Software Piracy Deprived Iowa Economy of More Than $97 Million

Microsoft Shares Proper Licensing Practices and Tips for Identifying Counterfeit Software With Customers and Channel Partners

DES MOINES, Iowa - April 23, 1999 - Microsoft Corp. officials today released statistics revealing that Iowa lost nearly 1,800 jobs and $97 million in combined wages, tax revenues and retail sales in 1997 as a result of software piracy.

The economic data was released in conjunction with a Microsoft-sponsored Intellectual Property and Anti-Piracy seminar held at the Des Moines Marriott Hotel for customers and channel partners. The announcement is also part of an overall effort to raise awareness that the detrimental effects of software piracy - the theft of software through unauthorized installations of genuine programs or through counterfeiting and distribution of imitation products - reach further than just the software industry.

"In addition to adversely affecting the local economy, software piracy also has dangerous consequences for legitimate software distributors," said Pete Preston, an account manager at Software Spectrum Inc., a leading supplier of personal computer software and technology services. "We're grateful that Microsoft recognizes the importance of education on this issue so that companies of all sizes are more aware of the many risks associated with software piracy and can learn how to protect themselves and their customers."

Iowa's piracy rate of 25.7 percent indicates that more than one in every four copies of software on desktops in the Hawkeye State is illegal. The data also revealed that software piracy robbed the state of more than $8 million in state and federal taxes, which could have instead contributed to important state improvement projects. Iowa workers did not fare well either as evidenced by the nearly 1,800 jobs lost to software piracy in the state, representing more than $43 million in wage and salary losses. The data was supplied by International Planning & Research Corp. of Redmond, Wash., which utilized 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 Iowa.

"In addition to threatening a significant source of employment and wealth for Iowa's economy, software piracy also damages the integrity of intellectual property, which continues to drive the growth of the local technology industry," said Nick Psyhogeos, Microsoft corporate attorney. "To encourage innovation and strengthen the industry's contribution to the community, it is vitally important that businesses work with the government and consumers to fight software piracy."

In addition to the increased potential for viruses, consumers who acquire pirated products could find they are missing key elements, such as user manuals and product identifications, Certificates of Authenticity, end-user license agreements and even software code. Microsoft is continually researching the viability of new anti-piracy technologies, such as the hologram on the hub of the Microsoft® Windows® 98 operating system CD, to maintain the integrity of the distribution channel and reduce the costs of piracy.

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 that 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 should include operating system software. If that software is the Microsoft Windows 98 operating system, it should be accompanied by a user 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 (visible on screen 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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