Piracy Rate Unchanged at 35%; global Losses Increased by $1.6 Billio

IDC: Thirty-five percent of the packaged software installed on personal computers (PC) Worldwide in 2005 was illegal, amounting to $34 billion in global losses due to software piracy. However, some improvements in a number of markets indicate education, enforcement and policy efforts are beginning to pay off in emerging economies such as China, Russia and India and in Central/Eastern Europe and the Middle East & Africa.

These are among the findings of an annual global PC software piracy study released today by the Business Software Alliance (BSA), the international association of the World's leading software developers. The independent study was conducted by IDC, the information technology (IT) industry's leading global market research and forecasting firm.

The progress made in reducing PC software piracy in several emerging markets provides some encouragement; however, much more needs to be done,. With more than one out of every three copies of PC software obtained illegally, piracy continues to threaten the future of software innovation, resulting in lost jobs and tax revenues.

Piracy rates decreased moderately in more than half (51) of the 97 countries covered in this year's study, and increased in only 19. The global rate was unchanged from 2004 to 2005 as large developed markets like the United States, Western Europe, Japan and a handful of Asian countries continue to dominate the software market while their combined piracy rate hardly moved.

Some positive changes could be seen in the rapidly developing countries of Russia, India and China. Russia saw a four point drop in its PC software piracy rate while India's piracy rate declined two points. China, with one of the fastest growing IT markets in the World, dropped four points between 2004 and 2005.

This year marks the second year in a row where there has been a decrease in the PC software piracy rate in China. This is particularly significant, considering the vast PC growth taking place in the Chinese IT market.

The study also found that 19 of the 26 countries in the Middle East and Africa declined somewhat, with 12 countries dropping two or more percentage points. In Central/Eastern Europe, the piracy rate declined in 15 of the 18 countries included in this year's study. Notably, Ukraine dropped six points to 85 percent during the past year.

global losses from software piracy amounted to $34 billion in 2005, an increase of $1.6 billion over the previous year. In countries with very large software markets, comparatively low piracy rates can amount to huge losses. While the United States had the lowest piracy rate of all countries studied at 21 percent, it also had the greatest individual losses – $6.9 billion. China saw the second highest losses at $3.9 billion with a piracy rate of 86 percent, followed by France with losses of $3.2 billion and a piracy rate of 47 percent.

Other key findings:

• The four countries with the largest percentage point drop in their piracy rate during the past year were China (4 points), Russia (4 points), Ukraine (6 points), and Morocco (4 points).

• The countries with the highest piracy rates were Vietnam (90 percent), Zimbabwe (90 percent), Indonesia (87 percent), China (86 percent), and Pakistan (86 percent).

• The countries with the lowest piracy rates were the United States (21 percent), New Zealand (23 percent), Austria (26 percent), and Finland (26 percent).

Figure 1

Many factors contribute to regional differences in piracy – the strength of intellectual property protection, the availability of pirated software, cultural differences and IT-related market trends. There's no doubt that lowering software piracy takes constant work and investment, but those investments can unlock enormous benefits for the industry and local economies.

A previous IDC/BSA study showed that if the global piracy rate were to drop 10 points to 25%, it would create as many as 2.4 million new jobs, $400 billion in economic growth, and $67 billion in tax revenues Worldwide.

The BSA-IDC global Software Piracy Study

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