Software Piracy Deprives Kansas Economy of More Than $92 Million in 1997

Microsoft Announces More Than 1,400 Jobs Lost to Software Piracy

ST. LOUIS - March 4, 1999 - Microsoft Corp.’s Mid-America office today released statistics revealing that Kansas lost more than 1,400 jobs and $92 million in combined wages, tax revenues and retail sales in 1997 as a result of software piracy.

The information was released as part of an educational effort to raise awareness that 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, as well as the value placed on people’s ideas. International Planning & Research Corp. (IPR) of Redmond, Wash., utilized data from a 1997 international piracy study published by the Business Software Alliance (BSA) and the Software Publisher’s Association (SPA) along with additional data and analysis of piracy in Kansas.

"Piracy has unquestionably blocked the state from fully realizing the benefits of its local technology industry," said Scott Suhy, general manager of Microsoft’s Mid-America office. "The figures announced today are a wake-up call to this extensive problem that hits pocketbooks of those in the community, threatens the livelihood of honest computer resellers, and deprives the state of funding that would otherwise go to worthy public benefits."

The data showed that the software piracy rate in Kansas almost reached 22 percent in 1997, which means that more than one in every five copies of software on the desktop was illegal. And, in addition to the loss of more than 1,400 jobs, the data also reveals that software piracy robbed the state of more than $38 million in wages and salaries, a direct hit to the wallets of Kansas workers as well as to the industries that would have benefited from funneling these dollars back into the state economy.

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 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.

Microsoft cautions that, in addition to the increased potential for viruses, consumers who acquire pirated products could find they are missing key elements, such as user manuals and product identifications, Certificates of Authenticity, end-user license agreements and even software code. Microsoft is continually researching the viability of new anti-piracy technologies, such as the hologram on the hub of the Microsoft® Windows® 98 operating system CD, to maintain the integrity of the distribution channel and reduce the costs of piracy.

Microsoft encourages consumers to become familiar with the warning signs that can help them identify counterfeit or illegal software.

• Prices that are "too good to be true." These may indicate counterfeit product, or product that has been misdirected, such as product authorized for distribution only to educational institutions but is being offered to the general public.
• Back-up disks or CD-ROMs with handwritten labels, or components that appear to be of inferior quality
• Manuals that appear to be photocopied or are of inferior quality
• Products marked with a phrase, such as "For distribution with a new PC only," "Special CD for licensed customers only," "Not for retail or OEM distribution" or "Academic price — not for use in a commercial environment," that does not describe the transaction

In addition, when users acquire a new computer system, it should include operating system software. If that software is the Microsoft Windows 98 operating system, it should be accompanied by a user manual that incorporates a Certificate of Authenticity as the cover. The customer will also receive a CD-ROM with the software program. There must be an end-user license agreement (visible on screen when the program is first run). If any of these elements is missing, the product is suspect.

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. Resellers may obtain information regarding the Microsoft System Builder Program, OEM products and authorized distributors at http://www.microsoft.com/oem/. Customers and resellers can also obtain information about software piracy 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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