IEEE Annals of the History of Computing 1058-6180/02/$17.00 © 2002 IEEE 43

Part 1 of Martin Goetz’s memoirs covers hiscareer through 1970. Part 2, concluding his mem-oirs, will be published in a subsequent issue ofAnnals.

Some events—such as when the universebegan—are hard to pin down. But I, and manyothers of my era, know where, when, how, andwhy the software industry started and how itevolved.

Today, the software industry is readily talkedabout in the news, on Wall Street, and in everycompany from the smallest mom-and-popoperation to the Fortune 500 giants. But whenI started working as a computer programmer in1954, there was only a small computer hard-ware industry and a few scattered software serv-ices firms. Now, not even 50 years later, thesoftware industry has become America’s third-largest manufacturing industry (behind auto-mobiles and electronics), and it boasts annualrevenues of well over $100 billion. Althoughthe software industry encompasses softwareproducts and services, my experience has beenentirely in the software products area, so thatis what these memoirs cover.

I believe that software products, as a business,began about 1964, when Applied Data Research(ADR), a company I helped found, began sellinga software program called Autoflow. From 1964through 1970, many other companies alsobegan selling software products, but by nostretch of the imagination could it yet be calledan industry. In my opinion, IBM’s unbundlingannouncement in 1969 was what turned a nas-cent business into the software industry.

My definition of a software product is sim-ple. It is a generalized off-the-shelf program,sold separately, which can be used by manyusers without their having to significantlymodify the source code. IBM called the soft-ware they sold a “program product” when theyunbundled their software. Although my defi-nition of a software product may be controver-

sial, it is probably the least controversial of thesoftware issues that began to be debated in the1960s—and are as controversial today as then.

Many of the issues raging today in the indus-try and in our courts are the same ones I havebeen involved with since the mid-1960s. Whenis adding a component or feature to an operat-ing system (for example, an Internet browser) anillegal tie-in? Should business method patents inthe US continue to be issued by the US PatentOffice? (The UK has made the decision not toissue such patents.) Should source code be in thepublic domain? If so, should it be free and avail-able to everyone? (The Free Software Foundationand Open Source Initiative [OSI] groups thinkso.) What is software? Is it tangible or intangi-ble? How should software be taxed under exist-ing state and federal statutes? What are theobligations of large dominant companies (forexample, IBM and Microsoft) in providing andreleasing interface specifications for their soft-ware offerings? And in what time frame?

These issues concern the nature of software,who should own it, and how it should be pro-tected. Although the Internet has been the cat-alyst for an examination of how to protect themusic industry and the scope of copyright pro-tection, those same kinds of questions arose inthe early to mid-1960s when software compa-nies began to market programs for large-scalecomputers. Even in the early 1980s, the natureof software became fuzzy as PC software com-panies started calling themselves “softwarepublishers,” as if software is a “writing” (asopposed to something like a machine that isbuilt and maintained).

As a founder and executive at ADR, mycareer and life have been intertwined with thesequestions and issues. They directly affectedADR’s growth and survival—always my first pri-ority. I admit freely that I have been tenaciousin presenting and defending my positions andmy company. Perhaps watching my father failto survive the Depression of the 1930s instilled

Memoirs of a Software Pioneer: Part 1Martin Goetz

In the first of this two-part series, these memoirs trace the softwareindustry’s beginnings back to the early struggles by software firmssuch as Applied Data Research as they tried to compete against IBM,the computer industry’s Goliath. The author identifies the questionsraised, from the antitrust suits and related issues, that led to IBM’sunbundling in 1970.

in me the strong need to succeed. Whateverforces drove me—this is my story.

Growing up: 1930–1954I was born the second of two children on

22 April 1930, shortly after the beginning of theGreat Depression. I sometimes wonder if I heardthe crash in October 1929, when my mother wascarrying me. At the time, my father had a haber-dashery store, where my mother helped out.Until about 1934, we lived in a middle-classneighborhood in Brooklyn, New York. But in1935, my father lost his business and was reducedto peddling ties on the streets of Manhattan. Forthe next seven years he struggled to eke out a liv-ing. Times for my family got tougher and tougheras the Depression continued.

From the age of five through 12, we movedsix times, each time to a lower-priced apart-ment. My father couldn’t support his family,and my mother worked. For a short time, wewere on welfare (which then was called “beingon relief”).

I always felt secure and loved. Yet, as is truefor many others of my generation, thoseDepression days affected my entire life. Eventoday, I am financially conservative, believingthat a depression could happen again, wipingout my family’s entire savings. At the age of 12,on my own initiative, I started working afterschool delivering meat for a local butcher for 5cents per delivery. From that point on, I con-tinued to work part-time jobs through publicschool, high school, and college. Each summer,during my college years, I worked full time as a

waiter in New York’s CatskillMountains, earning pretty goodmoney.

As a young person, I had littlecareer guidance from my family. Myfather got quite sick in 1940 and diedthree years later from heart failure. Ifanyone was my role model, it was mymother, who worked in the BrooklynNavy Yard during most of World WarII while raising my brother and me.(She remarried in 1947 and lived andenjoyed her life to the fullest, passingaway in 1999 at the age of 97.)

In 1943, I passed a special NewYork City exam that permitted me toattend Brooklyn Technical HighSchool, then considered one of thecity’s best high schools. As a pre-engineering student, I graduated in1948 with mediocre grades. Not cer-tain that I wanted to attend college, Ienlisted in the US Army (under a one-

year enlistment program) and spent a year withthe Second Armored Division in Killeen, Texas.

Following my discharge in 1949, I decided toattend Brooklyn College. After changing mymajor from pre-engineering to economics to busi-ness administration, I transferred to the BaruchSchool of Business at City College of NY (CCNY),graduating in 1953 with a BBA in business statis-tics. I then continued at night for my master’sand received an MBA from CCNY in 1961.

During my last year at CCNY, I worked parttime in a work/study program at Dancer,Fitzgerald, and Sample, a large Manhattanadvertising agency. After I graduated in 1953,they offered me a full-time job as a supervisorin the Media Research Department, analyzingNielsen radio ratings. Not knowing what I real-ly wanted to do (or could do), this seemed likea safe haven, so I accepted. Many of my CCNYfriends had taken jobs in quality control, butthat didn’t seem especially exciting. I sensed Iwas not destined to work in statistics, but at thesame time, I had no clear direction for a career.

Early years in software: 1954–1959In October 1954, the New York Times carried

a Remington-Rand advertisement for a pro-grammer trainee at its Univac Division: “Noexperience required.” Little did I know thatresponding to this ad would lay the ground-work for my career and my life. To my amaze-ment, they hired me, and I soon found myselfin a 12-week training course, learning how theUnivac computer worked internally and howto program it (see Figure 1 for a picture of my

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Figure 1. My Univac graduating class (author is at the far right, front row). (Photocourtesy of the author.)

graduating class). We were exposed to some ofUnivac’s rather crude programming tools andto BIOR (Business Input–Output Rerun), themonitor program that Univac was developing.

BIOR, my first lesson in computer manufac-turers’ promises about future software develop-ments, was never fully completed or debugged.One user noted, “The Input–Output didn’twork, and they never delivered the Rerun. Theonly thing they gave us was the Business.”

I took to programming like a duck takes towater. It was fun, and I quickly learned aboutmain-line programming, subroutines, buildingprograms as a hierarchy in small modules,organizing programs for easy debugging, andmaking program changes. I loved it and usedto program in my head as I drove my car. And,like most strong programmers, I never flow-charted; I just wrote the program.

We didn’t use punched cards, even in 1954.Remington had the Unityper, an offline devicethat produced 80 character images, from key-board input, on a small magnetic tape. Therewere crude programs for editing the punchedcard images. So when ADR developed theLibrarian, a source program maintenance andsecurity system (first in 1965 to use internallyand then as a software product in 1967), theunderlying concept was far from new.

After graduating from my training course, Iwas assigned to Consolidated Edison, New YorkCity’s large gas and electric utility, which wasin the process of trying to convert from IBMpunched-card tabulating equipment to elec-tronic computers. I quickly learned that Con Edwas going to test the Univac I equipment inparallel with testing IBM’s latest computer, theIBM 705—both companies built identical appli-cations with a “may the best company win”attitude. It was an intense race and my firstexperience competing against IBM.

I became aware that Remington Rand hadsued IBM for antitrust violations. TheDepartment of Justice also had an antitrust suitagainst IBM for tying in their tabulating equip-ment with the sale of their punched cards.Little did I realize at the time that I wouldspend much of my career competing againstIBM and getting involved in antitrust issues.

At Con Ed, I worked on a team of severalRemington programmers, headed by JohnO’Neill, who was responsible for designing theapplication. Con Ed had selected 15 Con Edpersonnel from its various departments andtrained them to program the Univac and assistin the project. Some of their best programmersnever went to college; in fact, their best pro-grammer was previously a utility linesman who

spent his career climbing poles until he wasselected to join the programming group. Thelesson stayed with me my entire career. Whenit comes to programming, education is secondto natural talent.

Several years later, after both systems werecompleted, I learned that Con Ed had selectedIBM over Univac in a political, rather thantechnical, decision. That was to be the historyof Remington during my four years there—good technology, but bad marketing. Becauseof their tabulating equipment, IBM hadaccount control and used it effectively.Remington was no match against IBM. As Ilearned the hard way over the years, IBM’saccount control for selling their hardware wasjust as effective for selling their software.

Within a year of my assignment at Con Ed, Iwas asked to head a similar group at Parke-Davis, a pharmaceutical firm in Detroit,Michigan, which had just purchasedRemington’s newest computer, Univac II. Icould fly home each weekend at Remington’sexpense, and it was an opportunity to head upan installation. Age 25 and single, I quicklyagreed to go.

Remington Rand was running very fast atthat time. Because most of its contracts statedthat there would be no payments until a sitewas operational, the company emphasized sell-ing the hardware, hiring and training pro-grammers to go to new installations, andgetting those new installations operational asfast as possible.

In 1955, Remington Rand had merged withSperry Gyroscope to form Sperry Rand. Frommy perspective, nothing had changed exceptthe name.

During my four years at Sperry, no real sys-tem programming group existed for buildingprogramming tools, but there was a researchgroup in Philadelphia where Grace Hopper andothers were doing experimental softwareresearch. In addition, programmers at Sperryand at Univac user sites had begun to donateprograms to a shared library. The UnivacProgram Distribution Library consisted of pro-gramming tools and statistical programs thatSperry distributed free to its users. While itadministered this library, Sperry took noresponsibility for program or documentationintegrity. IBM had a similar library of field-developed programs (FDP).

In my spare time, I became one of thelibrary’s biggest donors, especially for sort pro-grams. It began quite by chance. BettyHolberton, a noted programmer at the Bureauof the Census and an early Univac I user, had

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donated a sort generator that was widely used.Because the Univac I was a word machine, andrecords of different word lengths needed dif-ferent fields to be sorted, her program generat-ed the correct record size to be sorted and thelocation of the keys, based on a set of userparameters. The program was flexible but slow,and when I looked at the code, I quickly recog-nized why.

The Con Edison user application had manysorting requirements, and a faster sort wouldspeed up the application significantly. Becausewe were always in a race with IBM, I tried dur-ing my spare time to see what I could accom-plish. I programmed a 10-word sort with asingle key. The result was a much faster sortbecause my program did not generate code. Iwrote the main sorting loops using straight-line

coding so that there were few transfers oraddress modifications. In addition, I wrote thecode minimizing the latency time inherent inthe Univac’s mercury delay memory. Theelapsed time was significantly faster than thesort generator’s. Because of this, I gained thereputation in Univac as a sorting expert, andover the next several years, I rewrote the sortprograms based on requests from users for 2-,4-, 6-, and 20-word sorts.

Later, I worked at several other installations,including the Philadelphia Navy Yard and JohnHancock Insurance. All the while I was build-ing more sorts, debugging aids, generalized I/Oroutines, and other programming tools that Idonated to Univac’s Library.

Over time, I became disillusioned withSperry. IBM was beating them consistently, andSperry apparently didn’t recognize the impor-tance of developing programmers’ tools. So, inNovember 1958, I resigned from Sperry to joinIBM’s Applied Programming group in NewYork, a group dedicated to developing pro-gramming tools.

At IBM, I was assigned to build a monitor forthe IBM 7070. This program would eliminatethe need for separate tape-to-printer, card-to-tape, and tape-to-card peripheral equipment.But halfway through that effort, I was told todrop the assignment because IBM hadannounced its 1401 machine to handle thosefunctions. Somewhat frustrated, but still enthu-siastic about IBM, I joined the 7070 Autocoderteam. I was busily working away when I heardthat a group of Sperry programmers and sever-al Sperry users had formed a new company,ADR, in Princeton, New Jersey.

One of these programmers was SteveWright, a man with an outstanding record atSperry whom I knew well and admired greatly.It didn’t take me long to contact him. Withinseveral weeks, I left IBM and began my 28-yearcareer at ADR.

Before I discuss my long involvement withADR and ADAPSO, the software industry’s tradeassociation, I think it important that I reflecton my work experience with Sperry and IBM.

It was clear in the 1950s that programmingtools were important for building applications.Taking a more serious approach, IBM’s AppliedProgramming department had a large group ofprogrammers, which IBM expanded signifi-cantly over time. Figure 2 is a list of system pro-grams IBM was building in 1959 for the IBM7070. Similar programs were being built forIBM’s other large mainframe computers, the705 and 709.

Up into the 1960s, these programs were

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Figure 2. A list of system programs IBM was building in 1959 for theIBM 7070. (Photo courtesy of the author.)

freely given away, and they were not beingbuilt in a competitive environment. Certainly,by that time I had a vested interest in this issuebecause ADR had entered the software productsbusiness in 1964, five years before IBM unbun-dled. In 1966, I began to write articles about thepoor state of system software that was stillbeing provided free of charge to customers.

In May 1966, I wrote an opinion article forDatamation titled “Today’s CommercialSoftware: Has Inertia Set In?,” which began asfollows:

From 1956–1966, the number and use of com-puters by industry has increased at least ten-fold.During that time, the software provided by com-puter manufacturers has not significantlychanged in scope or concept. For the benefit ofthose skeptics among us, I quote from an adver-tisement that appeared in 1958: ‘Software pro-vided with the IBM 7070 includes an assemblysystem, a sort/merge, FORTRAN, an I/O package,multiprogramming and miscellaneous utilityprograms.’

One would expect that over a 10-year period,new software would emerge that would reduceprogramming costs and/or make programmingeasier. However, it appears that programmingtoday is more difficult, and the manufacturer iscontent with providing the same software toolsthat he previously provided, tools which even-tually will be viewed as very rudimentary.

My view of the software proposed by all com-puter manufacturers is that it is not enough, andit is not the right kind. The manufacturers’emphasis is now on operating systems and newlanguages … but what will they really do for theaverage user?

The article goes on to describe and giveexamples of needed programming tools andgeneralized business packages, some of whichwere then being built by independent softwarecompanies such as ADR and Informatics.

Over the next 30 years, I wrote many morearticles critical of the hardware manufacturerswho, through their business practices, wereimpeding the growth of the software industryin general and of ADR in particular.

My early years with ADR: 1959–1970In September 1959, I joined ADR as its first

employee. Of the six founders listed in ADR’sLetters of Incorporation, one remained a silentpartner for about a year; the others were intransition from their current positions.

Ellwood (Woody) Kauffman, one of thefounders, was an independent consultant and

former Univac employee. He lived nearPrinceton and was ADR’s first president. Heloved to say that he selected Princeton becauseit was equally inconvenient to both New YorkCity and Philadelphia. Except for Woody, therest of us had to relocate to Princeton. AsADR’s only full-time employee, I sat waitingfor the telephones to be installed in the small,empty office that Woody had selected. Thefounders were quick to give me an equalfounder’s share of the company; I paid $3,500for a one-seventh share in ADR.

The other founders were Steve Wright andDave McFadden, who were in the process ofleaving Univac, and Bob Wickenden andBernie Riskin, who were leaving the C&ORailroad, a Univac site in Cleveland. ShermanBluementhal, a former Univac employee, wasat General Librascope, a large government con-tractor. He joined ADR about a year later.

ADR’s businesses in the 1960sGeneral Librascope had a large contract with

the Federal Aviation Agency’s testing center,the National Aviation Federal ExperimentalCenter (NAFEC) in Pleasantville, New Jersey.Sherman was influential in quickly getting acontract for ADR to build several programmingsystems for the custom computer GeneralLibrascope was delivering to NAFEC for aircraftconflict prediction. For the next two years,about eight of us, including some new hires,worked at NAFEC building sort–merge pro-grams, an assembly program, a basic operatingsystem, and some programming aids.

ADR continued for several years strictly as aprogramming services company, building pro-gramming tools for many of the hardware com-panies and government agencies that hadspecial one-of-a-kind computers. One of ourearly projects in 1960 was to work with RCA inbuilding the first Cobol compiler. Most of ourcontracts were fixed-price and competitively bid.

Although I quickly became a supervisor formany ADR contracts and did little program-ming myself, I stayed up-to-date on sortingtechniques and recognized that, because sort-ing often consumed 50 percent or more of anapplication’s processing time, there was anintense need for better and faster sorts. Thatinterest remained with me for many years as Icontinually devised faster ways to sort on exist-ing tape computers and on some of the newerdisk storage computers.

Capitalizing on my experience with sorting,ADR secured a number of fixed-price contracts.To gain additional exposure for ADR’s sortingexpertise, ADR sponsored an ACM Sorting

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Symposium in November 1962. I chaired thissymposium and delivered four papers on newtape- and disk-sorting techniques. Other ADRemployees delivered three additional papers asdid representatives from IBM, Honeywell, RCA,and various universities and government agen-cies. In May 1963, ACM devoted an entire issueof the Communications of the ACM to the topic,publishing all 16 of the presented papers (seeFigure 3).

During the 1960s, ADR continued to buildmany sorting systems. We built a Bendix G-20sort, several RCA sorts for the 501 and SpectraSeries, a CDC 1604 sort for the Navy, a UnivacLARC sort, a Sylvania 9400 sort for army intel-ligence, a sort on IBM’s somewhat secretHarvest computer for NSA, and others.

By 1963, ADR had grown to about 30 peo-ple, and we found ourselves competing withthe few other software firms that hademerged—Computer Sciences, ComputerUsage, and Computer Applications. Although

we were generally profitable on each project,our cash flow was poor, and we generally justtried to survive. We did little planning, givingscant thought to patents, copyrights, tradesecrets, and protecting intellectual property.

There also were some management con-flicts. In 1962, Sherman Bluementhal andBernie Riskin tried to oust Woody Kauffmanfrom the presidency and failed. The two ofthem then resigned from ADR and set up a newprogramming services company called NCA(National Computer Analysts), which soonbecame one of our competitors.

Meanwhile, ADR had hired Dick Jones, alsoa former Univac employee, as sales manager. Inlate 1963, about 18 months after Dick joinedthe company, the founders decided thatWoody was not growing the company effec-tively so ADR’s board elected Dick Jones as thenew president. Although Woody then chose toleave ADR, he remained on the board for manyyears and always remained a good friend of thefounders and ADR.

With Dick Jones at the helm, the companybegan to grow much faster, and ADR openedseveral programming services offices aroundthe country, including in Washington, D.C.,Los Angeles, and New York City.

Dick hired a former Univac colleague, JohnBennett, to run the Washington, D.C., office.John was later to become, in 1970, ADR’s thirdpresident when the board ousted Dick Jonesduring a turbulent period for ADR, which Iaddress later.

In spite of increasing revenues each year,ADR had little to show for it. We had littlemoney in the bank and difficulty meeting eachpayroll. The need for additional investmentdollars became increasingly clear when, in1964, ADR entered the software products busi-ness with Autoflow, an automatic flowchartingprogram, and which we had built for the RCA501. Although we built it on a shoestring, weclearly would be unable to market it on a shoe-string.

With Dick Jones as the leader, we felt that itwas time to go public, even though our 1964revenues were less than $1 million. Our 1965public offering raised $6 million, and ADRbegan trading over the counter at $5 per share.

In ADR’s 1965 annual report, Dick Jonesnoted that ADR’s proprietary Autoflow productwould be built for several new computers andthat ADR was presently building additionalproprietary products. Dick was enamored ofthe potential market for software products. Hequickly authorized the building of a productcalled PDQ, a document search program, to be

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Figure 3. The cover of the May 1963 Communications issue devoted tothe ACM Sort Symposium. (Cover illustration Comm. ACM, vol. 6, no. 5,May 1963, courtesy of ADR; artist Charles G. Stern.)

built in our Washington, D.C., office. Then, in1967, ADR’s subsidiary called MassachusettsComputer Associates (which Dick had pushedto acquire) built the IAM product, which per-formed interactive algebraic manipulation.

Dick Jones ran ADR as a benevolent dictator.Although we had an active board of directors,including outsiders who represented the invest-ment firm that took us public, few planningdecisions were made at the board level. And,although we became a public company in1965, ADR had no real cost controls and noprofit-and-loss centers except for its twobranches and its one subsidiary.

I had an excellent relationship with Dick,who was a huge supporter of proprietary prod-ucts and who gave me a great deal of latitude.He quickly put me in charge of the proprietaryproducts ADR was building in its Princetonoffice, as well as those built in Washington andby our subsidiary in Massachusetts.

As I reflect on my years at ADR from 1964through 1970, it seems ADR and I fought bat-tles on many fronts to survive, some of whichwere very public. For example, we used thepress through articles, speeches, and advertise-ments to make our positions and problemsknown. Our first major battle was with IBMand its free product, IBM Flowcharter, whichcompeted with Autoflow. That battle betweenADR and IBM evolved into an industry battleto force IBM to unbundle. ADR had to protectits investment in the new products it was build-ing or planned to build. Concurrently withthose battles, we began to recognize the needto protect our intellectual property, and we bat-tled for the patenting and copyrighting of soft-ware. Interestingly, IBM, a big proponent of thepatent system in general and patenting com-puter hardware in particular, was against thepatenting of software.

As a young bachelor in my 30s, I channeledmy energies into those fights and in develop-ing ADR’s Software Products Division. At thesame time, I was battling Dick Jones’ shoot-from-the-hip approach to management. Inaddition to our programming services groups,Dick Jones had moved ADR into various otherbusinesses including time-sharing, servicebureaus, research, and turnkey systems—forthe most part without the Board of Directors’approval and without even an annual budgetor effective cost controls. As a director of thecompany, I certainly share some of the blame. Irationalize at this time that I was too busydoing other things. With no prior executivemanagement experience, I was learning thehard way.

At that time, we also faced significant finan-cial difficulties. One factor was that theFinancial Accounting Standards Board (FASB)accounting rule that was in effect in the 1960spermitted software product development coststo be capitalized and amortized over a five-to-seven-year period. Therefore, many compa-nies, including ADR, were able to showaccounting profits. So, although ADR showed abook profit each year between 1965 and 1970,it had a consistently negative cash flow, and itwas not financially solid.

In 1968, ADR raised additional moneythrough another public offering. The companywas now ardently followed by the Wall Streetanalysts as an up-and-coming company in thenew and exciting software products industry.ADR’s 1968 stock offering price was $25 pershare, and within a year, it peaked at $40. In1969, ADR had a market valuation of almost$40 million, with annual revenues of only $6.2million. Like the recent Internet craze, howev-er, sanity eventually returned to the stock mar-ket and dropped the value of ADR’s stock.

I was unhappy with our negative cash flow,but I was mesmerized by ADR’s market value. Icontinued to concentrate all my energy inmaking ADR’s Software Products Division suc-cessful. Although ADR had actually gotten intothe software products business in 1964, it wasnot until the 1970s and 1980s, well after IBMunbundled, that software became a major rev-enue producer for ADR.

ADR’s software products business in the 1960sOriginally, ADR had no intention of market-

ing software products in a bundled environ-ment. All software in the early 1960s was givenaway free by the hardware manufacturers, andusers freely exchanged programs throughSHARE, GUIDE, and other user groups. Userswere certainly not demanding priced software.

RCA was an up-and-coming computer man-ufacturer at the time, and, in 1963, theyapproached ADR about building a flowchartingsystem for its users. On speculation, wedesigned a semiautomatic flowcharting systemthat accepted assembly language input andsubmitted the proposal to RCA. The systemrequired a one-character code in the commentssection on each line of the assembly languagecode to generate the appropriate flowchartsymbols. But RCA showed little interest. Wesubmitted unsolicited proposals to severalother manufacturers and received the sameunenthusiastic response from all.

At that time, ADR had the free nighttimeuse of an RCA 501 and decided to develop a

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prototype to prove the flowcharting system’sfeasibility. A young programmer, Mike Guzik,who had just joined ADR from RCA, wasassigned the task. Mike wrote the Autoflow pro-gram in four to six months. In addition to pro-ducing extremely readable flowcharts, heproduced several cross-reference listings thatproved helpful during debugging. We showedthe completed prototype program to RCA butstill found little interest.

Having completed Autoflow with perhaps a$5,000 to $10,000 investment, we decided totry to license it to RCA’s base of about 100 RCA501 users. I became the project manager andhandled its marketing, development, pricing,and therefore its success or failure. I preparedsome descriptive marketing literature andwrote to all 100 users. We priced Autoflow at$2,400 and licensed just two copies.

It was now 1964. The IBM 360 had beenannounced, but there were still thousands ofIBM 1401s and 1410s in use. Because the marketseemed ripe for a flowcharting system, we decid-ed to build Autoflow for the IBM 1400 seriesmarketplace. Within 10 months, with a team oftwo, we produced a 1401 Autocoder version ofAutoflow and quickly hit the streets, countingon the fact that many of the 1401 Autocoderprograms had never been flowcharted despite itsbeing part of the required documentation inmost data processing organizations.

The interest was evident, but there was onehitch. Our system required those one-characterchart codes to trigger the right flowchart box.Companies were interested in Autoflow only ifthe system could automatically process exist-ing Autocoder programs without inserting theone-character codes. The project programmerquickly concluded that the operation codecould indicate to Autoflow the required flow-chart box type. The number of flowchart sym-bols would exceed those produced manually orunder the control of the one-digit chart code.Nevertheless, Autoflow would produce com-pletely accurate flowcharts that would be use-ful when the program had to be maintained orchanged. Additionally, it filled the documenta-tion need and satisfied corporate requirements.

Although I was now concentrating on devel-oping and marketing the IBM 1401 Autoflow, Icontinued to supervise the many sorting sys-tems that ADR was building under contract. In1964, I divided my time between those twopassions: Autoflow and sorting.

While attending the 1964 Spring JointComputer Conference (SJCC) in Washington,D.C., to present a paper on a new sorting tech-nique, I attended the session “Patents and Other

Legal Problems Relating to ElectronicComputers,” chaired by Morton (Mort) Jacobs.The panel discussed patenting software and otherways to protect intellectual property (IP). I imme-diately set up a meeting with Mort to discuss thepossibility of patenting one of the new sortingtechniques I had presented at the conference. Forme, the session was a turning point, marking myintroduction to Mort Jacobs and beginning 30-plus years of involvement in IP concerns.

To understand the issues we faced relative topatenting our sorting techniques requires a littleknowledge of how sorting large numbers ofrecords on computers works. Sorting theory forsorting large numbers of records on general-purpose computers with tape units was wellunderstood in 1964. The first phase, called theinternal sort, creates many sorted strings ofrecords using the computer memory and writesthe strings of sorted records on up to n – 1 tapeunits. The second, n-way merge phase continu-ally merges the strings of records (to formlonger strings) onto the various tape units untilthere is only one long string (consisting of allrecords) on one tape. At that point, the sort iscompleted.

The trick to reducing the elapsed time forthe entire sorting process is to make the initialstrings as long as possible in the first phase andto do the largest-size n-way tape merge in thesecond phase. Maximizing the “way” of themerge reduces the number of times the recordsare read and written, thereby significantlyreducing the overall sorting time. This can alsoreduce the waiting time as tapes (which can beread only in a forward direction) are beingrewound between successive merges.

Over the years, ADR and I had developedsome interesting ways to improve these two sortphases, some of which I presented in my paperat the SJCC. Although ADR had never built anysorts for IBM computers, I was familiar withIBM’s tape units that could only read and writerecords in a forward direction. I began to won-der if a faster sort product in competition to thefree IBM sort would be feasible. ADR could takesome of the techniques it had developed forother manufacturers’ computer systems, as wellas the new merging technique I had developed,and apply it to IBM’s 360 system.

Mort Jacobs convinced me that I could getpatent protection for my new sorting tech-nique. If awarded, this might stop IBM andothers from duplicating that process. So, on 8 April 1965, I filed for the sort patent. On 28 April 1968, a little more than three yearslater, I was awarded US patent #3,380,029 for“Sorting System.” The awarding of this first

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software patent warranted mentionon the front page of Computerworld(see Figure 4), and Fortune magazinecalled it an “Unprecedented Patent.”

After I filed for the patent, MortJacobs and I then turned our atten-tion to the Autoflow product. Mortasked pointed questions to which Ihad never given much thought. Howare you protecting the object codeyou are distributing to users? Howare you protecting your source codeinternally? What rights are you giv-ing your users in your contracts withthem?

I hadn’t been smart enough to askthe right questions—and I certainlydidn’t have the answers. But thanksto the long-standing business rela-tionship that was developingbetween ADR and Mort Jacobs, hequickly provided the right answers.In 1965, Mort was responsible forADR’s copyrighting the code that itdistributed and treating its sourcecode as a trade secret. In addition, weattempted to patent any softwaretechnique that we believed reachedthe level of an invention.

At that time, IBM was distributingsource code with its free software and puttingboth the object and source code in the publicdomain. To protect our IP rights in the pro-gram, Mort suggested we lease the program forthree years at a time and call the program equip-ment because contract law was clear on the lim-ited rights of a party when it leased equipment.Mort also drafted our patent for Autoflow,which was filed on 7 December 1965 and grant-ed almost five years later on 6 October 1970(see Figure 5, next page).

While marketing Autoflow for the IBM1400s, we became aware of the IBMFlowcharter, an IBM field-developed program(FDP) that IBM distributed for free. This pro-gram was not automatic, and the flowchart itproduced was based on separate, programmer-prepared input. Nor did it use the assembly lan-guage program as input. However, the IBMFlowcharter’s availability was a major factor inmany delayed or lost Autoflow sales. Ourprospects went to IBM and asked for improve-ments to the free IBM program. It was widelybelieved that IBM would develop a similar typeof program and provide the enhanced systemto customers at no cost.

Mort Jacobs advised us on how best to com-municate to IBM our concern that distributing

its free flowcharting program was anticompeti-tive. He wrote to Burke Marshall, IBM’s chiefcounsel, arguing that they were misrepresent-ing their product when they called it “auto-matic.” We argued that they were hurting ourmarket by giving the software away for free.Mort put IBM on notice that they might be vio-lating our patent application if they producedan automatic flowcharting program. But ourefforts were to no avail; we got only lip servicefrom IBM. These early skirmishes with IBMwere the first in a long line of confrontationson the subjects of tie-in sales, monopoly, andpatent protection for software.

With some success in the 1400 marketplaceand the emergence of Cobol, ADR embarked ona major effort to develop Autoflow for the IBMS/360 assembly, Cobol, and Fortran languages.

We advertised extensively, expanded oursales force significantly, and were at all themajor computer shows (see Figure 6, nextpage). From 1967 to 1970, ADR licensed morethan 1,000 Autoflow systems. IBM repro-grammed its flowchart program for the IBM360 and continued to be a major competitivefactor with its free program.

By 1967, several companies were marketingsoftware products, and the press was beginning

January–March 2002 51

Figure 4. From its 19 June 1968 issue, Computerworld’s front page announcement ofthe first software patent. (Reprinted with permission of Computerworld magazine.)

to take notice, questioning whether IBM andother manufacturers would unbundle theirsoftware from their hardware. In the March1967 issue of EDP Industry and Market Report, 17software packages were profiled, includingAutoflow. In that issue, editor Pat McGovernwrote about the potential of software packages,questioning if manufacturers would ever vol-untarily unbundle, opening themselves towidespread competition.

With little expectation by anyone that IBMwould voluntarily unbundle, there was a grow-ing awareness in 1967 that the independentsoftware companies had a golden opportunity.Because of ADR’s difficulties in competingagainst IBM’s free flowcharting program, Ibelieved that ADR’s best strategy to combatIBM was in building software that did not com-pete with IBM’s free software. I abandoned anythoughts of building sort programs to competeagainst IBM’s free sorts.

Industrial Research magazine recognizedAutoflow as one of the 100 best products of1967. Based on our continuing success withAutoflow and the growing acceptance of soft-ware products, ADR began investing in four addi-tional products: the Librarian, ROSCOE (RemoteOS Conversational Operating Environment),MetaCobol, and SAM (System AnalysisMachine). Everything looked promising. ADR’sstock rose, and the potentially huge marketplacefor software kept expanding.

Meanwhile, having been burned by IBM’sflowcharting program, ADR and other inde-pendent software companies complained to theUS Justice Department that IBM was monopo-

lizing the software industry. I remem-ber many meetings in 1967 and 1968with Justice Department attorneyswho were concerned about IBM’sdominance of the mainframe hard-ware field. During 1968, the JusticeDepartment interviewed a number ofindependent software companies andin January 1969 brought suit againstIBM. The complaint, which coveredIBM’s dominance of hardware, alsoalleged that IBM had hindered thesoftware products industry’s growthas a result of bundling the hardwareand software, beginning in the 1960s.

IBM had continued to announceand deliver free programs. DuringADR’s development of ROSCOE (anonline program development sys-tem), IBM began the free delivery ofCRBE, a Conversational Remote BatchEntry program, a direct competitor to

52 IEEE Annals of the History of Computing

Memoirs of a Pioneer: Part 1

Figure 5. First page of patent that shows a schematic block diagramincorporating a control program for flowchart documentation.(Courtesy of the author.)

Figure 6. ADR and Martin Goetz at the 1968 SJCC exhibit hall promoting itsnewest version of Autoflow. (Photo courtesy of the author.)

ROSCOE. Not long after,they announced CRJE (Con-versational Remote JobEntry), an improved versionof CRBE.

ADR’s strategy was toavoid direct competitionwith IBM. We had focusedour market niches in tech-nology areas that IBM hadpreviously avoided, but wehad no way to know whatIBM’s future developmentplans were. We could noteffectively plan for ourfuture if IBM was allowed tocontinue bundling its pro-grams with its hardware.

ADR sues IBMIn April 1969, ADR sued

IBM for monopolizing thesoftware products industry.We were attempting to pro-tect our future and, at the same time, collectdamages for reduced revenues in the flowchartmarket during the 1960s.

Just two short months later, in June 1969—six months after the filing of the JusticeDepartment suit—IBM announced that, begin-ning in January 1970, it would unbundle its sys-tems and application software except for systemcontrol programs (SCPs). These programs, saidIBM, were an integral part of its hardware andwould continue to be free. CRJE and all of IBM’soperating systems fell into that exempt group.

In late 1969, shortly after its unbundlingannouncement, IBM added insult to injury byannouncing TSO (time-sharing option), anotherADR ROSCOE competitor, as an option for its freeSCP MVS (multiple virtual storage) operating sys-tem. TSO was scheduled for delivery in 1971, 18months later. ADR then faced a battle on twofronts: Not only would TSO be free, it would notbe benchmarked for 18 months. There was greatinterest in ROSCOE, but few sales resulted. IBMcontacted all our prospects and told them aboutCRJE and the forthcoming TSO.

The year 1969 was traumatic for ADR andfor me. First, ADR brought suit against IBM inApril. At about the same time, Dick Jonespushed to acquire Programatics, a West Coastprogramming services firm selling Pisort, a pro-prietary software program, in competition withIBM’s free sort program. Against my objectionsand those of John Bennett, who had movedfrom Washington to Princeton to become direc-tor of marketing, the ADR Board approved the

acquisition of Programatics. My opposition wasbased on wanting to stay out of IBM’s path,not selling products in competition to them, ifpossible. And, because we had just introducedthe Librarian, ROSCOE, MetaCobol, and SAM,our sales staff was already dealing with toomany new products.

The acquisition proved both disruptive andcostly. Dick Jones added Pisort to ADR’s suitand tried to obtain a preliminary court injunc-tion against IBM’s distribution of its free sort.His effort failed, because ADR could not provethat the distribution would cause “irreparableinjury,” but the experience did afford us insightinto what it would take to get a preliminaryinjunction against IBM in the future.

Then, in October 1969, ADR’s main officebuilding, hit by a plane, caught fire and wasdestroyed (see Figure 7). It was a miracle thatno one was killed or injured. The next day wemoved to temporary quarters and never lost abeat. One saving grace was that coverage of thefire gave our products some excellent publici-ty. We even developed an advertisement andbrochure, “Unplanned Demonstration,” de-scribing how the Librarian had saved our sourcecode and Autoflow had allowed us to reproduceour flowcharts. Shortly thereafter, Business Weekpublished an article about ADR’s unusual adver-tising campaign with the headline, “TurningDisaster into a Sales Pitch.”

My growing involvement in IP and anti-competitive industry issues paralleled this1968–1969 time frame in which ADR was

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Figure 7. A 15 November 1969 newspaper headline about ADR’s main office being hit by aplane. ADR’s building was destroyed from the resulting fire. (Photo courtesy of thePrinceton Packet.)

struggling to survive and become a viable com-pany. In late 1968, I attended The Law ofSoftware conference in Washington, D.C.,where software’s patentability was discussed infive papers, including one by the commission-er of patents, Edward Brenner, as well as one byMort Jacobs. Three papers addressed the ques-tion of copyright protection for computer pro-grams. Two papers focused on the businessoutlook for software and whether the bundlingof hardware and software was an antitrust vio-lation. These issues were urgent. The JusticeDepartment suit, the ADR antitrust suit, andIBM’s unbundling announcement all tookplace during the first six months of 1969. MortJacobs, Dick Jones, and I, totally involved withthese issues, became more confident that IBM’ssupremacy of software was about to change(see Figure 8).

At a second Law of Software conference, inlate 1969, I spoke on the future direction of soft-ware and the need for software protection. Bythat time, IBM had announced its softwareunbundling would take effect in January 1970.IBM presented a paper on its new softwarelicenses in addition to a paper supporting theneed to protect software. IBM, however, indi-

cated that it opposed the patenting ofsoftware, a position it had held sincethe early 1960s. The new commis-sioner of patents, William Schuyler,took a different position in his pres-entation—there would be new guide-lines permitting software’spatentability.

Software’s taxation was addressedin a paper by Sheldon Cohen, whowould later become the US tax com-missioner. Software taxation isanother area in which I becameinvolved as the industry began togrow in the 1970s.

Following the conference, I canstill remember the feeling of elationthat ADR’s (and my) views werebeginning to garner support. The con-ference also renewed my confidencethat our suit against IBM had meritand that IBM’s distribution of CRJEand their announcement of TSO wereunlawful. However, despite my greatadmiration for Mort Jacob and his lawfirm, I began to realize that his smallfirm did not have the expertise ormanpower to effectively handle oursuit or do what would be necessary tobring IBM to the negotiating table. So,in late 1969, we employed the

Malcolm Hoffman law firm to handle our suitagainst IBM. Malcolm Hoffman himself, wellrespected in antitrust circles, had written a bookon antitrust law and had worked for theAntitrust Division of the Justice Departmentfrom 1944 to 1955.

Over the next several months, I workedclosely with Hoffman and his staff to prepareour case against IBM’s bundling of CRJE andTSO. I also worked with ADR’s sales force toobtain evidence that CRJE and the TSOannouncement were crippling ADR’s ability tomarket ROSCOE.

Meanwhile, ADR’s financial condition wors-ened. Not only were our costs increasingbecause of the lawsuit, but our cash flowremained negative in spite of paper profits. TheLibrarian and Autoflow sales continued toincrease, but our other new products were notselling well. Most notably, ROSCOE sales in1970 were near zero as IBM users tried to eval-uate our product against CRJE and the forth-coming TSO. Per IBM’s unbundlingannouncement, all existing pre-1970 software,including CRJE, would remain bundled (andfree). TSO would also be free because it was tobe part of the free IBM MVS operating system.

54 IEEE Annals of the History of Computing

Memoirs of a Pioneer: Part 1

Figure 8. A 1969 Computerworld editorial cartoon, from its 14 May 1969 issue,depicting IBM’s fortress as a castle of sand. (Reprinted with permission ofComputerworld magazine.)

ADR’s poor financial results in 1969 alsoreflected the fact that Dick Jones had opened17 one-man mini-offices in 1968 and 1969 inanticipation of higher product sales. AlthoughADR’s 1969 revenues of $6.2 million werealmost 50 percent higher than our 1968 rev-enues, our expenses had doubled.

Dick’s last full year with ADR was 1969. TheBoard of Directors had lost confidence in hisability to control ADR’s growth. While Dickhad done an outstanding job in helping ADRgrow in the 1960s, he did not have the disci-pline to work with budgets and to get Boardapproval on major expenditures.

In March 1970, having no desire to be pres-ident or to take responsibility for ADR’s otherdivisions, I recommended to the ADR Boardthat John Bennett replace Dick Jones as presi-dent. The Board agreed. John accepted the joband Dick left ADR and moved to California.(Two years later, ADR divested itself ofProgramatics, by selling it to Dick.)

Shortly, in June 1970, ADR sought a tempo-rary restraining order (and then a preliminaryinjunction) against IBM to stop its distributionof CRJE. Our sales force produced memorandaand affidavits from several users providing evi-dence that the free CRJE and the TSO announce-ment had crippled ADR’s ability to consummateROSCOE sales. And our poor financial condi-tion, as it turned out, gave our counsel someneeded and strong ammunition with which toargue our case.

A 60-day restraining order against IBM wasgranted in July 1970. A September 1970 datewas set for an evidentiary hearing for a prelim-inary injunction against IBM’s distribution ofCRJE and the bundling of TSO with the MVSoperating system.

But the hearing never happened. In August1970, IBM approached ADR with a settlementoffer and we settled our antitrust suit. ADRreceived a cash settlement of about $2 million,and IBM agreed to market Autoflow in Japanand Brazil with a guaranteed minimum pay-ment. IBM also agreed to license a large numberof copies of Autoflow and the Librarian for itsown internal use. This settlement provided ADRwith some much-needed cash and provided forsome foreign distribution of our products.

We continued to work closely with IBM afterthe settlement. We were a customer of its main-frame computers, we had a marketing agree-ment with two of its IBM World Tradesubsidiaries, and IBM was now the largest userof Autoflow and the Librarian.

With John Bennett as ADR’s new president,money in the bank from the IBM settlement,

the IBM’s unbundling announcement in effect,a Justice Department suit against IBM, andADR’s base of more than 1,000 existing cus-tomers and many new products, ADR had anew lease on life. Our stock, which had hit ahigh of 40 in 1968, was down to five, but wewere still in there, fighting for survival.

John Bennett gave me profit-and-lossresponsibility for the Software ProductsDivision of ADR and I had my work cut out forme—what had been John’s product sales forceand marketing responsibilities were now mine.For the first time, I had control of ADR’s soft-ware products business.

In 1970, the software industry emergedwith lots of opportunities. But would IBM andthe other computer manufacturers dominatethis industry and smother ADR and those hun-dreds of small independent software compa-nies that had just formed? As it turned out,there was strength in numbers—several earlysoftware companies recognized the power oftrade associations.

ADR had been active in a small software tradeassociation called the Association of IndependentSoftware Companies. AISC was formed in May1968 by 11 software companies (see Figure 9, nextpage). Some of the companies were in the soft-ware products and programming services busi-ness; some, exclusively in services. Although asmall association, AISC was active in developingwhite papers on software protection throughpatenting, on fair competition issues from not-for-profit companies like System DevelopmentCorporation, and on unbundling of software andhardware by IBM.

Dick Jones had been ADR’s representative toAISC, a role I filled after his departure in early1970. Although many new software productsand services companies had formed after IBM’sunbundling announcement, AISC found it diffi-cult to attract new members. Meanwhile, theAssociation of Data Processing Service Organiza-tions (ADAPSO), another trade association madeup of hundreds of small service bureau centers,was hoping to expand by forming new ADAPSOsections and asked Larry Welke, president ofInternational Computer Programs, to form anew software section. ICP, which produced andmarketed a catalog of software programs, wasconsidering joining AISC but decided instead toorganize the ADAPSO section.

The Software Section of ADAPSO wasformed with 26 software companies in October1971, with Larry Welke as its first president. Ihad known Larry for several years, and we soonopened discussions on the possibility of AISCalso joining ADAPSO. In the spring of 1972,

January–March 2002 55

AISC agreed to merge with the software prod-ucts section of ADAPSO and name the expand-ed section ADAPSO/AISC. The five executiveboard members of AISC (of which I was one)agreed to be on the new section’s Board ofDirectors, which asked me to form an ADAPSOcommittee on software protection. (In 1973,the software section of ADAPSO was renamedthe Software Industry Association.)

(End of Part 1. Part 2 will feature Goetz’s role ingrowing ADR to a $200,000,000 company and inADAPSO, which dealt with industry issues as IBMbegan to exert its enormous marketing powers andresources in the licensing of its program products.)

Martin Goetz is a privateinvestor and management con-sultant to software product firmsand venture capital firms. Hewas a founder of Applied DataResearch in 1959 and formerpresident of ADR. He receivedthe first US software patent in

1968. In 1989, he was elected to the InfomartComputer Hall of Fame and, in 2000, to the New JerseyInventors Hall of Fame. He is recognized for his workin software product protection through copyright andpatent law and for combating unfair competitive prac-tices in software by hardware manufacturers.

Readers may contact Martin Goetz at mgoetz@nis.net.

For further information on this or any other com-puting topic, please visit our Digital Library athttp://computer.org/publications/dlib.

56 IEEE Annals of the History of Computing

Memoirs of a Pioneer: Part 1

Figure 9. A Computerworld article, from its 22 May 1968 issue, announcing the formation of the AISCtrade association. (Reprinted with permission of Computerworld magazine.)