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Software piracy still costs billions
[June 05, 2006]

Software piracy still costs billions


(Columbus Dispatch (Ohio) (KRT) Via Thomson Dialog NewsEdge) Jun. 5--The software-piracy rate worldwide held steady in 2005 from the year before, but losses from the practice increased by more than $1.5 billion, a new study shows.

More than a third of packaged software installed on personal computers worldwide in 2005 was illegal, according to the study, conducted by Business Software Alliance, an international association of software developers with U.S. headquarters in Washington.

Piracy rates declined in several countries with so-called emerging markets, a trend that alliance President Robert Holleyman said "provides some encouragement."

China's piracy rate decreased for the second year, to 86 percent. Holleyman said the decline was "particularly significant, considering the vast PC growth taking place in the Chinese IT market."


Oded Shenkar, a professor at Ohio State University's Fisher College of Business and author of The Chinese Century, said he remains skeptical about China's progress.

The country's four-percentagepoint improvement in 2005 has to be weighed against the fact that the piracy rate decreased from an extremely high level, he said.

When the Chinese edition of Shenkar's book was published in 2005, the chapter on intellectual-property rights was removed, he said.

China is always under the microscope for its piracy problem, said Jenny Blank, director of enforcement for the business alliance. She said it's a positive development that the country's rate is declining in "meaningful numbers."

Blank said the decrease is the result of educational and government efforts, and more software being legally pre-loaded onto computers sold in China.

Morocco, Russia and Ukraine were the other countries where piracy rates dropped by several percentage points. The biggest increases were in Bolivia, Guatemala, Greece, Italy, Pakistan, Paraguay, Portugal and Spain.

The U.S. has the lowest piracy rate in the world. Nevertheless, one of every five packaged software applications being used is illegal.

What's happening in other countries ultimately affects software companies here, Blank said. When companies are battling piracy around the world, she said, there's less money to invest in product development.

Creativity and innovation suffer as a result, she said.

Shenkar agrees. He said the U.S. doesn't have some business advantages other countries do, such as cheap labor. The country's main advantage is innovation.

"If we are in a situation where innovation is not being compensated, then we have a very serious problem" Shenkar said.

mcuret@dispatch.com

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