Global software piracy cost US$40 billion in 2006: BSA

Stan Beer
Tuesday, 15 May 2007 16:10

Business IT - Technology

The fifth annual global PC software piracy study released today by software vendor sponsored group the Business Software Alliance (BSA) has found that globally the average software piracy rate was 35%, virtually unchanged from 2005. This amounted to nearly US$40 billion in losses to software companies, according to BSA.

According to the study conducted by IDC, progress was seen in some emerging markets, including China, where the piracy rate dropped 10%, and in Russia, where piracy fell 7%, over three years.

However, the report painted a far bleaker picture overall, especially in emerging markets. In more than half of the 102 countries studied, the piracy rate exceeded 60%. In approximately one third of the countries, the piracy rate exceeded 75%.

Emerging markets in Asia-Pacific, Latin America, Eastern Europe, and the Middle East and Africa accounted for one-third of PC shipments, but only 10% of spending on PC software.

Eastern Europe, with a 68% piracy rate, led the way as the most piracy ridden market, closely followed by Latin America (66%), the Middle East/Africa (60%) and Asia Pacific (55%). In all of these markets, there was little change in the piracy rate from the previous year.

In fact, while the developed markets had overall significantly lower rates of piracy than emerging markets, the 2006 figures showed little change from the previous year.

The 2006 software piracy rates in North America (22%) and Western Europe (34%) were virtually unchanged from the previous year, suggesting that piracy remains a persistent problem for software vendors in all markets. However, the BSA has attemptefd to put a positive spin on the findings.
 
BSA President and CEO Robert Holleyman said: “The good news is we are making progress, however, we still have a lot of work to do to reduce unacceptable levels of piracy.  These significant losses translate into negative impacts on IT industry employment, revenues, and financial resources available for future innovation and the development of new technologies.”

Commenting at the Asia regional launch of the latest global software piracy study, Jeffrey Hardee, Vice President and Regional Director for Asia, said “Of the 15 individual markets examined in the Asia-Pacific region, the rate of piracy actually dropped in 11 and stayed the same in four. Despite these results, the average piracy rate for the region increased by one point to 55%.  This seems counter intuitive, but China’s and India’s share of the PC market in the Asia Pacific region grew from 42% in 2005 to 46% in 2006 and this has the mathematical effect of dragging the regional average upward toward the China and India average, even though the piracy rates in both countries came down in 2006.” 

Hardee added: “Governments in Asia Pacific have recognized the contribution and vast potential of the IT sector as an economic driver and the corresponding importance of reducing software piracy. Today, more than ever, governments in the region, working with industry, are strengthening IP policies, educating consumers and businesses on the benefits of using legal software, introducing enterprises to ways to manage their software assets, and conducting concerted enforcement actions against the use of illegal and unlicensed software.  As respect for IP in the Asia-Pacific continues to grow and the region’s IT market segments mature, local companies and industries will expand and move up the value chain. In fact we have already seen evidence in the region of an increasing proportion of investment by the private sector being directed towards the development of next-generation technologies and higher-value IT products and services. This reinforces our view that strong protection for intellectual property rights encourages innovation.”

“A number of factors contribute to regional differences in piracy:  the strength of intellectual property protection, the availability of pirated software, and cultural differences,” said John Gantz, chief research officer at IDC.  “Reducing software piracy around the world will take much more work and investment, but those efforts will pay off in the form of stronger local IT industries that drive broader economic growth.”

Microsoft, the largest sponsor of the BSA, has been criticized in the past for allegedly tacitly encouraging piracy in emerging markets that can't afford the relatively high prices of its software. The software company's accusers maintain that Microsoft would rather see a market filled with pirate users of its products than a market driven into the waiting arms of free and open source software, such as Linux.{moscomments}