One-Third Of All Software Installed In 2006 Was Pirated

Global piracy losses increased in 2006 by 15% over 2005. Of the 102 countries covered in this year's study, piracy rates dropped moderately in 62 countries, but went up in 13 countries.
About a third of the software installed on personal computers around the globe last year was pirated, according to a study from IDC.

That pirated software amounts to a worldwide loss of $40 billion, noted the industry research firm, which conducted the fourth annual global PC software piracy study for the Business Software Alliance. The study also showed that for every $2 of software bought legitimately, $1 was obtained illegally.

Global piracy losses increased in 2006 by more than $5 billion -- or 15% -- over 2005. Of the 102 countries covered in this year's study, piracy rates dropped moderately in 62 countries, but went up in 13 countries.

In more than half of the 102 countries studied, the piracy rate exceeded 60%. In about one-third of the countries, the piracy rate exceeded 75%.

The good news is that some previously poor performers have done a better job of cracking down on software piracy. The study showed that there was progress in a number of emerging markets, most notably in China, where the piracy rate dropped 10% in three years, and in Russia, where piracy fell 7% over the same three years.

"The good news is we are making progress, however, we still have a lot of work to do to reduce unacceptable levels of piracy," said BSA President and CEO Robert Holleyman, in a written statement. "These significant losses translate into negative impacts on IT industry employment, revenues, and financial resources available for future innovation and the development of new technologies."

The 10% improvement in China's piracy rate -- going from 92% in 2003 to 82% in 2006 -- adds up to a decline in lost revenue to the software industry of $864 million, according to IDC. Analysts reported that the reduction in the country's piracy rate is the result of government efforts to increase the use of legitimate software within its own departments, vendor arrangements with PC suppliers to use legitimate software, and increasing industry and government education and enforcement efforts.

The legitimate software market in China grew to nearly $1.2 billion in 2006, an increase of 88% over 2005. Since 2003, the legitimate software market in China has grown over 358%, according to IDC.

Even much smaller piracy rates can add up to huge losses, the report showed. For example, while the U.S. had the lowest piracy rate (21%) of all the countries studied, it also had the greatest total loss at $7.3 billion. China saw the second highest losses at $5.4 billion with a piracy rate of 82%, followed by France with losses of $2.7 billion and a piracy rate of 45%.

Over the next four years, IDC analysts expect businesses and consumers worldwide to spend $350 billion on PC software. If the current trends continue, the study predicts that more than $180 billion worth of PC software will be pirated during that same period.