Monday, November 12, 2012

Pirated software in Indonesia

There are a lot of vague numbers about the impact of pirated software in Asia. But Microsoft gave some clear data last week at a seminar called 'Intellectual Property Rights for a Better Indonesia'.

Microsoft Indonesia's CEO, Mr Andreas Diantoro, of indicated that 86% of users of electronic devices such as desktops, smartphones or tablets use pirated or illegal software. He explained that although Microsoft is the market leader with a 97 % market share in its sector, only 11% of the market is legal software. He estimated that there were 5 million devices sold in Indonesia in 2012, and according to their figures, just over half a million ran genuine Microsoft software. This leaves a figure of 4.3 million users who did not buy from Microsoft. This is data over one year, so doesn't count pirated software purchased and still running from previous years.

So far so good. Then Microsoft indicated that this led to lost revenues of US$1.5 billion. Of course we know in emerging markets that one of the reasons so many people do buy computers is that the pirated software is virtually free, so it is not certain that everyone could afford to pay that much for software. While the lost revenue is not so absolute, the number of devices running pirated software seems relatively clear. There are various ways customers acquire pirated software:

- consumers can buy pirated disks in street markets and shops
- computer vendors preload new computers with all the software a buyer wants from pirated or genuine but reused (in breach of the license) disks
- businesses reuse (in breach of the license) disks for multiple computers
- downloads onto digital devices from the web

Software companies have a long way to go to develop more substantial genuine markets. With the enforcement system very weak they admit that the tools they have to improve the situation are limited.

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