Surprise: Networks Don't Like Cablevision's DVR Plans

Software Piracy, A Win-Win For China And Microsoft

from the network-effects dept

Mon, Apr 10th 2006 9:09am — Joseph Weisenthal

Last week we looked at the software industry's dubious claim that piracy was hurting the Chinese economy. Not only does software piracy probably not hurt their economy, it doesn't necessarily hurt the software companies, like Microsoft. In fact, as the company has acknowledged in the past, piracy helps the company achieve a high Windows user base. Companies using Windows, legitimately or not, are more likely to buy the software in the future, buy other Microsoft products, and help hold competitors at bay. Furthermore, differing price levels across regions is a common business strategy, but because selling low/no-cost versions of Microsoft products might be a waste of money for the company, piraters actually do the company's work for them. While Microsoft has talked a tough game, taking a hardline anti-piracy stance, they've actually been pretty good about not being too aggressive, knowing that they could drive users to rival platforms. They've certainly been better than the music industry, which derives a similar benefit from piracy, but has gone after listeners with a vengeance. Unlike Microsoft, which faces competition from Linux, the music industry has a captive audience -- what else would teenagers do for entertainment, read books?

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22 Comments

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Simon, 10 Apr 2006 @ 9:46am

The majority of software companies would rather you steal their software than buy a competitors.
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Anonymous Coward, 10 Apr 2006 @ 9:57am

If this is true, then why not make just officially make the OS free? Then they would also have to maintain 1 or 2 versions of the windows OS because they could just tell users to upgrade the latest OS for free.
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Anonymous Coward, 10 Apr 2006 @ 10:33am

Microsoft and other software companies DID go after folks hard, mainly in the 90s. The BSA (business software alliance) I think was the name. They were going after schools that couldn't show proof of payment for every piece of software they had installed. I don't know how active that stuff is today. It was a nightmare, just like with music/video later on.
So maybe the music industry will learn the lesson too eventually, though they seem to feel more threatened.
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Anonymous Coward, 10 Apr 2006 @ 11:01am

More tationalizing
Companies using Windows, legitimately or not, are more likely to buy the software in the future, buy other Microsoft products, ...

Uh, if they pirate Windows, why wouldn't they pirate other software as well?

piracy helps the company achieve a high Windows user base

Yes, if *everyone* stole all of Microsoft's products, they'd have a HUGE user base -- but no income. Pirates are subsidized by people who purchase the software legally (aka "suckers").

This is just more rationalizing about why it's okay to steal.
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Anonymous Coward, 10 Apr 2006 @ 11:02am

oops... "More rationalizing"
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macrohard, 10 Apr 2006 @ 11:56am

Seems to me that it'd be difficult to play hard in China. They could if they really wanted to, but with current prices of a real windows cd being 3 digits and all, its hard for most folks there to afford a decent hardware let alone an OS that cost about half as much as their emachines (or equivalent). If pirated windows weren't around, they may well be forced into getting free OS's like linux. So, if they can't buy it in the first place, its not really a loss for MS either. I'm not trying to justify piracy as it is against the law, but being too aggressive can lead to more losses for the company for all the legal campaigns, and may not even be worth it. I can see how it could however boost economy as the PC hardware itself will rise for I'm sure people feel more guilt in stealing solid objects than bits and bytes. High windows user base might not help in the short term, but by allowing people to use windows for free for a few years, they mostly will not switch to a alien program. Macs are still much more expensive, and linux sometimes isn't always user friendly, and support is rare. Therefore, in the long run when the economy becomes better, MS can truely become aggressive and force them to buy it. Pirating should decrease as people start getting money to pay for the OS. Anyways thats my 2 cents.
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Yuriye, 10 Apr 2006 @ 12:16pm

what is piracy?
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DreadedOne509, 10 Apr 2006 @ 12:20pm

I'd like to see Microsoft offer a dumb version of their premier OS for free, and allow the client an option to purchase an upgrade for additional content.

Perhaps a skinny version of Home for free, and XP Pro for a reasonable amount. Cripple the file sharing, advanced networking etc on the Home version.
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Anonymous Coward, 10 Apr 2006 @ 12:58pm

Think it comes down to simple mathematics...

Would you rather have 1 billion people running your OS and only 50% have paid for it...

*or*

Would you rather have 1 million people running your OS and 100% paid for it?

The bottom line would be far, far higher in the first scenario..
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Squidster989, 10 Apr 2006 @ 1:03pm

Wow
this is kinda frighting that large corporations know about and tell us its hurting them... when in reality its only hurting them 20 extra bucks per person
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Bob, 10 Apr 2006 @ 1:04pm

Re:
If you make the software free they'd have to support it and they'd get calls on it.
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Anonymous Coward, 10 Apr 2006 @ 1:06pm

Henry Ford had a wonderful idea...

His theory was that he could *give* a car to each person in the US, and he would still make a tidy profit from parts.

He was right... lol

But now they know they can sock you for the cost of the car too...
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Doug, 10 Apr 2006 @ 1:16pm

you can't justify piracy
The software is Microsoft's to sell. It is their right, not anyone else's, to decide whether or not giving it away for free is a good idea. Piracy takes that right away from them. End of story.
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Spunky, 10 Apr 2006 @ 2:36pm

Re: More tationalizing
But it is okay to steal.
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Anonymous Coward, 10 Apr 2006 @ 3:15pm

Re:
Uh, what kind of mathematics is that? You are implying that if you let 500 million people steal sometihing, 499 million more will actually pay than would have otherwise? I don't think so.

Please cite the names of any legitimate economists that have studied and support the "Ecomomics of Piracy".
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Lee, 10 Apr 2006 @ 3:49pm

Re: Re:
I can't give the formula showing that not hunting down 'pirates' is a smart econmic decision, but rest assured, if M$ says that it is smarter to let the pirates get away with it than finding them, then it is a smart economic decision.
Thats WHAT Microsoft does, they find the most effective way to make money.
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Flamsmark (profile), 10 Apr 2006 @ 6:04pm

No
That is false.

When customers buy products is there is an implied warranty of fitness for a particular purpose [in this case, running a computer]. There is an implied contract that goes a lot like 'we give you an OS, and you give us $'. If the product is unfit for the purpose for which it was provided, the vendor is reneging on its side of the contract, and has to work until it is once again fulfilled.

If you give something away for free, there is no contract of that sort. Therefore, you don't have to do anything. You might get people calling you, but you'd be totally justified telling them to go away.
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Flamsmark (profile), 10 Apr 2006 @ 6:09pm

Re: More tationalizing
steal [v] [legal]:

to wilfully take unauthorized possession of another's property with intent to permanently deprive the owner of that property.

since when does the copying of IP by someone who has no intent to purchase it deprive anyone of anything?
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A chicken passeth by, 10 Apr 2006 @ 6:31pm

Sharers are a great source of free marketing, economics be damned.

And although I don't do this myself, I know hardcore fans who MUST possess the REAL THING even after they have watched the pirated stuff, if it is THAT GOOD. And if it is that good, they'll be hocking the product to all their friends as well.

The software industry boomed in countries that did not have any software advertisments whatsoever. But now that they've taken a hardline against "piracy", unofficial marketing plumetted, leading to loss in sales, resulting in a need to spend on advertising - which can be more expensive than letting piracy go right on.

(This is without mentioning the cost of implementing lock-in technologies).

I don't see any point in stopping pirates. They're doing the businesses a HUGE favor as it is.
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Michael, Denmark, 6 Jul 2006 @ 1:33am

Vista
Well, that flooding model may be ending when Vista comes around, as they will tighten the knot harder, and cascade that anti piracy model down to win2003 and xp. So they WILL be removing their own user base, and I'll be running Ubuntu when that time comes.
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Mikhail Gambarian, 4 Apr 2007 @ 5:43am

Re:
First, people currently pirating Windows probably will not be interested in really crippled version.

Second, if free legal crippled version will become available, many people in USA who don't need more can switch to it and save money (and really hurt MS profits)
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Mikhail Gambarian, 4 Apr 2007 @ 5:48am

Re: you can't justify piracy
Actually not true. MS I think could easily prevent piracy by technical means. They don't use all needed technical means for this, and this is their choice.

Actually they decided to allow pirates to pirate Win XP and Vista and to still receive automatic updates over internet.
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