Microsoft: Manufacturing Companies in BRIC Countries Suffer Massive Competitive Disadvantage Due to Software Theft

• As part of a study to examine the broader economic impact of software piracy, analysts from Keystone Strategy evaluated the unfair competitive advantage enjoyed by companies that practice widespread piracy.
• In China, for example, manufacturers that “play fair” with legal, licensed software suffer a competitive disadvantage of about $837 million compared with companies that illegally slash costs and use pirated software.
• Russian manufacturers who play fair are disadvantaged more than $575 million over the five-year software lifespan.
• Piracy creates more than $2.9 billion of competitive disadvantage per year across manufacturers in Latin America, Central and Eastern Europe and Asia-Pacific regions.
• In specific countries, Keystone determined how much pirated software harms manufacturers playing by the rules as follows: Brazil ($186 million), Russia ($115 million), India ($505 million), and China ($837 million).
• Over a five-year software life cycle, manufacturing companies in BRIC countries will lose more than $8.2 billion to their cheating competitors.
• There are more than 4.1 million PCs legally licensed by manufacturing firms that play by the rules in China. The competitive disadvantage to these firms amounts to about $837 million annually, or $4.18 billion over the typical five-year software life cycle.
• Indian manufacturers experience $505 million per year in competitive harm. Their pirating competitors could use this money to hire more than 215,000 new employees.

FAST Research: 76 percent would not report their employer if they were using illegal software

• Over three quarters of UK office workers would turn a blind eye to malpractice in the office and fail to report it, according to the latest research from the Federation Against Software Theft
• Of this sample, 13 percent stated that they would not report illicit use to protect their jobs;
• 22 percent because they did not wish to be seen as a whistleblower and
• Amazingly, 46 percent simply did not care

Eighth Annual BSA and IDC Global Software Piracy Study

• Commercial value of unlicensed software put into the market in 2010 totaled $58.8 billion (up 13% from the year before and almost double what it was compared to the first study in 2003)
  
• Once again, the U.S. has the lowest piracy rate (unchanged at 20%), but still has the highest commercial value of pirated software (losses of $9,515 million)
• Even with relatively low piracy rates, the size of the technology markets in North America and the European Union led to a combined $32.2 billion in unlicensed software in 2010 (55% of total losses)

SIIA Paid $57K in 2010 to Piracy Whistleblowers

• In 2010, the Software and Information Industry Association received 157 reports of alleged corporate end user software piracy
• Of the 157 reports, 42 (or 27%) were judged sufficiently reliable to pursue
• Of these 16 qualified for rewards totaling $57,500
• 75% of all reports come from IT staff or managers, 11% from the company’s senior management and 4% from outside consultants
• More than 59% of those reporting are no longer employed by the target company
• Most corporate cases pursued by SIIA represent relatively larger companies – the average number of employees is over 567 with average annual sales of nearly $441 million

Top 20 Geographies for Pirated Software Use (Jan 2011)

Source: CodeArmor Intelligence data from sample deployments (top geographies based on the number of unique machines running pirated software)

Microsoft Removing 800,000 Links Per Month

• Through an artificial intelligence system, Microsoft scans the Web for suspicious, popular links and then sends takedown requests to Web service providers, providing evidence of questionable activity.
• The counterfeiters, however, have automated systems that replace links that Microsoft deep-sixes. So the company has turned up the dial on its link-removal machine.
• “We used to remove 10,000 links a month,” Mr. [Peter] Anaman [of Microsoft] says. “Now, we’re removing 800,000 links a month.”

Seventh Annual BSA and IDC Global Software Piracy Study

• Commercial value of unlicensed software put into the market in 2009 totalled $51.4 billion
• Once again, the U.S. has the lowest piracy rate (20%), but still has the highest commercial value of pirated software (losses of $8,390 million)
• Even with relatively low piracy rates, the size of the technology markets in North America and Western Europe led to a combined $21 billion in unlicensed software in 2009 (41% of total losses)

SIIA Anti-Piracy Year on Review 2009

• Most cases pursued by SIIA represent relatively larger companies – the average number of staff is over 1,721 with average annual sales of nearly $505 million

Share of Pirated Titles by Software Type

• Productivity (96%)
• Utilities (74%)
• CAD (71%)
• Development (67%)
• Document Management (45%)
• Creative (42%)
• Media Management (38%)
• Security (29%)
• Other (23%)
• Server (0%)

Microsoft: 1 in 8 Workers in the U.K. Use Pirated Software

• 57% believed their boss would consider the practice acceptable

Bill Gates Calls Out China On Software Piracy In Business

• "What's unique to China is you have large businesses using software without paying for it. Super-profitable big businesses. Take two of the five most-profitable businesses in China: they don't pay for their software."

V.i. Labs Software Piracy Risk Assessment Report - September 2009

• File hosting services are a significant piracy distribution threat: 100% of the pirated product releases surveyed were available on Rapidshare and 67% were available on two or more file hosting service providers.

V.i. Labs Software Piracy Risk Assessment Report - July 2009

• The top five piracy groups (out of 212) contributed 59% of the cracked releases in the research sample.

Top 10 US Industries With Highest Reports of Software Piracy in 2008 (BSA)

1. Manufacturing
2. Sales/Distribution
3. Service (general category)
4. Financial Services
5. Software Development
6. IT Consulting
7. Medical
8. Engineering
9. School/Education
10. Consulting

Sixth Annual BSA and IDC Global Software Piracy Study

• One-Fifth of PC software in United States is pirated
• Worldwide losses grew in 2008 by 11 percent to $53 billion

SIIA Anti-Piracy Year on Review 2008

• Most cases pursued by SIIA represent relatively larger companies – the average number of staff is over 804 with average annual sales of nearly $90 million

V.i. Labs’ Research Offers Insight to High-Value Software Applications and Piracy Activity (August 2008)

• V.i. Labs evaluated 17 leading EDA and PLM vendors, including Agilent, ANSYS, Autodesk, Cadence Design Systems, Synopsys, Dassault, The MathWorks, Mentor Graphics, National Instruments, PTC, Solidworks, and UGS/Siemens
• Discovered nearly 1,000 crack releases in the last three years alone, with 79 percent of those being PLM or CAD-related, and 21 percent being EDA-related
• The average time-to-crack for PLM vendors was 30 days (the point in time where the piracy group has produced a quality crack release of a vendor’s new software version)

PricewaterhouseCoopers 2007 Technology Licensing Marketplace Study

• Consensus estimates seriously miscalculate the impact of licensing revenue leakage
• Almost half of the companies surveyed (48 percent) do not have a plan for recovering lost licensing revenue
• Forty percent of technology licensors do not conduct any compliance audits

PricewaterhouseCoopers "Economic crime: People, culture and controls" (The 4th biennial Global Economic Crime Survey)

• Of the 41% of IP infringement cases that involved a perpetrator located overseas, 44% of those involved a perpetrator from China.

UBS Investment Research: Could the Piracy Trade Winds Be Changing Course? (May 2006)

• Estimated average piracy rate for the large enterprise market in China is approximately 70%
• Estimated average piracy rate for the SMB market in China is approximately 90%