Software Piracy Cost Arizona More Than $180 Million in Lost Wages, Tax Revenues and Retail Sales in 1997

Microsoft Announces State's 28 Percent Piracy Rate Cost Arizona 2,000 Jobs

PHOENIX - Sept. 14, 1998 - Microsoft Corp.'s Phoenix office today released statistics revealing that in 1997 software piracy caused the loss of an estimated 2,000 jobs in Arizona and more than $180 million in combined lost wages, tax revenues and retail sales.

The information was released as part of an educational effort by Microsoft to raise awareness of the fact that software piracy - the theft of software through illegal copying of genuine programs or through counterfeiting and distribution of imitation products - hurts more than just the software industry. International Planning & Research Corp. 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 Arizona.

Arizona's software piracy rate in 1997 of 28.6 percent resulted in a loss of over 2,000 jobs in the state's software industry, according to Microsoft. These job losses translate into a loss of more than $62 million in salaries that would have gone directly into workers' pockets and back into the state's economy. In addition, the data shows that Arizona lost more than $9 million in state tax revenues that could have instead been used for local and state improvement projects.

"It's alarming that more than one of every four software programs in use in Arizona today was probably pirated," said Ed Denison, executive director for the Arizona Software Association. "The software industry makes a significant contribution to our local economy. We can maintain and even strengthen its contribution to our communities by helping fight this crime of piracy."

"Software piracy creates an uneven playing field and undermines the competitive ability of channel resellers who obey the law," said Gary Hart, president of Beyond Reality Inc., an Arizona provider of software solutions. "Pirated products, often from sophisticated counterfeiters and organized criminal enterprises, threaten our livelihood and contribute to a destabilized business environment. We are looking forward to stepping up the fight against software piracy."

Microsoft today also released information showing the impact of piracy on the state of California. Over the next several months, Microsoft will release statistics on the negative impact of software piracy for every state in the United States.

"One of the objectives of the educational campaign is to demonstrate to the computer-using public that illegal copying of software programs can exact a considerable toll on the economic health of their own communities," said Gary Willman, Southwest district general manager, Microsoft. "We want everyone who acquires or uses software - at home, at work or in school - to understand that illegally copying software is no different than walking into a local store, slipping a CD in your pocket and walking out without paying."

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

• Prices that are "too good to be true." This may be 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 will include operating system software. If that software is the Microsoft® Windows® 98 operating system, it will be accompanied by a user's 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 (this may be seen online 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. 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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