IN the wake of what is believed to be New Zealand’s first prison sentence for software piracy, Reseller News takes a look at what impact counterfeiting has — or could potentially have — on the channel.
Interestingly, New Zealand has the second-lowest piracy rate in the world.
Helen Robinson, Microsoft director for small to medium businesses and partners, would like to think New Zealanders have a genuine desire to be good.
“It goes with the whole clean and green philosophy and the majority of people still fit that category. Of course there are exceptions to the rule as with any form of crime,” she says.
Robinson defends her company’s stance when it comes to battling software piracy and insists Microsoft doesn’t want to play big brother.
“All Microsoft is trying to do is invest in making its partners successful by trying to drive the value people perceive in the licensed product.
“It’s a consistent problem and everyone in the industry has a responsibility to drive that message home.”
She says pirates are taking the value out of business, which affects everyone.
“Technology drives economies. Over 2.3 million people are employed worldwide in technology businesses so imagine the consequences if piracy continues to rise.”
Robinson says her company wants to do what is fair and equitable for every New Zealander.
“Bottom line — business, partner, consumer. Microsoft doesn’t want to be overbearing it just wants the best for its customers. If the customer is buying a product that is unusable, can’t be supported or upgraded then fundamentally it’s the same as buying the cheapest thing in the shop and having to throw it away because it breaks.”
In July Microsoft launched its Windows genuine advantage programme that allows customers to log in and verify whether the software they have is legal or not.
Robinson says 22% of products were found to be counterfeit and 15,000 customers have subsequently filed counterfeit reports.
As a result the company is working to close all the loopholes in the validation process.
“The standard message is to be proactive about anti-piracy education, engineer sophisticated anti-piracy technology and the enforcement of policies.”
At the end of the day, says Robinson, Microsoft wants to stop the hurt to local distributors who genuinely want to do the right thing by their customers.
Graeme Muller, IDC country manager, says New Zealand ranks so well because it is one of the few countries that has strong intellectual property (IP) laws.
“Some of the reasons are cultural; we place a high value on IP in this country. New
Zealand also values innovation and respects IP so people tend to feel inherently guilty using pirated software,” he says.
Muller believes people are less likely to actively look to purchase pirated software, but if there is a disc lying around the office they might install it at home.
He says piracy isn’t at the enterprise level in New Zealand but it is rather opportunistic, adding that online sites provide the perfect environment.
“A lot of this piracy will be operating systems and desktop software but as soon as things go on the black market there are winners and losers.”
While New Zealand loses around $100 million annually due to software piracy Muller warns that if the anti-piracy culture swings the other way the losses could potentially be huge.
“I think it’s a good thing to make an example of those doing it. Some people may think it’s a waste of time, or just Microsoft flexing its muscles, but if we were in a market where everything was pirated there would be no channel.”
Earlier this year the Business Software Alliance (BSA) released a piracy report based on research carried out by IDC.
The results confirm that software piracy continues to be a major challenge with accompanying economic consequences, including lost tax revenues and job losses, which reverberate up and down the supply and distribution chains.
IDC says educational programmes, policy initiatives to strengthen copyright laws and enforcement of laws are effective inhibitors to piracy.
On the other hand, IDC identifies several factors driving an increase in piracy, including the increased availability of counterfeit software over the internet and P2P networks.
Yet Paul Plester, Express Data sales and marketing manager, says he mostly encounters incorrect licensing as opposed to piracy.
“Piracy is a pretty strong term. A lot of our corporate users may have forgotten to re-license but willingly pay if a mistake has been made,” he says.
Plester considers Microsoft to be the most proactive of the software vendors when it comes to licensing but believes others will soon follow suit.
“Adobe is about to start a software auditing regime for the first time and I expect to see other vendors doing this.”
IN September a 52-year-old Palmerston North man received ten months’ imprisonment for copyright offences involving the distribution of counterfeit Microsoft software on the internet.
After the sentencing then-Microsoft partner group manager Steve Haddock said it sent a strong signal to counterfeiters, demonstrating just how serious an offence piracy is considered by law enforcement agencies in New Zealand.
“In passing its sentence the Court has recognised the detrimental effect piracy has on the software industry’s ability to contribute to the health and prosperity of the New Zealand economy,” Haddock said.
He went on to say that Microsoft would continue to partner with the industry and law enforcement agencies to protect its intellectual property and create a safe market for distributors, resellers and customers.
The court declared the scale of the operation as being highly commercial and sophisticated and even the defendant’s own assessment of the business placed the value at $50,000 with pirated software to the value of $2 million.
The business, in operation for over two years, used three websites and false names to avoid detection. In a raid on the defendant’s house police found 600 CDs of pirated software worth in excess of $150,000.
The defendant described the money he had made out of the enterprise as amazing and said it had set him up for life.
Facts at a glance
• New Zealand has the second-lowest software piracy behind the US.
• 18,000 PCs in New Zealand annually go unlicensed.
• 23% of all software in New Zealand is pirated.
• IDC estimates the economic impact of piracy in New Zealand to be worth $100 million annually.
• The Business Software Alliance believes there to be 840,000 illegal software sites.
• Globally, businesses and consumers will spend more than $300 billion on PC software over the next five years. IDC predicts during that period almost $200 billion worth of software will be pirated.