Software piracy – who’s to blame?

By : |June 21, 1999 0

According to NASSCOM, 65% of the software used in India is
pirated. The piracy levels in China are allegedly at an astounding 96%. Are 65% of Indian
users and 96% of the Chinese dishonest? Does that make you feel uneasy?

Software companies say that software piracy (use of software without paying for a
proper license or using more copies than paid licenses) leads to higher development costs
and lost profits. A user who hasn’t paid for his software keeps money from coming in
– money that would have gone into development of new, better products. So, why is piracy
rampant in India (and indeed most of the "Third World" countries)?

Know your market – or else!
It’s a plain common sense rule of marketing. When you’re in a different country,
try and sell only products that will be accepted by that user base, and price it to be
affordable. More than one multinational company has burnt its fingers trying to prove
otherwise in India (the major MNC shoe manufacturers, for example). It’s surprising
that the big software companies, sitting on mounds of cash seem to have not caught on.
Today, the only real base of legitimate software users comes from large corporates with
deep pockets. The rest – the home user and the small business user – either skip it
completely (preferring to source it from the friendly neighbourhood "CD-ROM
vendor" for below Rs. 500) or at best buy only the operating system legally.

Rs. 35000 for your PC; Rs. 25000 for your software
In countries like the USA, you can buy a really powerful PC with a month’s salary, or
less. In India, the upper middle class saves up their money to buy a PC, and a low end PC
gobbles up 3-4 months’ salary on an average. The Indian home PC user, after spending such
a significant amount of money, is not convinced of the need to buy software that will cost
him another 3 months’ salary. The software companies have not realised that even if piracy
were wiped out totally, software sales wouldn’t shoot up as they expect. This is because
the customer simply cannot afford it and would just stop using the software instead.

PC prices are crashing . What about software?
With lower end PCs now available for less than $800 in the USA, an office suite like
Microsoft Office 2000 (Premium Edition) costs more than the PC itself! Bill Gates has
written in his syndicated columns that as usage of a product increases, prices tend to
come down. This is what has happened continuously with PCs and other hardware. Then why is
it that software still costs pretty much the same as it used to? Microsoft’s financial figures reveal a gross
profit margin of 91.85%. With so much money in the bank, perhaps it’s time for software
companies to price their products a little more realistically, keeping in mind the
purchasing power of the average user.

Do you think software costs too much? What can
companies do to reduce piracy? Mail us at content@ciol.com

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