One-Third of Software Pirated

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Piracy continues to be a costly global problem for software makers, with $1 in every $3 spent on applications and programs going to illegal sources, according to a revamped study from the Business Software Alliance (BSA).

The study, conducted for the BSA by market research company IDC, finds that 36 percent of all software bought in 2003 had been pirated, costing software vendors worldwide losses of $29 billion. Of the $80 billion in software installed on computers worldwide last year, only $51 billion was legally purchased, according to the group.

Worldwide Trends

In the U.S. alone, the piracy rate is 22 percent--the lowest among the nations surveyed. By contrast, the highest piracy rates in the world are in Vietnam and China, where piracy stands at 92 percent last year, according to the study.

Although it had the lowest piracy rates in the world, the financial hit in the U.S. is the highest, costing the industry $6.5 billion in revenues. Hong Kong had the smallest losses from piracy, totaling $102 million.

By continent, the piracy rate in the Asia/Pacific region is 53 percent, with dollar losses totaling more than $7.5 billion, according to the study. In Eastern Europe, the piracy rate is 71 percent, with dollar losses at more than $2.1 billion. In Western Europe, the rate is 36 percent, and dollar losses total $9.6 billion.

In Latin American countries, the average piracy rate was 63 percent, with losses totaling nearly $1.3 billion. And in Middle Eastern and African countries, the piracy rate is an average of 56 percent, with losses totaling more than $1 billion.

New Tracking

In its announcement, the BSA says the methodology of its new study has been revised from past years, when the organization looked only at business desktop software. The study IDC includes new categories of software such as operating systems, games, and other consumer-oriented programs as well as local-language applications around the world.

In the past, the study results focused on shipment data from software and hardware manufacturers, according to the group. The new study uses proprietary IDC data for those shipments, as well as more than 5600 interviews in 15 countries designed to better analyze the problem and to offer a more extensive picture of the problem.

The changes in how the latest study was done mean past totals can't be directly compared for analysis. But they will lead to improved tracking and analysis in the future, says Bob Kruger, BSA vice president of enforcement. The new study answers critics who complained that old BSA studies only looked at business desktop software piracy, he says.

"We've always wanted to basically reflect as much of the marketplace as we could," Kruger says. "It's a logical evolution for the study."

And while the 2003 results don't directly correlate to past studies, the latest figures show that the piracy problem isn't going away, he says.

"I think it underscores what we've been saying for a long time, that this is a huge problem and it needs attention" from manufacturers and governments around the world, Kruger says. "It adds some credence to our arguments over the years that everybody loses from piracy."

This story, "One-Third of Software Pirated" was originally published by Computerworld.

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