Software Piracy Drained Pennsylvania Economy Of Nearly $560 Million in 1997

Piracy Also Cost 6,300 Jobs in the Keystone State

PHILADELPHIA - Feb. 5, 1999 - Microsoft Corp.'s Greater Pennsylvania District office today released statistics revealing that software piracy caused the loss of more than 6,300 jobs in Pennsylvania and more than half a billion dollars in combined lost wages, tax revenues and retail sales in 1997.

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., furnished the economic impact statistics utilizing data from a 1997 international piracy study published by the Business Software Alliance (BSA) and the Software Publishers Association (SPA), along with previously published data and analysis of piracy in Pennsylvania.

According to Microsoft, Pennsylvania's software piracy rate in 1997 was 24 percent, which ultimately cost the state more than $210 million in wage and salary losses. In addition, the data shows that Pennsylvania lost nearly $21 million in tax revenues that could have contributed to local and state improvement projects.

"These economic loss figures demonstrate unequivocally that, contrary to what some people may think, software piracy is not a victimless crime," said Brian Boruff, general manager of Microsoft's Greater Pennsylvania District. "One in almost every four software programs installed in Pennsylvania has been pirated, translating into millions of dollars taken from the pockets of programmers, honest computer dealers and other workers in software-related industries. Piracy drains local communities and national economies of jobs, income and tax revenue and threatens the pace of innovation we've come to rely on."

Microsoft announced the data in conjunction with TechNet and Direct Access, events being held in Philadelphia on Feb. 5 and Pittsburgh on Feb. 9, which bring together customers and channel resellers to discuss technology implementation issues. Microsoft released the Pennsylvania statistics as part of a nationwide effort to educate the public on the detrimental impact of software piracy on every state in the United States.

"Illegal reseller operations engaged in software piracy pose a serious threat to the reputation and, ultimately, profitability and viability of legitimate resellers," said Elliot Levine, president of Philadelphia-based Softmart Inc., a leading global supplier of packaged software, software licenses and hardware products to the business and government marketplaces. "Furthermore, unwitting businesses to whom they sell this illegal product likewise put themselves in both financial and legal jeopardy. It is clearly a significant problem."

Bentley Systems Inc. a worldwide leader in enterprise engineering software based in Exton, Penn., underscored the need to track software licensing.

"Our users are involved in worldwide infrastructure enterprises, with thousands of participants and an enormous amount of software connected over the Web," said Yoav Etiel, senior vice president of marketing at Bentley Systems Inc. "We really don't think most people mean to be pirates; they mean to comply, but it's hard to keep track of the licensing. On the other hand, users have to understand the seriousness of the issue. We think one solution is to provide the electronic tools that make compliance easy. The software should help users comply and keep track of their licenses. It's a team effort, and I think most users are more than willing to play fair."

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 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. More information about software piracy can 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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