Software Piracy in Maryland Amounts to Nearly $450 Million

Local Resellers Working to Help Consumers Buy Legal Product

BALTIMORE - Feb. 16, 1999 - Microsoft Corp. today released statistics revealing that in 1997 software piracy caused the loss of an estimated 3,400 jobs and more than $445 million in combined wages, tax revenues and retail sales in Maryland.

The information is being released as part of a national education effort by Microsoft to raise awareness that software piracy hurts more than just the software industry. The data shows 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, in addition to the value placed on people's ideas.

According to Microsoft, the 3,400 jobs lost to software piracy in Maryland translated into more than $142.3 million in wage and salary losses. In addition, the data shows that the region lost more than $279 million in retail sales and $24 million in tax revenues that could have instead contributed to federal and state improvement projects. International Planning & Research Corp. (IPR) of Redmond, Wash., used data from a 1997 international piracy study published by the Business Software Alliance (BSA) and the Software Publishers Association (SPA).

Microsoft announced the data in conjunction with TechNet, an event being held in Baltimore on Feb.16, which brings together customers and channel resellers to discuss technology implementation issues. Allison Watson, general manager for Microsoft's mid-Atlantic region, said the statistics in the report underscore the tangible impact of software piracy on the local economy. Watson said that Microsoft works with nearly 5,500 high-tech, entrepreneurial businesses in Maryland.

"In my previous positions with Microsoft I worked closely with small and medium-sized businesses that often operate on tight margins and are vulnerable to piracy," Watson said at TechNet. "I think we have a great opportunity in Maryland to help the IT industry grow even more, but we need to be vigilant about helping these thousands of small businesses have the opportunity to compete fairly."

Software resellers and system builders in Maryland who joined Watson at TechNet said that their businesses are directly affected by software piracy in the state, which is about 19 percent according to a study by IPR.

"I lose clients on a regular basis to piracy," said Chris Maier, operations manager of CMC Computers Inc., a Westminster-based system builder. "For example, we lose one out of every two sales of Office Professional to unscrupulous system builders. We could up our software volume by six to eight percent if we stopped piracy. This is a real economic issue for us."

John Novak, sales and marketing manager for Continental Technologies, a Microsoft Certified Solution Provider based in Hunt Valley, said that IT professionals also need to work diligently with their customers to educate them on the importance of software license compliance.

"As many companies analyze their computer networks to ensure compliance with the year 2000 problem, it is an opportune time to review all of their software systems for license compliance," Novak said. "We are entering an era when intelligent software asset management is becoming strategic for business."

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.

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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