EDEN  ESTOPACE:  RP  SOFTWARE  PIRACY  RATE  DOWN  ONE  NOTCH

MANILA, June 18, 2005
 (STAR) By Eden Estopace - The battle against software theft seems to be making inroads in promoting the use of licensed software, albeit in very small increments, a recent study released by the Business Software Alliance (BSA) and leading information technology market research tracker International Data Corp. (IDC).

In the Philippines, the rate of software piracy went down to 71 percent in 2004 from 72 percent in 2003. This is consistent with the one-notch decline in the global piracy rate – from 36 percent in 2003 to 35 percent in 2004.

The decline in piracy level both globally and in the Philippines, however, did not make a dent in lowering the cost of software theft for software companies. Total packaged software loss actually went up from $29 billion in 2003 to $33 billion in 2004. In the Philippines, software theft in 2004 translated into losses of $69 million, up from $55 million the previous year.

In a conference call to Filipino IT journalists recently, Martin Kralik, IDC associate director for the Asia-Pacific, said the value of pirated software actually went up despite the decline in piracy rate because piracy rate has been traditionally measured in relative terms for its dollar value.

Moreover, he said it is also because of the fact that the size of the IT market is also getting bigger.

"Although piracy is improving in percentage terms, we are looking at a large number of new users from consumer and business segments with no PC or Internet connection before," Kralik added.

The study showed that the global PC software industry grew over six percent, but the US dollar fell by more than six percent as against the other currencies.

In 2004, the BSA said $90 billion worth of software was installed, but for every two dollars worth of software purchased legitimately, one dollar’s worth was obtained illegally.

It is interesting to note that the United States has the lowest piracy rate in the world, at only 21 percent in 2004. However, in terms of the dollar value, losses due to software theft was the highest in the world at $6.6 billion, partly because of the relative size of the market.

Piracy in Asia

In the Asia-Pacific, the IT market in 2003 was a $175-billion industry and employed three million people. It also generates around $95 billion in tax revenues annually. The software industry alone is a $25-billion sector and the fastest component of the IT industry.

However, despite a concerted effort from the BSA, governments and the IT industry, the region’s piracy level remained at 53 percent in 2004, as it was in 2003. Among the countries found to have lower piracy levels in 2004 were China, Indonesia, Japan, Malaysia, Pakistan, Singapore, South Korea, Thailand and the Philippines. These countries were monitored to have a one to two percent drop in piracy rate.

The country in the Asia-Pacific with the highest piracy level is Vietnam at 92 percent, and the lowest, New Zealand, at 23 percent. In terms of dollar value, China topped the list with losses of up to $3.5 billion, followed by Malaysia with $1.7 billion. Total losses for the Asia-Pacific in 2004 reached $7.8 billion, up from $7.5 billion in 2003.

Three of the top five pirating countries were also from the Asia-Pacific – Vietnam, China and Indonesia. However, the region ranked lower in piracy than other regions of the world. Latin America had the highest piracy level at 66 percent, while Middle East and Africa’s was 58 percent. Europe (excluding European Union members) had a higher piracy rate than the Asia-Pacific region at 61 percent.

Unfortunately, the BSA said high piracy regions are also high market-growth regions.

"In the developed world, the IT market is growing by less than five percent today. In contrast, in high piracy countries such as China, India and Russia, the IT market is growing at a rate of 15 percent or more. The emerging markets in Asia-Pacific, Latin America, Eastern Europe and the Middle East and Africa account for one-third of PC shipments today, but only a tenth of spending on PC software," the BSA/IDC report stated.

Making a difference

 "Very simplistically speaking, when we talk of piracy, we are looking at what was installed in a particular year and what was actually paid for," explained Kralik.

Narrowing the gap between these two elements has always been BSA’s goal. Jeff Hardee, BSA vice president and regional director for Asia, said that although their programs are meant to eliminate piracy in every country and bring it down to zero, obviously they cannot get total reductions.

"We continue to accelerate our programs by working with governments for people to finally change their behaviors, especially when it comes to respecting intellectual property," he said.

According to the BSA/IDC study, the IT industry in Asia is projected to grow 54 percent between 2002 and 2006. However, with a 10-point reduction in piracy, the IT sector could grow 93 percent. This means, it can generate additional $170 billion for Asia’s economies, create 1.1 million new jobs and generate another $15 billion in taxes.

This is because additional revenue would translate into more software production, marketing, research and development and more competitive products which would be spurred by increased demand. "The piracy rate of 71 percent in the Philippines is still one of the highest in the Asia-Pacific region and needs to be brought down significantly to accelerate the growth of the Philippine ICT industry," said Ronald Chua, chairman of the BSA Philippines Committee.

"We are optimistic that with close and continuous cooperation between the government and various industry groups, this goal will be advanced," Chua said.


Reported by: Sol Jose Vanzi

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