36 Percent of Software in Use Worldwide Is Pirated

Thirty-six percent of the software installed on computers worldwide was pirated in 2003, representing a loss of nearly $29 billion. These are the key findings of a global software piracy study released by the Business Software Alliance (BSA), the international association of the world’s leading software manufacturers.

Conducted for the first time by global technology research firm International Data Corporation (IDC), this year’s BSA global piracy study incorporated major software market segments including operating systems, consumer software and local market software. In previous years, the study was limited to business software applications.

The inclusion of these new categories paints a broader, more accurate picture of the global software piracy problem based on IDC's extensive industry and market knowledge. The study found that while $80 billion in software was installed on computers worldwide last year, only $51 billion was legally purchased.

“Software piracy continues to be a major challenge for economies worldwide,” said Robert Holleyman, president and CEO of BSA. “From Algeria to New Zealand, Canada to China, piracy deprives local governments of tax revenue, costs jobs throughout the technology supply chain and cripples the local, in-country software industry.”

Holleyman said the IDC study reflects a logical evolution in BSA’s decade-long effort to measure piracy in the global economy. Its scope was expanded to account more accurately for trends such as the growth of local software markets worldwide and the acceleration of Internet piracy.

For its analysis, IDC drew upon its worldwide data for software and hardware shipments, conducted more than 5,600 interviews in 15 countries, and used its in-country analysts around the globe to evaluate local market conditions. IDC identified the piracy rate and dollar losses by utilizing proprietary IDC models for PC, software and license shipments by all industry vendors in 86 countries.

Among key findings:

• The piracy rate in the Asia/Pacific region was 53 percent, with dollar losses totaling more than $7.5 billion.

• In Eastern Europe, the piracy rate was 71 percent, with dollar losses at more than $2.1 billion.

• In Western Europe, the rate was 36 percent, and dollar losses totaled $9.6 billion.

• The average rate across Latin American countries was 63 percent, with losses totaling nearly $1.3 billion.

• In the Middle Eastern and African countries, the rate was 56 percent on average, with losses totaling more than $1 billion.

•In North America, the piracy rate was 23 percent. The losses totaled more than $7.2 billion.

The study found that the size of a regional software market is the critical link between piracy rates and actual dollars lost. For instance, 91 percent of software installed in the Ukraine in 2003 was pirated, as compared to 30 percent in the U.K. But dollar losses in the U.K. ($1.6 billion) were about 17 times higher than those in the Ukraine ($92.1 million). This difference is attributed to a much larger total PC software market in the U.K. than in the Ukraine.

“A number of factors contribute to the regional differences in piracy, including local-market size, the availability of pirated software, the strength of copyright laws, and cultural differences regarding intellectual property rights,” said John Gantz, chief research officer at IDC. “Unfortunately, we found that high market growth regions also tend to be high piracy regions, such as China, India and Russia. If the piracy rate in emerging markets — where people are rapidly integrating computers into their lives and businesses — does not drop, the worldwide piracy rate will continue to increase.”

“The fight for strong intellectual property protection and respect for copyrighted works spans the globe, and there is much work to be done,” Holleyman said. “BSA will continue to work with governments to enact policies to protect software intellectual property as well as implement programs to raise business and consumer awareness about the importance of copyright protection for creative works. Lowering the piracy rate will stimulate local economic activity, generate government revenue, create job growth and cultivate future innovation.”

For more information on the Global Software Piracy Study, visit: www.bsa.org/globalstudy/.

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