Illegal Software Harms Economies: Study

Manufacturing companies in Brazil, Russia, India and China that choose to use illegal software steal more than $1.5 billion from their in-market competitors that choose to play fair by using genuine software.

Microsoft today released the findings of the first-ever study that examines the financial impact using illegal software has on the competitive landscape within developing economies.

In support of the inaugural Play Fair Day, a global initiative to emphasize the importance of utilizing legitimate software, this commissioned study quantifiably proves the harm software piracy has on businesses that choose to play fair.

As part of this study to examine the broader economic impacts of software piracy, analysts from Keystone Strategy evaluated the illegitimate competitive advantage of companies that use illegal software.

In China, manufacturers that “play fair” with legal, licensed software lose more than $863 million to companies using pirated software. This translates to more than $1 billion each year that cannot be reinvested into the economy in the form of 500 new manufacturing plants; or 65,000 new machines; or 200,000 additional employees in China alone.

It is a well-established fact that economic growth is thwarted by piracy. Pirated software does not create jobs for students, developers or IT professionals. This fact alone should be reason enough for the economies to play fair, regardless of the other inherent dangers pirated software brings to a business,” said Kamal Ahmed, Country General Manager, Microsoft Pakistan.

“The total commercial value of unlicensed software reached US $ 59 billion in 2010, which translates to loss of economic activities and jobs. What’s more, when companies use pirated software, it hinders job opportunities and stifles innovation. It is also just plain wrong.”

According to Microsoft’s research, unfairness from piracy creates a staggering $3 billion of competitive disadvantage per year across manufacturers in Latin America, Central and Eastern Europe and Asia-Pacific regions. In specific countries, Microsoft was able to determine exactly how much pirated software costs competing manufacturers in Brazil ($278 million), Russia ($92 million), India ($344 million) and China ($863 million).

“Software piracy is widely prevalent in Pakistan and immensely damaging the commercial and intellectual growth of software development in the country. I became a victim of software piracy when I was sold a pirated copy for the price of original software. This menace cannot be curbed without the concerted efforts of citizens and public institutions. I feel that a much effective response can be achieved if other entities like Microsoft and the Intellectual Property Organization can also put their efforts in curbing the menace of piracy,” said, Mr. Husain Qazi, a victim of software piracy working as PR Manager at FWO.

Microsoft released these findings as part of Play Fair Day, which aims to educate businesses, consumers and governments to play by the rules, learn about the benefits of using legal software and build respect for intellectual property. Microsoft is holding activities in more than 50 countries around the world in order to educate businesses, governments and consumers that the decision to utilize fake software is one that is not only dangerous to personal information, but dangerous to the economic landscape as well.


  • I’ve a question for OP.

    are you living in Pakistan? Or earning in Pakistan?

    If yes then can you afford Rs.16000+ Windows and all other necessary software (a rough package for an average user is more then Rs.100,000) can you afford that? If again yes then you’re must be from just 1% of our population.

    Let me tell you one fact straight. Our GDP is nearly 50 time less then most European Union, USA or Japan etc,
    http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
    that’s mean your purchasing power is also 50 time less then these countries.

    Yes Piracy should be an issue in these countries where software price is so cheap compare to their purchasing power. but not here, where majority are just struggling for survival, most of them can’t afford basic life essentialist and you’re encouraging them to buy software aimed toward western markets.

    Ask these questions from developers first…
    Why Microsoft is not giving us a discount for its products according to our GDP?

    Why our local developers are following western pattern when pricing their products and still expect from is to buy and not seek for alternatives?

    Some more facts…
    An average US or European citizen is earning more then $50000 a year in other words nearly 50 million rupees a year,
    and here an average Pakistani is not even earning half million rupees a year. So unless we don’t get x50 discount, piracy can’t die in this country, or you’ve to change the living standard of the people first.

    • You just don’t get it.

      All the point of sale software I see at supermarkets is written in VB6 or something for Windows. Why? Linux is 100% up to the task. You can sell commercial, closed source point of sale software for Linux systems. You can even find free point of sale software with a license that allows you to make changes and sell (commercial use).

      If you use pirated software then everyone who develops local software HAS to target pirated software. What happened to indiginous software industry??? 100% dependent on pirated software that they have no control over?

      Use free or open source software. Promote it as alternative to Microsoft’s software. Free software does not have to cost Rs 0 (free means you have access to source code and can make your own changes). People can still make money developing free software, or customizing free software for companies or building commercial solutions on top of free software.

      And THAT my friend is how piracy kills software industry. Why would you pay Rs 10,000 for an accounting package when you can go to Hafeez Centre or Rainbow and get a cd with 10 accounting softwares for Rs 50? Which option supports local industry?

      • the main thing is not every person is aware of these free source softwares. and every person is not a tech guru who could make changes to the source coder or else.
        you have to bring down the prices. i am a microsoft IT trainer. and give trainings of its different products. When I say that original window costs you around 18k then every student gets surprised.(We have licensed software of windows in our lab)
        but back at home a student has to use a pirated software. and if you talk about linux and other softwares they are not user friendly. so best suggestion is to cut down the price.

        again i would like to say that every person is not a tech guru…

        A WINDOWS XP/7 COSTS AROUND 15K (price difers depending on the version) WHERE AS HE A COMPUTER HARDWARE COSTS AROUND 6 TO 7K (P4) NOW TELL ME WHEN A COMPUTER HARDWARE IS BEING SOLD AT 6 TO 7K THEN HOW COULD A USER BUY SO EXPENSIVE SOFTWARE.

    • — Why our local developers are following western pattern when pricing their products and still expect from is to buy and not seek for alternatives?

      Also do note that when our local governments (provincal or federal) give tenders for software, they don’t mind paying for western pricing.

    • ” About 3 million computers get sold every year in China, but people don’t pay for the software. Someday they will, though. As long as they are going to steal it, we want them to steal ours. They’ll get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade. ” Bill Gates

      Reference: http://en.wikiquote.org/wiki/Bill_Gates

      Seems like a decade has passed.
      Btw 2 wrongs dont make 1 right.

      Chorii payain lakhdi payain kakh di. Wisen up use open source.

    • This means that we start cheating and stealing because our GDP is less and we are poor. What a logic brother

  • I am student of graduation in PUCIT i get many applications like Windows XP, 7, Vista, Visual Studios, Office and many applications free(Not pyrated). There are many best open source and freeware alternatives of about every software. But actually Pakistanis just want to use every illegal way. None other than that.

  • Everything has good and bad effects. Software piracy will have Good effects in countries that have poor per capita income. Thus, the softwares which are freely available could be utilized by Talented people (who cannot afford to buy genuine product).

    So the point is, if someone can AFFORD to buy a Software, he SHOULD buy, and if someone CANNOT afford, than he should be free to use it. And that is what Bill Gates too believe in… he would never spare a BUSINESS enterprise of his OFFICE license… but he will love everyone to use Microsoft products if one cannot afford to buy for his PERSONAL USE….

    • — And that is what Bill Gates too believe in…

      Wrong, read above post. They WANT people to pay for their software. IF they cannot pay, then they want them to at least use their Pirated software INSTEAD of any other alternative (like free software). Because even when you use their software in pirated form you are still supporting the industry built around it.

      Notice how many people in government or industry are using .doc or .docx files instead of .ods or some other standard.

  • i think pirated software is much better than original software first it is too expensive and not easy available

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