Pirated Software Comes with a Hidden Tax

Despite its often too-good-to-be-true price, from very low to completely free, pirated software comes with a hidden tax which manages to take a consistent toll, Microsoft revealed. A whitepaper titled "The impact of software piracy and license misuse on the channel" by IDC and sponsored by the Redmond company along with the International Association of Microsoft Certified Partners, focuses on the profits lost because of software piracy.

The issue regards not only Microsoft, but also partner companies which find that their revenues are lower, impeded by the unfair competition delivered by illegal software to genuine products. According to IDC, for every dollar lost by the Redmond giant, its partners also find themselves with no less than $5.50 lost opportunity.

"Even in a healthy ecosystem, illegal software causes hidden costs and friction in the sales and deployment processes. At its worst, rampant piracy in some economies is tearing down the opportunity for legitimate businesses to exist and thrive," explained Michael Beare, director of License Compliance for Microsoft.

Market analysis firm IDC has calculated that Microsoft's ecosystem of partners involved in building and commercializing services and solutions tailored for the company's software stand to gain some $4.37 for every dollar taken back from pirated products. In addition to the extra revenue from lowering piracy, Microsoft partner companies will enjoy approximately $1.13 for each dollar that Microsoft will pocket for the curbing of license misuse. These statistics are valid only for 2008, according to IDC.

"The flip side of this is that within those hidden costs may lie hidden opportunities in helping these customers turn their licensing situation around. Much of the misuse, especially in developed countries, is inadvertent. A savvy vendor can realize an opportunity by helping customers to 'true up' their licensing, realizing that every dollar saved from software pirates can translate to over five times that amount for the channel," added John Gantz, senior vice president of IDC.