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Some software companies act as publishers, soliciting programs from authors, who receive a royalty of 15% to 25%. Increasingly, though, the software firms, which are concentrated on the West Coast, are preparing programs with their own staffs, which makes quality control easier and profit margins higher. Among the major software companies:
Personal Software. Daniel Fylstra, 30, who co-founded the firm with $500 three years ago, saw sales rise to $4 million last year and expected his gross to triple this year. Now he believes that sales will be "substantially more" than that. The company's first product was the game program Microchess, but its bestseller is VisiCalc, a $200 program used by businessmen to make financial forecasts. Total sales of it to date: 150,000 copies.
Microsoft. Best known for its version of the program-writing language, BASIC which has sold more than 500,000 copies so far, Microsoft (projected 1981 sales: $14 million) was founded in 1975 by William Gates, then an 18-year-old Harvard student. Gates now oversees a staff of 96 at the firm's headquarters in Bellevue, Wash. Growth has come so fast that Gates has not yet found time to finish his degree at Harvard.
Lifeboat Associates. Based in Manhattan, Lifeboat (projected 1981 sales: $10 million) sells some 200 different software packages through retail stores and catalogues. The company, which publishes only programs written by freelance authors, was founded in 1977 by Anthony Gold, 35, a former Citibank officer. Among its offerings are the spelling corrector MicroSpell and the expense account helpmate T-Maker II.
Although small, start-up companies now dominate personal computer software, hardware companies like IBM and Hewlett-Packard are moving into the field. IBM has already announced it will sell programs to match its new personal computer. Even IBM, though, commissioned several of the new personal software companies to adapt their product to its machines.
In the future, it may be more difficult for new companies to enter the rapidly maturing industry. A current case in point is Plum Software, established last January in Los Gatos, Calif., to market Filewriter, a program priced at $9.95 that can alphabetize lists on Apple computers. Despite three classified ads in computer magazine, no products have yet been sold. But that has not discouraged the company's founders: Steve Grimm, age 12, and Nikolai Weaver age 11. —By Kenneth M. Pierce. Reported by Michael Moritz/San Francisco