Bill Baker likes to compare the people who write instructions for computers to songwriters. "They're both creating something new," he says. "They just need a way to get it recorded and played." Mr. Baker is founder and president of Information Unlimited Software Inc. (IUS), a Berkeley, Calif., company recently chosen by IBM to provide the workd processing instructions, or software, for its new line of personal microcomputers.
Lately, Baker and many of the other people in his business have been writing a very happy tune.
It barely existed four years ago, except in the basements and garages of a dedicated band of computer hobbyists. Now, the business of making instructions to tell computers -- in their own language -- how to help write sentences and paragraphs, how to do number-crunching for accountants, and how to forecast sales trends has grown to a half-billion-dollar industry.
This year, software is likely to account for over $1 billion in sales; by 1990, software-writing is expected to bring in over $22 billion. In this hothouse growth climate, some companies are talking about sales that triple every year.
And as they grow, software companies are turning the world of computer users from a closed club where only afficionados understood how to use them into a retail business for the common man where sophisticated computers say things like "Hi, there."
The number of companies and individuals producing these friendly software packages on a regular basis stands somewhere between 200 and 300, a figure that is hard to pin down because there are so many free-lancers. And these software authors are a prolific lot. A person buying a system from Apple Computer Inc., for instance, has a choice of over 15,000 software programs, Apple spokesman Robert Campbell said.
"The software business is growing exponentially," said Ralph Gilman, a computer industry analyst with Dataquest, a Cupertino, Calif., research firm. "Many companies will show 300 percent growth for the next coupel of years or so."
One of these is IUS. Its sales reached $1.3 million last year, and should go over $3 million this year. By 1985, IUS president Baker foresees sales of $100 million.
Another company showing fast growth is Peachtree Software Inc. of Atlanta. Its sales of accounting software packages reached $2.5 million last year and "at the beginning of this year we thought sales would double," said spokesman Burt Bralliar. "Now we know we'll do better than that." Peachtree also recently sold a software package for IBM's personal computer.
Despite this growth, many of these companies, including IUS, have stuck to their entrepreneural roots by staying private and have not been sold to larger computer companies. But eventually, analysts say, their growth will require the larger infusions of capital that a stock offering or takeover can bring in.
In June, for instance, Peachtree Software was bought for $5.5 million by MSA Inc., another Atlanta-based company that produces software for large business computers, Mr. Bralliar said.
"A few are going public, but most have chosen to stay private," Mr. Gilman said. "And Wall Street has shown an interest."
"What helped get investors interested in something that was was just a cottage industry a few years ago were two major developments. One made it possible for computers to be used by the great mas of uninitiated, the other permitted software packages from many designers to be used in various brands of computers.
The first was the development of software packages that electronically took novice users and led them by the hand through processes like constructing and analyzing revenue forecasts without a pencil and paper. One of the first to do this was VisiCalc, a product of Personal Software Inc. of Cupertino.
"ViciCalc was the single most innovative pacakage of its time," Gilman says. After that, he said, all microcomputers had to have software that made it possible for people who know nothing about computers to use their new office "assistants" in a few hours.
The other development was also born in California, at Digital Resources Inc. in Pacific Grove. It goes by the name CP/M, for Control Program for Microcomputers. CP/M is what is known as an operating system, a set of instructions that tell the machine where to put all the bits of information and what to do with them.
CP/M's instructions serve as a translator between the computers and the software packages from a variety of makers. Now, says George Weiss, an analyst with Quantum Science Corporation, most of the computer companies are making their machines compatible with CP/M.
With CP/M, Mr. Weiss says, a person can use a wide selection of software. As a result, he added, computers are "becoming more and more of a commodity, like stereo sets."
Like stereos, where people are at least as interested in new records as in the record players, public interest in microcomputers will eventually be focused , not on the computers themselves, but on software packages that allow users to perform a variety of business and budgeting tasks as well as play games.
"The industry is becoming more and more of a retail business," Weiss said. This year, about 25 percent of microcomputer industry sales come from software. By 1990, it is estimated, the picture will be almost reversed, with 71 percent coming from software and 29 percent from hardware.
Even though many software authors have put on business suits and moved their garages into office buildings, the microcomputer industry still likes to hear from the hobbyists. "IUS is actively seeking top-quality, documented software products and offers premium compensation to individual program authors," an IUS brochure beckons.