PC software piracy increases globally

Worldwide PC software piracy rate rises for second year in a row, to 41 percent, with problem being greatest in world's fastest-growing markets, according to new study.
Written by Sol E. Solomon, Contributor

Despite progress in stopping the illegal use of software, PC software piracy remains a serious problem globally, especially in the fastest-growing markets, a new study revealed.

Released Tuesday, the study found that the worldwide PC software piracy rate rose for the second consecutive year, to 41 percent in 2008 from 38 percent in the previous year. This was mainly because PC shipments grew fastest in high-piracy countries such as China and India, as well as overwhelming progress in these and other countries.

Despite the rise in the global rate, PC software piracy dropped in slightly more than half, or 57 of the 110 countries studied. It was the same in nearly one-third and rose in just 16, according to the study conducted by IDC for the Business Software Alliance (BSA).

Other key findings

  • China's piracy rate dropped 10 points in the last five years due to more vigorous enforcement and education, vendor legalization programs and agreements with original equipment manufacturers and resellers.
  • India's rate dropped 6 points in five years despite its sprawling PC market.
  • Hong Kong's PC software piracy rate declined by 3 percentage points in 2008.
  • Rising Internet access will raise the supply of pirated software. Over the next five years, 460 million people in emerging countries will come online. The growth will be highest among consumers and small businesses, which tend to have higher rates of piracy.

Jeffrey J. Hardee, BSA's Asia-Pacific vice president and regional director, noted mixed results in the Asia-Pacific region, with eight economies showing a fall in PC software piracy, no change in seven and a rise in three. Still, the regional average PC software piracy rate rose to 61 percent, from 59 percent in the previous year, with losses reaching over US$15 billion.

"This increase...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," Hardee explained in a press statement.

"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 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.

Globally, 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 U.S. dollar. Excluding the effect of exchange rates, losses grew by 5 percent to US$50.2 billion.

The study's scope did not extend beyond packaged software, to cover server- or mainframe-based software.

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