APAC software piracy losses hit record in 2010

update SINGAPORE--Sixty percent of PCs in the Asia-Pacific region had pirated software installed in 2010, with the commercial value of these programs hitting a record US$18.7 billion, according to a new study by the Business Software Alliance (BSA).

While last year's piracy rate registered a slight increase to 60 percent over 59 percent in 2009, the total value of losses was double that in 2003, when the survey first started, the industry group revealed in a media briefing here Thursday.

Australia, China, India, Japan and Malaysia were among the top 30 economies with the highest commercial losses in 2010 due to software piracy in the region, according to the global study which was conducted by IDC and covered 116 economies.

While the value of commercial losses increased US$2.2 billion from 2009, software piracy in the region declined in 14 markets, remained constant in three economies and increased only in Indonesia.

Globally, piracy increased in 15 economies but an improvement was seen in 51 others, noted to Victor Lim, IDC's vice president of Asia-Pacific consulting operations.

Given that the level of piracy in each of the surveyed countries did not show significant changes over the last five years, Lim noted that the increase in the value of commercial losses was due to exponential growth in the PC market.

He explained that BSA's calculates piracy rate based on the total number of pirated software installations against the total number of software installations, including free and open-sourced software. This is in turn measured against the total number of PC shipments in each country.

According to IDC figures, PCs for the consumer, education and business sectors registered positive growth in 2010, boosted by improvements in the economy. BRIC (Brazil, Russia, India and China) economies accounted for 24 percent of global PC shipment, while emerging and mature markets contributed 21 percent and 7 percent, respectively.

The increase in demand for PCs was greater than the dip in piracy rate so even though the situation in APAC improved, the commercial value of losses still headed northward, Lim said.

"PC shipment grew 16 percent [globally], whereas piracy rate went down by 1 point. So that tells me the volume is driving the total losses, not so much the unit price," he noted. "Why did the value keep going up when the rate remained flat? It's down to the fact that the market is growing bigger."

Tarun Sawney, BSA's Asia Pacific senior director of anti-piracy, told reporters at the briefing that a decrease in the actual value of commercial losses would require a dip in piracy rates of between 5 and 10 percent. Most economies last year only experienced improvements of between 1 and 2 percent, he noted.

Sawney said: "We found that government is probably the most important factor in [reducing piracy rates]. If the government spends a lot of resources in education, promoting software asset management, making decision-making managers accountable for the use of software, then this can have a positive impact."

He quoted the example of Hong Kong, where for the past six years, the Special Administrative Region (SAR) experienced significant improvements in software piracy due to "good cooperation" between the industry and government in critical areas. He added that enforcement is also a key element in driving down piracy./p>

Sustained efforts to reduce piracy
The BSA survey, for the first time, included public opinions of PC users on social attitudes and behaviors relating to software piracy. Seven in 10 respondents expressed support for IP rights (IPR) such as paying inventors for their creations to promote more technology advances. This support was also strongest in markets with high piracy rates, the study showed.

However, many participants, especially those in developing economies, displayed a lack of understanding of how legitimate ways software should be obtained.

Piracy in these economies most commonly resulted when users purchased a legal copy of the program and installed it in multiple PCs, including systems deployed in enterprises.

Roland Chan, BSA's senior director of marketing in Asia Pacific, said the survey results highlighted the need to educate users on the illegal means of obtaining software, such as P2P (peer-to-peer) file transfers and installing software purchased for one computer on multiple home or office PCs.

Chan also revealed that according to the survey, productivity software such as Microsoft Office, security programs and games were among the top software installed illegally globally.

Besides education, BSA also called for more sustained efforts to reduce software piracy in the industry such as initiatives by vendors to provide governments with cheap software to replace unlicensed programs.

The software industry group highlighted in last year's survey that a reduction of software piracy by 10 percentage points over four years, could inject close to US$41 million into the Asia-Pacific economy, create 350, 000 jobs and generate US$9 billion in new tax revenues for governments.