Print
Infringements drop but the value of losses is on the rise according to latest PC software piracy study
Hong Kong has posted the best performance in Asia in stopping the illegal use of software products, with a 3 percentage point decline in its personal computer (PC) software piracy rate according to the Sixth Annual BSA-IDC Global Software Piracy Study released today by the Business Software Alliance (BSA).
However, the study conducted by IDC, the information technology (IT) industry’s leading global market research and forecasting firm, showed that while the number of infringements in Hong Kong has fallen, the dollar value of losses to the industry from software piracy has actually risen marginally from US$224 million in 2007 to US$225 million in 2008.
Globally, the rate of PC software piracy dropped in slightly more than half (57) of the 110 countries studied in 2008, remained the same in nearly one third (36), and rose in just 16. However, the worldwide PC software piracy rate rose for the second year in a row, from 38 percent to 41 percent, mainly because PC shipments grew fastest in high-piracy countries such as China and India, overwhelming progress in these and other countries.
In another sign of the scale of the problem, the monetary value of “losses” to the software industry from PC software piracy broke the US$50 billion level for the first time. Worldwide losses grew by 11 percent to US$53 billion in non-adjusted dollars, although half of that growth was the result of the falling US dollar. Excluding the effect of exchange rates, losses grew by 5 percent to US$50.2 billion.
Jeffrey J. Hardee, BSA’s Vice President and Regional Director, Asia Pacific, said, “We are seeing mixed results in Asia Pacific with eight economies showing a decline in the PC software piracy rate, no change in seven and an increase in three. The average PC software piracy rate in Asia Pacific increased to 61 percent, up from 59 percent the previous year, with losses reaching over US$15 billion. This increase in the average piracy rate is 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.”
“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 PC software 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.
“The availability of pirated software on the Internet, which ironically is facilitated by increasing broadband penetration in the region, is also a major concern,” added Hardee. “On top of this, it is surprising how often we find that managers fail to institute policies and procedures in their organizations to manage their software assets to prevent the use of unlicensed software in the workplace and to gain efficiencies by carefully integrating their software assets to maximize productivity.”
“Fortunately, experience has shown that we can reduce software piracy through a combination of consumer education, strong intellectual property policies, effective law enforcement, and legalization programs by businesses and government agencies. The progress seen in many APAC economies is proof that this anti-piracy blueprint works – and that governments, businesses and consumers all benefit,” said Hardee.
“The HKSAR Government is committed to promoting respect for intellectual property rights (IPR), in the interest of nurturing a business environment conducive to the further healthy development of our knowledge-based economy,” a spokesman for the Commerce and Economic Development Bureau said. “We are delighted to see our efforts to promote proper management of software assets bearing fruits. We look forward to working closely with the industry to further strengthen our IPR protection regime.”
“In achieving the largest drop in PC software piracy in the Asia-Pacific region, Hong Kong has demonstrated what can be achieved when government and industry join hands to address the challenge,” said Belinda Lui, Chairperson of the BSA Hong Kong.
The HKSAR Government received the inaugural ‘Government Best Practices, Asia-Pacific’ award from BSA last year for its leadership in driving software asset management adoption by Hong Kong businesses through the Genuine Business Software Campaign.
“This year’s results largely reflect the impact of that initiative, and ongoing efforts by HK Customs & Excise in deterring the use of illegal software. While we are very encouraged, there is more work to be done if we are to bring Hong Kong’s piracy rate in line with comparable economies in the region. In maintaining our focus on business software piracy, we need to leverage new copyright laws which encourage better corporate governance by directors and senior management, and also address the growing threat of piracy in the digital environment,” said Lui.
Lui further stated “In this economic environment, it is even more important to promote respect for IPR and ensure a level playing field. We are confident that with the Government’s ongoing commitment to IPR protection, this will continue to fuel the local software industry to innovate and prosper.”
Negative Impacts Go Far Beyond Software Industry
Software piracy affects much more than just the global software industry. For example, for every $1 of software sold in a country, there is another $3 to $4 of revenues for local IT service and distribution firms. A 2008 IDC study predicted that lowering PC software piracy by 10 points over four years would create 600,000 additional new jobs worldwide. That projection has been confirmed by actual experience in China and Russia, the new study says.
Software piracy also lowers tax revenues at a time of increased pressure on governments to provide essential services. According to the 2008 study noted above, reducing piracy by 10 points would generate US$24 billion in higher government revenues without a tax increase.
Software piracy also increases the risk of cyber crime and security problems. For example, the recent global spread of the Conficker virus has been attributed in part to the lack of automatic security updates for unlicensed software. In a 2006 study, IDC found that 29 percent of Web sites and 61 percent of peer-to-peer sites offering pirated software tried to infect test computers with “Trojans,” spyware, keyloggers, and other tools of identity theft.
Impact of Global Recession Is Mixed
The global economic recession is having a mixed impact on software piracy, the study says. Victor Lim, Vice President, Asia/Pacific Consulting Operations at IDC, noted that consumers with reduced spending power may hold on to computers longer, which would tend to increase piracy because older computers are more likely to have unlicensed software loaded on them. However, pocketbook pressures are spurring sales of inexpensive “netbooks,” which tend to come with legitimate pre-loaded software; and spurring businesses to implement software asset management (SAM) programs to increase efficiencies and lower IT costs.
“Reduced buying power is only one of many factors affecting software piracy,” said Lim. “The economic crisis will have an impact – part of it negative, part of it positive – but it may not become fully apparent until the 2009 figures come in.”
Among the study’s other key findings:
The BSA-IDC Global Software Piracy Study covers piracy of all packaged software that runs on personal computers, including desktops, laptops, and ultra-portables. The study does not include other types of software such as server- or mainframe-based software.
For more details or a copy of the complete study, visit www.bsa.org/globalstudy.
Business Software Alliance (www.bsa.org) is the foremost organization dedicated to promoting a safe and legal digital world. BSA is the voice of the world's software industry and its hardware partners before governments and in the international marketplace. Its members represent one of the fastest growing industries in the world. BSA programs foster technology innovation through education and policy initiatives that promote copyright protection, cyber security, trade and e-commerce. BSA members include Adobe, Agilent Technologies, Altium, Apple, Autodesk, Bentley Systems, CA, Cadence Design Systems, Cisco Systems, Corel, CyberLink, Dassault Systèmes SolidWorks Corporation, Dell, Embarcadero, Frontline PCB Solutions - An Orbotech Valor Company, HP, IBM, Intel, Intuit, McAfee, Microsoft, Mindjet, Minitab, NedGraphics, PTC, Quark, Quest Software, Rosetta Stone, SAP, Scalable Software, Siemens, Software Industry Information Center, Sybase, Symantec, Synopsys, Tekla and The MathWorks.
IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 45 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.
Elaine ChaoEba Communications(t) +852 2537 8022(e) elaine.chao@ebacomms.com
Hong Kong
