck. However, Bill Gates had an impressive perseverance to take the business from the days of this letter to what it is today.

Thing is-- if it wasn't free then most hobbyists probably wouldn't bother.

Many people, when they aren't able to obtain the tools they need to do what they really want, settle for what they've got. At least, until they can afford it, if that ever happens and assuming someone doesn't come along and offer a free version in the meantime.

The interesting thing is that Gates didn't stop at this horrible business opportunity.

That's clearly a hypocritical stance. I wonder why he took it at the time if he was so outraged.

In many ways, it's still an issue today: most users (especially for web applications) have come to expect software to be free, but not every business can generate cash from advertising.