Demand from China and India Fuels Software Piracy

The piracy rate increased worldwide last year, a new study shows, thanks to counterfeit sales in the two Asian giants
Despite progress in stopping the illegal use of software, PC software piracy remains a serious problem globally, especially in the fastest-growing markets, a new study revealed.

Released Tuesday, the study found that the worldwide PC software piracy rate rose for the second consecutive year, to 41% in 2008 from 38% in the previous year. This was mainly because PC shipments grew fastest in high-piracy countries such as China and India, as well as overwhelming progress in these and other countries.

Despite the rise in the global rate, PC software piracy dropped in slightly more than half, or 57 of the 110 countries studied. It was the same in nearly one-third and rose in just 16, according to the study conducted by IDC for the Business Software Alliance (BSA).

Jeffrey J. Hardee, BSA's Asia-Pacific vice president and regional director, noted mixed results in the Asia-Pacific region, with eight economies showing a fall in PC software piracy, no change in seven and a rise in three. Still, the regional average PC software piracy rate rose to 61%, from 59% in the previous year, with losses reaching over $15 billion.

"This attributed to the mathematical outcome of more rapid growth of PC markets in economies of higher piracy rates. Even if piracy were to go down in every high-piracy country, their growing market share for PCs could drive the regional average up," Hardee explained in a press statement.

"We are pleased that countries like China are moving in the right direction in bringing down their PC software piracy levels, and many governments across the region have continued to show their support with joint awareness campaigns, enterprise software legalization initiatives, enforcement actions and stronger legal remedies, but challenges still remain."

One fertile ground for piracy, especially in emerging markets, is the rapidly growing "white box" user base (typically consumers and small businesses) that buy locally assembled computers from non-brand-name vendors that bundle pirated software with their PCs, said Hardee.

Globally, the monetary value of "losses" to the software industry from PC software piracy broke the $50 billion level for the first time. Worldwide losses grew by 11% to $53 billion in non-adjusted dollars, although half of that growth was the result of the falling U.S. dollar. Excluding the effect of exchange rates, losses grew by 5% to $50.2 billion.

The study's scope did not extend beyond packaged software, to cover server- or mainframe-based software.

BY Sol E Solomon

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