Study: Companies using pirated software 'save' $2.9B

Pirated software saves its users in developing countries more than $2.9 billion annually. So finds a study of manufacturers in Latin America, Central and Eastern Europe and Asia-Pacific commissioned by Microsoft.

The study was done by the Keystone Strategy with results announced as part of Microsoft's Global Play Fair Day on Thursday. Play Fair Day is Microsoft's attempt to raise awareness on how pirated software gives an "unfair competitive advantage" to companies that steal software compared to those that pay for it, the company says.

Ballmer to Hu: 90% of Microsoft customers in China using pirated software

The study singled out manufacturers deliberately in the hopes of convincing the Federal Trade Commission to initiate sanctions against users of pirated software. On Nov. 4, the National Association of Attorneys General (NAAG), sent a letter signed by 39 to the FTC and its Bureau of Competition requesting greater enforcement of the Federal Trade Commission Act (FTCA) against foreign manufacturers using pirated software. The implication is that the FTC could ban the import or sale of goods made by these companies, or take other actions.

"Theft of intellectual property is endemic in countries to which our manufacturing jobs have been transferred. Indeed, the piracy rates for software in some of our largest trading partners are above 80% and in some cases, above 90%," the letter states.

The Keystone study determined which countries are using more pirated software and how much money is being saved annually by those using it. Among manufacturers in the "BRIC" nations, Brazil, Russia, India, China, (all regarded to be at similar stages of economic development), China was found to steal the most, the report finds, and save the most: Brazil manufacturers save $186 million annually, Russia $115 million, India $505 million and China $837 million. In India, for example, those savings translate into 215,000 jobs.

The report also tips a hat to those playing by the rules, noting that more than 4.1 million PCs in China are paying for their software licenses. The message of Play Fair Day is that competitors inside those countries are being hurt by piracy, too.

On the other hand, the study also could be seen as quantifying how much money companies are spending on software and, perhaps, the potential savings available should they opt for using less expensive alternatives such as open source.

Keystone Strategy analyzed data from the Bureau of Labor Statistics, the Business Software Alliance, the CIA World Factbook, government statistical reports, Microsoft research, UNIDO, software resellers and the World Bank.

Microsoft also gave a shout-out to its legitimate paying customers in BRIC nations including Hindusthan National Glass & Industries of Indian and Russian steel manufacturer Seversta. It held them up as "heroes" that also suffer an unfair disadvantage when competing against those who use pirated software.

Julie Bort is the editor of Network World's Microsoft Subnet and Open Source Subnet communities. She writes the Microsoft Update and Source Seeker blogs. Follow Bort on Twitter @Julie188.

Read more about software in Network World's Software section.

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