Microsoft battles piracy with free software

Company lays out booty for nonpirates who prove their Windows software is the real thing.

As part of its growing effort to thwart piracy, Microsoft is offering free photo slideshow software to customers who verify that they have a genuine copy of Windows.

Microsoft on Wednesday released Photo Story 3, the latest version of its software for creating photo slideshows set to music or narration. The previous incarnation was sold as part of a $20 digital media bundle known as Microsoft Plus Digital Media Edition.

This time around, Microsoft is making the software available free of charge, but it is requiring customers to take part in the Windows Genuine Advantage pilot program. In the program, people use an online tool to check whether their PCs are using a properly licensed copy of the operating system.

"The problem is that there are a large percentage of users that are using nongenuine software," said David Lazar, a director in the Windows Client unit at Microsoft. "A good percentage of those think they are using genuine Windows and are being cheated."

The Windows Genuine Advantage program was launched last month. At that point, there was no added benefit for those who had genuine software, nor was there a penalty if the software was bogus.

Ahoy, matey
Piracy is a major and longstanding problem for Microsoft, whose operating system is used on more than 90 percent of computers. The company has seen growth of Windows trail that of overall PC shipments as more PCs go to emerging markets, such as Russia and Brazil, where piracy is a bigger problem. The company believes that a large percentage of PCs that are sold without Windows eventually run a pirated version of the software.

The Business Software Alliance, a trade group that counts Microsoft as a key member, estimated earlier this year that software piracy robs the industry of $29 billion in sales a year. Some critics, however, have taken issue with the way the group arrives at that figure.

When Microsoft launched the current pilot program in September, it said it would re-evaluate the program once about 20,000 people had taken part--something it estimated could take from six weeks to three months. In fact, customers signed up far more quickly than Microsoft expected, with 800,000 participating in the first month. Microsoft wouldn't say how many of those were found to have unlicensed software.

Although the response has been better than expected, the company decided to sweeten the pot with series of "carrots" for people who verify their software. In addition to the free copy of Photo Story, Microsoft is offering a total of $390 worth of software, software discounts and services to consumers and small businesses that participate.

"We are testing a variety of offers to see what works best," Lazar said. "I anticipate that we would expand based on customer feedback."

No keelhauling ... yet
There is still no "stick," or penalty, for customers whose software is found not to be genuine. That could change, Microsoft said.

"I can't rule anything out, but we are still in the early phases and gathering customer and partner feedback," Lazar said.

Microsoft is also expanding the program to four additional languages: Czech, Norwegian, Simplified Chinese and Traditional Chinese, which is used in Hong Kong. Those languages were chosen because of their geographic diversity and because they represent comparatively high-piracy areas--such as China and the Czech Republic--as well as lower-piracy areas such as Norway and Hong Kong.

Microsoft hopes to see about 10 times as many customers go through the process in its next phase of testing. The company hopes to continue its linguistic expansion as well. "Based on customer feedback, we would expand to all the Windows languages," Lazar said.

Jupiter Research analyst Michael Gartenberg said the program makes sense for Microsoft, which is still battling the effects of a number of Windows license keys that were leaked to the Internet three years ago, when Windows XP debuted.

"Microsoft is using this as an opportunity to make sure those taking advantage of the new features of Windows XP are legitimate users," he said. There are some hassles, he said, as the software requires customers to find their Windows license information, something that is not always easy. However, he said he doesn't think "anyone is going to be overly inconvenienced."

"It's much more of a carrot than a stick approach," he said, predicting that Microsoft will use this with a number of products and that, over time, customers will find something they want enough to go through the validation process.

And Photo Story is a good place to start, he said. "It's a really nice tool. You might pay $20 for that feature. For Microsoft to give it away as an incentive is pretty good. But I don't think this is the last thing we are going to see."

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