I don't know what Henry Chesbrough is thinking when he penned this opinion piece at BusinessWeek saying that "Microsoft should welcome piracy in India and China", but his reasoning is shortsighted and irresponsible on multiple levels.
- Condoning piracy (especially those who profit from it) as a matter of principle is always wrong
- Pirated copies of Software (AKA Warez) is a cesspool of Malware that has serious repercussions to all of us
- Strategies like $3 Windows and Office are far more effective at combating Software Pirates, Malware, Microsoft's competitors, and it actually makes money.
Condoning piracy is always wrong. I don't know where Mr. Chesbrough's sense of ethics went, but it's never right to condone piracy especially those who actually make money selling pirated software. It doesn't matter that those hardware dealers loaded software "at no charge" because those dealers added value to their products which made it easier to sell their hardware with larger margins. Of course I would never suggest Microsoft (or any Software company) sue poor individuals in third world countries or students for running illegal software when it's impossible for those individuals to come up with the money.
A person in the third world can't possibly pay a month's salary for a copy of Windows when they can barely afford to survive. Few students are in a position to pay full price or even discount price for software and it's a strategic investment to allow students to use your software because they become future paying customers. Microsoft knows this which is precisely why you'll never see them raiding poor individuals and students. But Microsoft is absolutely within its right to go after the dealers who sell or bundle free software with hardware.
The other big problem is that pirated software almost always has some kind of root kit or back door embedded within it. This means that software pirates can not only make money selling someone else's intellectual property, they also make money selling hijacked computers to the underworld. These armies of zombies will spam us will pump and dump stock scams, Viagra pills, Nigerian schemes, or blackmail us with the threat that they will shut us down with DDoS (Distributed Denial of Service) attacks. For this reason alone it would be crazy to condone software piracy.
Chesbrough isn't entirely wrong from Microsoft's business perspective. Shutting down piracy without offering a cheap alternative will ultimately hurt Microsoft's business and drive users to Linux, Firefox, OpenOffice.org, and other Open Source software. While the Open Source world will cheer (another reason to be against piracy), it's a serious problem for Microsoft's future prospects. Microsoft's $3 Windows and Office for Education is an absolute step in the right direction, but it really isn't enough. Microsoft needs to offer OEM and Retail versions of Windows and Office that are localized to the country and restricted to run in those countries at prices that those markets will bear. If that means offering Chinese edition of Windows Vista for $3 and Office 2007 Home for $6 to the OEM vendors and maybe $6 and $12 for retail editions, then so be it.
Besides, selling a billion copies of $3 software to the third world is extremely profitable and it's a lot better than making nothing and letting some criminal make $1 off each of those billion people. As those countries develop and become richer, their prices can be adjusted to reflect that. Nobody wants to buy pirated software if they have reasonably priced alternatives and just having an officially licensed copy of the software along with the user manual will be good enough to convince the majority of the market to come above board. This builds a long term user base that respects intellectual property rights who won't have to serve as Malware infected bots. At the same time, Microsoft needs to adopt a carrot and stick approach and double up on its efforts to hunt down and punish those who would continue to sell or bundle Microsoft's intellectual property.