Economic Impact of Software Piracy in Virginia Tops $900 Million

RICHMOND, Va., Feb. 23, 1999 — Microsoft Corp. today released statistics revealing that in 1997 software piracy caused the loss of nearly 5,000 jobs and more than $900 million in combined wages, tax revenues and retail sales in Virginia.

The information is being released as part of a national education effort by Microsoft to raise awareness that software piracy hurts more than just the software industry. The data shows how software piracy – the theft of software through illegal copying of genuine programs or through counterfeiting and distribution of imitation products – adversely affects local businesses and economies, in addition to the value placed on people’s ideas.

“We easily lose 10 percent to 15 percent of our business or approximately $3 million to $5 million annually to software piracy,”
said Dr. Alex Sun, president of Information Integration Inc., an IT distributor and systems builder based in Maryland with offices in Richmond and Virginia Beach.
“When customers want illegitimate software, we turn them away, but as a systems builder, we’re not only turning down software sales, we’re also losing hardware sales.”

According to Microsoft, the 4,940 jobs lost to software piracy in Virginia translated into more than $234.6 million in wage and salary losses. In addition, the data shows that the region lost more than $629.3 million in retail sales and $40 million in tax revenues that could have instead contributed to federal and state improvement projects. International Planning & Research Corp. (IPR) of Redmond, Wash., used data from a 1997 international piracy study published by the Business Software Alliance (BSA) and the Software Publishers Association (SPA).

Microsoft announced the data in conjunction with TechNet, an event being held in Richmond on Feb. 23, which brings together customers and channel resellers to discuss technology implementation issues. Allison Watson, general manager for Microsoft’s mid-Atlantic region, said the statistics in the report underscore the tangible impact of software piracy on the local economy. According to the Northern Virginia Technology Council, Virginia is fifth among all states in terms of technology workers per capita and is home to more than 3,500 technology companies and over 320,000 workers.

“Virginia is a strong player in the technology industry and has fostered the growth of the IT industry by increasing protection for university employees who commercialize their intellectual property, establishing the Information Technology Commission, and creating the Center for Innovative Technology,”
Watson said at TechNet.
“To help the IT industry grow even more in Virginia we have to protect intellectual property, enable technology innovators and ensure that small businesses such as software systems builders and resellers have the opportunity to compete fairly. Equally important, we must educate consumers so that they can spot counterfeit software and recognize when a licensing deal is too good to be true.”

Software resellers and systems builders in Virginia who joined Watson at TechNet said that their businesses are directly affected by software piracy in the state, which is about 15 percent according to a study by IPR.

“There is a tremendous need to educate people, particularly small and medium-sized businesses, about the need to buy fully legal and licensed software,”
said Pam McLeod, sales manager of HyperFormance, a Richmond-based systems integrator and Microsoft Certified Solution Provider.

Put another way, one copy cannot go on 10 machines without the proper licenses. It’s

also in the interest of these businesses to purchase the bona fide version of these products to be safe from virus-ridden copies and to have access to technical support.

The software industry is a significant driver of the current economic prosperity in the United States, accounting for the creation of more than 2 million jobs, $102.8 billion in software and software-related services, and payment of $7.2 billion in taxes. However, software piracy threatens the ability of the industry to continue to contribute to the American economy. According to a 1997 study by Nathan Associates Inc. of Arlington, Va., commissioned by the BSA, software piracy in 1996 resulted in the loss of 130,000 jobs in the United States, $5.3 billion in wages and salaries and nearly $1 billion in tax revenues.

Customers or resellers with questions about the legitimacy of Microsoft products should contact the Microsoft anti-piracy hot line, toll free, at (800) RU-LEGIT (785-3448), or send
e-mail to piracy@microsoft.com. More information about software piracy can also be obtained by calling the Business Software Alliance anti-piracy hot line at (888) NO-PIRACY (667-4722) or sending e-mail to software@bsa.org.

Founded in 1975, Microsoft (Nasdaq
“MSFT”
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

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