Software Piracy Deprived Texas Economy of Nearly $1 Billion in 1997

Microsoft Announces That Piracy Cost Texas More Than 10,000 Jobs

DALLAS - Oct. 7, 1998 - Microsoft Corp.'s Dallas office today released statistics revealing that software piracy caused the loss of an estimated 10,000 jobs in Texas and more than $920 million in combined lost wages, tax revenues and retail sales in 1997.

The information was released as part of an educational effort by Microsoft to raise awareness that software piracy hurts more than just the software industry. The data underscores 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. International Planning & Research Corp. of Redmond, Wash., used data from a 1997 international piracy study published by the Business Software Alliance (BSA) and the Software Publishers Association (SPA) along with additional data and analysis of piracy in Texas.

According to Microsoft, the software piracy rate in Texas of 30.2 percent in 1997 cost the state's workers approximately 10,200 jobs, translating into $340 million in wage and salary losses. In addition, the data shows that Texas lost more than $44 million in state tax revenues that could have instead contributed to local and state improvement projects.

"Contrary to what some people may think, software piracy is not a victimless crime," said Frank Giebutowski, general manager of Microsoft's South Central District. "It hits people in their pocketbooks and where they live. It robs them of jobs, and reduces the amount of tax revenue that our communities can share in and benefit from. Piracy weakens the local as well as the national economies, and we're hoping that this educational effort will help get the word out."

"Software piracy creates an unlevel playing field and undermines the competitive ability of channel resellers that obey the law," said Mark Dalton, director of software management for Dallas-based CompuCom, a leading provider of distributed desktop products and network integration services. "Pirated products, often from sophisticated counterfeiters and organized criminal operations, threaten our livelihood and contribute to a destabilized business environment. We need to step up the fight against this menace."

Over the next several months, Microsoft will release statistics on the negative impacts of software piracy for every state in the United States.

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.

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 run for the first time). 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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