Software piracy still serious problem in RP, Asia-Pacific

MANILA, Philippines – Software piracy remains a serious problem in the Philippines and the Asia-Pacific as a whole, according to a recent study released by the Business Software Alliance (BSA) and research firm IDC.

In the Philippines, the piracy rate level remained at 69 percent in 2008, similar to 2007’s. However, monetary losses due to this illegal activity rose to $202 million in 2008 from $147 million the previous year.

In the Asia-Pacific, the piracy level rose two percent from 59 percent in 2007 to 61 percent in 2008. Correspondingly, losses increased from $14 billion to $15.2 billion.

The software piracy level worldwide, however, registered a higher increase, jumping by three percent, from 38 percent in 2007 to 41 percent in 2008. Losses also rose from $4.9 billion to $61.3 billion.

BSA and IDC, however, said, “Half of the increase in the monetary value of software piracy was attributed to an increase in foreign exchange rate. But excluding the effect of foreign exchange, losses grew by five percent to $50.2 billion worldwide.”

The BSA-IDC Global Software Piracy Study covers piracy of packaged software that runs on personal computers, including desktops, laptops, and ultra-portables. This includes operating systems, systems software such as database and security packages, business applications, and consumer applications such as games, personal finance, and reference software.

The study does not include software that runs on servers or mainframes or software sold as a service.

Bienvenido Marquez III, BSA consultant for the Philippines, said the fact that the rate of software piracy in the Philippines did not go down last year and that losses in the industry continued to mount, makes the current intensified educational and enforcement efforts by the government and the private sector even more crucial.

“Losses in the software industry due to piracy further hurt our local economy. Filipinos should realize that whenever they buy a pirated copy of a software program, or when a business decides to use more copies of a software than they had bought licenses for, they are not only stealing the intellectual property of the software developers. They are also causing many of our countrymen to lose job opportunities as a result of lost revenues in the industry,” Marquez said.

Emerging market growth effect

The BSA-IDC study attributes the increase in the piracy level, among others, to rapid growth in PC sales and the widespread use of the Internet. “It went up in the Asia-Pacific and worldwide because of the emerging market growth effect,” the report said.

“In Asia, for instance, shipments of PCs to China and India outpaced shipments to Japan and Australia by 29 million units, and the installed base grew 25 percent, compared to six percent for Japan and Australia. For this reason, both China and India could see lower piracy yet ultimately bring the regional average up,” it added.

China’s piracy rate has actually dropped 10 points since 2004, according to the BSA-IDC study, as a result of more vigorous enforcement and education as well as vendor legalization programs and agreements with original equipment manufacturers (OEMs) and resellers. India’s rate has also dropped six points since 2004, despite its sprawling PC market.

These two biggest countries in the Asia-Pacific were among the 57 countries (of 110 studied) that registered a drop in software piracy rates. The other Asia-Pacific countries that were able to reduce piracy levels were Australia (from 28 percent in 2007 to 26 percent in 2008), Japan (23 to 21 percent), Singapore (37 to 36 percent), Taiwan (40 to 39 percent), Thailand (78 to 76 percent), and Hong Kong (51 to 48 percent).

The minimal drop in piracy levels is a significant stride because based on IDC forecast, “over the next four years, just lowering global piracy by one point a year would add $20 billion in industry revenues.” IDC explained that over the next four years, consumers and businesses would spend nearly $450 billion on PC software.

“If piracy rates do not change, they will pirate another $300 billion. In 2008, every point of piracy cost the industry $1.3 billion,” the IDC said. “For every $100 of legitimate software sold, another $69 was pirated.”

Anti-piracy blueprint works

The Philippines is among 39 countries whose piracy levels did not go down but at least remained stable. The country’s piracy rate has been pegged at 69 percent since 2007. It did, however, already dropped from 71 percent in 2004 to 2006.

“Fortunately, experience has shown that we can reduce software piracy through a combination of consumer education, strong intellectual property policies, effective law enforcement, and legalization programs by businesses and government agencies,” Jeffrey Hardee, BSA vice president and regional director for Asia, said in a statement.

“The progress seen in many APAC economies is proof that this anti-piracy blueprint works — and that governments, businesses and consumers all benefit,” Hardee added.

Only 44 percent of PC software in use all over the world is legitimate, according to the BSA-IDC study. Almost half or 41 percent is pirated, while 15 percent is used for free or open source.

The IDC revealed that it’s fairly easy for counterfeit software to find its way to end-users. “Illegal software may be sold over Internet auction sites such as eBay to buyers who do not realize it is not legitimate. Organized crime syndicates may manufacture counterfeit packaged software in concealed factories. Corporate IT departments may install more copies of software than their licenses allow, sometimes intentionally, sometimes not,” it said.

Software can also be copied and installed on multiple machines without licenses, moved from older PCs, borrowed from friends or acquired from street vendors.

Overall, IDC expects “software piracy rates to continue to drop on a per country basis but to increase globally as the market shifts to emerging regions.” –Eden Estopace, Philippine Star