O
Onno Tasler
Because there have been requests for pirated software lately, I would like
to say some words to this topic. Not the standard "It is illegal, do not do
it", neither do I want to warn about the possible dangers, at least
Microsoft sees no sense in prosecuting ordinary private home users for
pirating software - it is probably to expensive compared to the loss.
Instead, I want to try to explain which effects pirating software has.
There are two, seemingly contradicting positions towards pirated software:
"It destroys the software market!" does the one side say, "Only this way,
Microsoft could get its position!" the other proclaims.
Now, who is right? The BSA or the software pirates? Or are both wrong? I
would say neither nor, both are right - and both lie, nonetheless. Seems a
bit confusing, but hold on.
First, let's think whose software is the one that is pirated most often?
Usually, it is the market leaders software. Taking a look at the statistics
verifies this assertion, MS Office and MS Windows are not only market
leader in their respective markets but also the programs in that market
which are pirated the most often. In some areas the pirated versions of MS
Office alone have a bigger share of the market than the second placed
competitor!
It is a well known fact in Marketing (and not only there) that the market
leader often has an advantage just by being the market leader, but in the
software market being the market leader has even a bigger advantage. Since
office computers are most often used to exchange data, all other programs
have to be able to import the market leaders file formats, while the market
leader itself can afford having only import filters for the numbers three
and four (or sometimes none at all). People will rather ask why someone
uses "such a strange format" instead of the "standard format" of the market
leaders software than complain toward the manufacturer of the own program.
(This applies to almost any kind of software, even though the specific
reasons differs by application. Games for example have a smaller need for
exchanging data, but while playing the market leaders game you cannot play
the competitors [much cheaper] game either.)
Thus, having a big market share is a big advantage in the software market
because it allows one to somehow dictate the used file formats. Or would
anybody consider putting Word Perfect files on his homepage when the file
is meant for general access? Few think twice about doing so with a MS Word
document, it is expected to be readable by everyone.
Pirating software increases your share of the market, thus gives you the
advantage of a commonly used software, mentioned above. For that reason,
many companies started to give away their software for free for home users,
because that is the only way they see they can compete in this market. This
leads to point 2: Pirating software destroys the market. Of course,
companies who specialised in writing software for the private sector are
the losers of this game, their chosen home is turned into a battlefield.
Even though their software might have been well written, fairly priced and
better suited for private use they stand just no chance against the
professional software which is given away for free. The effect remains the
same even if the big players are not giving away their software for free on
purpose but just by ignoring the pirated versions (as MS does).
This way, of the many manufacturers that were there in the beginning only a
few remain. What remains is a market with a strong market leader and a
handful of small competitors, which are often specialised in certain niche.
Of course, this destroys the market -- one of the main requirements for a
working market is competition, after all.
Thus, in a vicious circle, the market share (to which the pirated versions
count) improves the position of a company, the better the position in the
market the bigger the pressure on the other companies to support your file
format, the wider spread your file format the bigger the need for your
software, the bigger the need for your software the stronger your place in
the market, the stronger your place in the market the more pirates...
Also, pirating software is not lowering the price, a fact which can already
be understood by basic market principles: Pirating something is expressing
a demand, and the higher the demand, the higher the price. This is truly
what happens: By pirating MS Office, you prevent other companies (whose
product are fairly priced and of high quality) of earning money, thus
preventing competition on the software market, thus reducing the necessity
for the market leader to raise quality and lower the price.
In case you truly read till here, you will probably be able to draw the
conclusion yourself: Pirated software destroys the market /because/ it gave
Microsoft its leading position and is now cementing it! Pirating MS Office
is not harming Microsoft, but all these small manufacturer's whose fairly
priced product you otherwise might have bought -- and that way, in the end
you are harming yourself by granting a monopoly.
to say some words to this topic. Not the standard "It is illegal, do not do
it", neither do I want to warn about the possible dangers, at least
Microsoft sees no sense in prosecuting ordinary private home users for
pirating software - it is probably to expensive compared to the loss.
Instead, I want to try to explain which effects pirating software has.
There are two, seemingly contradicting positions towards pirated software:
"It destroys the software market!" does the one side say, "Only this way,
Microsoft could get its position!" the other proclaims.
Now, who is right? The BSA or the software pirates? Or are both wrong? I
would say neither nor, both are right - and both lie, nonetheless. Seems a
bit confusing, but hold on.
First, let's think whose software is the one that is pirated most often?
Usually, it is the market leaders software. Taking a look at the statistics
verifies this assertion, MS Office and MS Windows are not only market
leader in their respective markets but also the programs in that market
which are pirated the most often. In some areas the pirated versions of MS
Office alone have a bigger share of the market than the second placed
competitor!
It is a well known fact in Marketing (and not only there) that the market
leader often has an advantage just by being the market leader, but in the
software market being the market leader has even a bigger advantage. Since
office computers are most often used to exchange data, all other programs
have to be able to import the market leaders file formats, while the market
leader itself can afford having only import filters for the numbers three
and four (or sometimes none at all). People will rather ask why someone
uses "such a strange format" instead of the "standard format" of the market
leaders software than complain toward the manufacturer of the own program.
(This applies to almost any kind of software, even though the specific
reasons differs by application. Games for example have a smaller need for
exchanging data, but while playing the market leaders game you cannot play
the competitors [much cheaper] game either.)
Thus, having a big market share is a big advantage in the software market
because it allows one to somehow dictate the used file formats. Or would
anybody consider putting Word Perfect files on his homepage when the file
is meant for general access? Few think twice about doing so with a MS Word
document, it is expected to be readable by everyone.
Pirating software increases your share of the market, thus gives you the
advantage of a commonly used software, mentioned above. For that reason,
many companies started to give away their software for free for home users,
because that is the only way they see they can compete in this market. This
leads to point 2: Pirating software destroys the market. Of course,
companies who specialised in writing software for the private sector are
the losers of this game, their chosen home is turned into a battlefield.
Even though their software might have been well written, fairly priced and
better suited for private use they stand just no chance against the
professional software which is given away for free. The effect remains the
same even if the big players are not giving away their software for free on
purpose but just by ignoring the pirated versions (as MS does).
This way, of the many manufacturers that were there in the beginning only a
few remain. What remains is a market with a strong market leader and a
handful of small competitors, which are often specialised in certain niche.
Of course, this destroys the market -- one of the main requirements for a
working market is competition, after all.
Thus, in a vicious circle, the market share (to which the pirated versions
count) improves the position of a company, the better the position in the
market the bigger the pressure on the other companies to support your file
format, the wider spread your file format the bigger the need for your
software, the bigger the need for your software the stronger your place in
the market, the stronger your place in the market the more pirates...
Also, pirating software is not lowering the price, a fact which can already
be understood by basic market principles: Pirating something is expressing
a demand, and the higher the demand, the higher the price. This is truly
what happens: By pirating MS Office, you prevent other companies (whose
product are fairly priced and of high quality) of earning money, thus
preventing competition on the software market, thus reducing the necessity
for the market leader to raise quality and lower the price.
In case you truly read till here, you will probably be able to draw the
conclusion yourself: Pirated software destroys the market /because/ it gave
Microsoft its leading position and is now cementing it! Pirating MS Office
is not harming Microsoft, but all these small manufacturer's whose fairly
priced product you otherwise might have bought -- and that way, in the end
you are harming yourself by granting a monopoly.
