Software Piracy Drained Alabama Economy of Nearly $140 Million in 1997

Microsoft Announces Piracy Cost Alabama Almost 1,900 Jobs At Seminar for Local Resellers

BIRMINGHAM, Ala. - Nov. 18, 1998 - - Microsoft Corp. today released statistics revealing that Alabama lost nearly 1,900 jobs and $140 million in combined wages, tax revenues and retail sales in 1997 as a result of software piracy. Microsoft is announcing the impact of piracy on the local economy in conjunction with a seminar in Birmingham for Alabama-based resellers and Microsoft® Certified Solution Providers on licensing procedures and software piracy.

The economic data was released as part of an educational effort to raise awareness that the detrimental effects of software piracy - the theft of software through illegal copying of genuine programs or through counterfeiting and distribution of imitation products - reach beyond just the software industry to affect local businesses and the economy. 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 Alabama.

Alabama's piracy rate of close to 36 percent is significantly higher than the national average of 27 percent. In 1997, piracy robbed the state of approximately 1,900 jobs and more than $50 million in wages and salaries, a direct hit to the pocketbooks of Alabama workers as well as to the industries that would have benefited from funneling these dollars back into the state economy. Furthermore, the data shows that piracy resulted in the loss of more than $9 million in tax revenue, $6 million of which would have contributed to state and local improvement projects.

"These figures are a wake-up call that software piracy, whether committed intentionally and on a wide scale or unwittingly through individual copying of software programs, is by no means a victimless crime," said Sandy McCarthy, general manager of Microsoft's Gulf states district. "Unscrupulous merchants and counterfeiters prey upon honest resellers and unsuspecting customers. They rob businesses of legitimate revenue and workers of wages, stifling the flow of dollars through the economy. We are trying to step up the fight against software piracy so we can prevent further damage."

"Software piracy creates an unlevel playing field and has dangerous consequences for our industry and our economy as a whole," said Carlos Ponce, CEO of American Computer Systems (ACL) in Birmingham. "Organized counterfeiting rings and illegal reseller operations pose a threat to legitimate businesses and undermine the integrity of the products we provide our customers."

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 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.

Consumers who obtain counterfeit products could find they are missing key elements, such as user manuals and product identifications, Certificates of Authenticity and even software code. They may also find that the counterfeit software contains viruses or does not work as well as the genuine product. 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 will include operating system software. If that software is the Microsoft Windows® 98 operating system, it will be accompanied by a users 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. 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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