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Downturn to hamper Asian piracy fight

Cash-strapped companies are increasingly likely to risk sanctions in the economic slump, and Microsoft's new licensing structure could make matters more troubling.

By Irene Tham

SINGAPORE--Efforts to clamp down on the illegal use of software in Asia could prove futile, as businesses become increasingly cash-strapped in the economic downturn.

Although large to medium-size corporations tend to go through the proper channels, smaller companies continue to take the risk, said Alan Tong, an IDC Asia-Pacific senior analyst. And with the downturn now straining company coffers, the use of illegal software could become more rampant.

"Cost is an issue for small organizations," said Tong.

The temptation is clear. A pirated copy of Microsoft XP, for example, sells for as low as $1.50 in Malaysia, compared with the original price tag of $199 for the home version, and $299 for the professional version.

Small companies in Asia are already the bane of software makers such as Microsoft and Adobe Systems, as software piracy is "a part of life" in Asia, Tong said.

The situation could become even more complex with Microsoft's new licensing structure, set to go into effect this week. Under the new pricing scheme, customers enter "software assurance" contracts that commit them to buying application and operating system upgrades for an annual fee.

Although the Redmond, Wash.-based giant claims that the new model simplifies software contracts, allowing the cost of upgrades to be spread over a few years, analysts believe that it places customers on a more rapid upgrade cycle.

The less frequently companies upgrade, the more expensive the software turns out to be, said Guernsey Research analyst Chris LeTocq. In fact, "for people who upgrade every four years, it would be cheaper to go out and just buy the full version of the product," he noted. Hardest hit would be the small businesses, which tend to upgrade the least frequently of all.

"The new licensing model might, in a way, increase the illegal use of Microsoft software," said Tong.

Corruption impedes success
Corruption within the ranks of Asian government authorities, especially in the developing countries, also impedes the fight against illegal software sale, said Tong.

Raids conducted in Malaysia have proven largely ineffective. For example, Microsoft Malaysia said it obtained a court order on Aug. 20 forbidding any store or operator in popular shopping complex Imbi Plaza from selling unlicensed Microsoft products. But a week later, most vendors had resumed their illegal trade.

Even in Singapore, illegal Windows XP versions can be bought for about $6.

Under the Malaysian Copyright Act 1987, those found guilty of using pirated software can be fined up to about $2,600 for each copy of software and jailed up to five years. Those who make or possess illegal copies could be fined about $5,200 for each offense and jailed for up to 10 years.

According to Singapore law, if an individual or a company reproduces unlicensed software for sale or distribution, criminal action can be taken against them. That could result in a fine of about $5,600 per unlicensed copy, or imprisonment of up to five years, or both.

Since January, the Singapore Police Force said it has smashed six syndicates, seized about $4.5 million worth of pirated articles and arrested 85 people.

Last year, Asia-Pacific (including Japan) accounted for the highest revenue losses due to software piracy among corporate users. Losses in the region hit over $4 billion, or 35 percent of the global figure, the Business Software Alliance (BSA) announced in May.

The BSA is a global watchdog that aims to educate the public on software copyright and advocates public policies promoting the development of the software industry. Its members include Microsoft, Adobe Systems, Apple Computer, Macromedia, Corel and Symantec.

Separately, the BSA and the Intellectual Property Office of Singapore Wednesday launched a one-month educational campaign to discourage the use of pirated software.

The campaign, titled "You Could Be Piracy's Next Victim," involves the distribution of 75,000 posters to more than 10,000 businesses and public venues on the island.

Staff writer Irene Tham reported from Singapore's Joe Wilcox contributed to this report.