Software Pirates Cost Industry $50 Billion In 2008
The findings were released in the sixth iteration of a joint study between the Business Software Alliance (BSA) and analyst firm IDC. The results of the study show that out of 110 nations, PC software piracy dropped in 57 countries, remained the same in 36 and actually rose in 16. However, worldwide PC software piracy rate rose from 38 percent in 2007 to 41 percent in 2008 due to rapidly developing, high piracy markets such as India and China.
According to the study, monetary losses due to PC software piracy clocked in at over $50 billion for the first time, with losses growing 5 percent from the previous year to $50.2 billion. For the sake of comparison, the legitimate PC software market hit $88 billion in 2008; meanwhile, the personal computer market reached $244 billion in the same year.
Solution providers stand to take a double hit due to software piracy. In addition to lost product sales, piracy also brings a significant loss in service revenue, the study shows. For every $1 of software sold in a country, there is another $3 to $4 of revenues for local IT service and distribution firms, which means when there is higher piracy, there are fewer IT services jobs, according to the study.
"We are continuing to make progress against PC software piracy in many countries, which helps people working in the U.S.-led global software industry. That's the good news," said BSA President and CEO Robert Holleyman in a statement.
"The bad news is that PC software piracy remains so prevalent in the United States and all over the world," Holleyman added. "It undermines local IT service firms, gives illegal software users an unfair advantage in business, and spreads security risks. We should not and cannot tolerate a $9 billion hit on the software industry at a time of economic stress."
The U.S. has the lowest PC software piracy rate in the world, at about 20 percent. However, it is also the largest software market in the world, according to the report. So while the percentage of pirated PC software may remain low, total losses domestically alone accounted for $9.1 billion, the largest dollar amount of any country.
Additionally, the joint BSA-IDC report finds that PC software piracy increases the risk of cyber crime and security threats. According to the report, unlicensed PC software is more vulnerable to attack from viruses and worms -- the Conficker worm, for example -- because illegally obtained software often does not receive normal updates and protection. A separate IDC study found in 2006 that 29 percent of Web sites and 61 percent of peer-to-peer sites are infected with software containing Trojans, spyware and keyloggers.
The economic downturn even plays a role in the pirated software, according to John Gantz, chief research officer at IDC. With potential customers having less buying power and holding onto old hardware longer, the chances of keeping older software on those machines increases the chances that those users will load unlicensed software on a PC.
"Reduced buying power is only one of many factors affecting software piracy," Gantz says. "The economic crisis will have an impact -- part of it negative, part of it positive -- but it may not become fully apparent until the 2009 figures come in."
The BSA-IDC study reports that the regions with the highest rate of software piracy are Central/Eastern Europe and Latin America. The lowest regions are North America and the European Union.
Specificially, the countries with the highest rate of piracy are Armenia, Bangladesh, Georgia and Zimbabwe, all of which are over 90 percent. Meanwhile, the United States, New Zealand and Luxembourg have the lowest rates, around 20 percent.