Computer Business Review

Microsoft admits piracy benefits

by CBR Staff Writer| 15 March 2007

The president of Microsoft Corp's business division, Jeff Raikes, has admitted that the company benefits from software piracy in an apparent tip of the hat to the open source software distribution model.

In an interview at the Morgan Stanley Technology Conference last week, Raikes admitted that there was a fine line between seeing high numbers of users and ensuring that they are using genuine products.

Our number one goal is that we want people to use our product. If they're going to pirate somebody, we want it to be us rather than somebody else, he said. And that's because we understand that in the long run the fundamental asset is the install base of people who are using our products.

What you hope to do is over time you hope to convert them to licensing the software, legally licensing it, so on, and so forth, he added, neatly - and presumably accidentally - describing the method by which commercial open source vendors benefit by making their core code available free of charge.

So it's always a delicate balance, because what you want to do is you want to push towards getting legal licensing, but you don't want to push so hard that you lose the asset that's most fundamental in the business, he added

Raikes' admission that the company benefits from the trade in pirated versions of Microsoft software is surprising given the company's tough stance on software piracy with its Genuine Advantage authentication test program, but Raikes quickly got back on the party line explaining the company's process for reducing piracy.

The first thing you do is you've got to get the government to support have the laws that respect intellectual property, he said. The second thing you've got to do is you've got to have some enforcement. So you want to get the government to do that. And the third thing you've got to do is you've got to get broad education. If you go through those phases, then you have a good business.

Raikes also noted that whilst Microsoft's attempts to crack down on software piracy often focused on emerging markets such as southern Europe, Brazil and China, US users are not averse to a bit of illegal software.

The truth is we like to all think, hey, we're the US, we respect intellectual property. The piracy rate here is still probably 20-25 percent. And if you look at the volume, that might make it the biggest opportunity in the world, he said.

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