Software Piracy

W HITE P APER THE IMPACT OF SOFTWARE PIRACY AND LICE NSE MISUSE ON THE CHANNEL

June 2008

www.idc.com

Sponsored by Microsoft and the International Association of Microsoft Certified Partners (IAMCP) Authors: Darren Bibby, John Gantz, Amie White Note: the term piracy here refers to the use of all forms of unlicensed software, from counterfeit software and software downloaded over the Internet to software installed using a volume license beyond what is allowed by that license. Piracy may be deliberate or inadvertent.

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EXECUTIVE SUMMARY

"When we find pirated software – ours or the OEM – we cease work until the client purchases the appropriate licenses." -- Microsoft Certified Partner, USA The losses to software vendors from piracy and license misuse are well documented in the annual i Business Software Alliance (BSA) study of global PC software piracy. What has never been documented is the effect they have on all the other companies in the software ecosystems – resellers, VARs, system integrators, service firms, and other ISVs. This study does just that, building on IDC projects studying the benefits of lowering piracy for local economies and on the impact of the Microsoft ecosystem on those same economies. The study finds:

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For every dollar Microsoft realizes from lower software piracy in 2008, other companies in the software ecosystem will realize, in aggregate, $5.50. This $5.50 comes from two sources: $4.37 in increased revenues, $1.13 in lower costs. The largest portions of the potential revenue increase come from faster sales cycles (31%) and faster product and service delivery (40%); the largest portion of the cost savings comes from lowering the cost of service (64%).

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Benefits by partner type in relation to each dollar Microsoft realizes from lower software piracy in 2008 range from $0.54 for logistics oriented partners, such as...