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Study: Software piracy costs $34 billion

Losses worldwide are up $1.6 billion from 2004, IDC finds. About one out of every three software copies is pirated.

Candace Lombardi
In a software-driven world, it's easy to forget about the nuts and bolts. Whether it's cars, robots, personal gadgetry or industrial machines, Candace Lombardi examines the moving parts that keep our world rotating. A journalist who divides her time between the United States and the United Kingdom, Lombardi has written about technology for the sites of The New York Times, CNET, USA Today, MSN, ZDNet, Silicon.com, and GameSpot. She is a member of the CNET Blog Network and is not a current employee of CNET.
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Candace Lombardi
2 min read
Software piracy resulted in a loss of $34 billion worldwide in 2005, a $1.6 billion increase over 2004, according to a study commissioned by the Business Software Alliance.

The study, conducted by information-technology research firm IDC, found that roughly one out of every three copies of personal computing software installed in 2005 was pirated. While the rate of piracy has fluctuated from country to country, globally it has remained steady since 2004.

"The piracy is the same rate, but overall more software and PCs were actually shipped in 2005," John Gantz, chief research officer for IDC, said Tuesday.

China, Russia and India have seen two or more point drops in their piracy rates, while piracy has actually increased in 19 countries. But after the U.S., China also saw the highest revenue loss, $3.9 billion. That's because the PC market in China expanded in 2005.

"In Asia Pacific, over half the countries went down and yet the average went up. That's because the amount of PCs going into India and China became a much bigger part of the total. They have an increased share in the PC market overall," Gantz said.

The United States had the lowest piracy rate--21 percent--of any country. It was followed by New Zealand, with 23 percent, and Austria and Finland, both with 26 percent piracy rates.

But the U.S. also lost the most amount of money, $6.9 billion, due to piracy.

Topping the list of countries with high software piracy rates are Vietnam and Zimbabwe, each with 90 percent; Indonesia with 87 percent; and China and Pakistan with 86 percent.

The BSA defines pirated software three ways: as a purchased, legal copy that is installed on more computers than the copy is licensed for; as software that is illegally sold or distributed; and as software that is downloaded from the Internet but never paid for.

Gantz said IDC keeps a daily watch on the PC market, collecting surveys and inventory data. Piracy percentages and figures are calculated from the amount of PC units shipped, the amount of software packages deployed and paid for, and from deductions for variables like open-source software options. The remainder is considered pirated software.