Of course, this has been noted at a time where Microsoft’s piracy protections through activation, Windows Genuine Advantage and Office Genuine Advantage schemes are stricter and harder for the hackers to crack than ever before.

InformationWeek reported that Raikes spoke about this at last week’s Morgan Stanley Technology conference in San Francisco. He didn’t say that all piracy was helpful to Microsoft, but that a certain amount of piracy helped Microsoft, with the exact quote being “We understand that in the long run the fundamental asset is the installed base of people who are using our products. What you hope to do over time is convert them to licensing the software.”

Hmm… sounds a little bit like YouTube or Kazaa’s business model, with the former under attack right now in the courts, while the latter was sued into completely changing their business model.

Once again, this is clearly not a signal from Microsoft that the floodgates to free software are open. Microsoft’s ever more effective anti-piracy technologies are testimony to that, with most people wanting Vista or Office 2007 having no choice but to pay.

Microsoft are said to be flirting with ‘pay-as-you-go’ schemes, although this was tried previously in Australia with a subscription version of Office 2003. It flopped badly, and rather than being a bad idea, it was simply ahead of its time, and possible too expensive even though the per-year cost was obviously more easily handled financially than paying for the package upfront in one go.

Still, it is fascinating to see that Microsoft has finally acknowledged that some piracy can ultimately be good for the bottom line, even as they fight harder than ever to make piracy as utterly inconvenient as possible.

Could this be yet another step towards ad-supported online software from Microsoft, in the vein of what Google has been able to achieve with its complete dominance of the online advertising space? Please read onto page 2 for the conclusion...