MICROSOFT ANTI-PIRACY FACT SHEET APRIL 2008 - DOC

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					INTELLECTUAL PROPERTY RESEARCH
COUNTERFEITING AND PIRACY STUDIES
Piracy Impact Model Study – Released January 2008
 Conducted independently by International Data Corporation (IDC), covering 42 countries, the study reveals that a 10 percentage point reduction in
  only PC software piracy would deliver: An additional 600,000 new jobs, $24 billion in new tax revenues, $141 billion in economic growth worldwide.
 Total IT spending in the 42 countries in 2007 was $1.1 trillion; software spending was $245 billion.
 In the 42 countries, IT employment (hardware, software, services, and channel company employees) totaled 12.5 million in 2007.
 Across the 11 countries in Asia studied, a 10 percentage point drop in PC software piracy would create: 435,000 new jobs, $41 billion in new
  revenues, $5 billion in new tax revenues. These are revenues and jobs that stay in the local country.
BSA/IDC Economic Impact Study – Released October 2007
 More than 7.1 million new jobs will stem from the IT sector from 2007 to 2011 and account for the creation of more than 101,286 new IT companies.
 21% represents only software spending of the total worldwide IT market, yet drives 49.9% of IT employment in the industry and the user base through
  jobs creating, distributing, installing, or servicing software.
 42% of the worldwide IT employment in 2007 stems from the Microsoft ecosystem.
 For every USD of Microsoft’s worldwide revenue, $7.79 is generated by other companies in the Microsoft ecosystem of hardware OEMs, software
  companies, and channel and service firms.
 Counterfeiting and piracy is estimated to cost the U.S. economy an average of 750,000 jobs annually — nearly equivalent to employing the entire city
  of San Francisco.
 Global spending on packaged software will be just 21% of total IT spending in 2007, but because software drives activity in the services and distribution
  sectors, as well as in IT using organizations, it will account for 50% of IT employment.
 In 2008, Microsoft will invest close to $100 billion in local economies.
BSA/IDC Global Software Piracy Study – Released May 2007 *based on 2006 results
 Software Piracy is an industry problem
 Worldwide, 35% of all software is pirated, which equates to over $40B of lost software license revenue
 2006 Worldwide Software Piracy Figures:
   Total software installed on PCs: more than $100B
   Total software paid for: $65B
   Total packaged software loss: nearly $40B, up 15% y/y
 WW for every $2.00 worth of software purchased legitimately, $1.00 worth was obtained illegally.
                  nd
 China ranks 2 in PC shipments after the U.S., yet has seen a 4 % point drop in piracy for the second year in a row.
 The greatest drop in rates, of the top 20 countries, was over the last 3 years (2003-2006):
   China (10 % decrease). Ukraine (8% decrease). Russia (7% decrease). Vietnam (4% decrease). Indonesia (3% decrease)
 US had the lowest piracy rate of all countries studied (21%), but also the greatest losses – almost US $7.3B. China had 2nd highest losses at US $5.4B.
Anti-Piracy Successes in China
 The legitimate software market in China grew to nearly $1.2 billion in 2006, an increase of 88% over 2005. Since 2003, the legitimate software market
  in China has grown over 358%.
Risk of Counterfeit IDC Study - Released 2006
 Cost to recover from a single incident of malicious software on a single workstation may be over $1000 (per incident).
 Total average cost per security incident of malicious code:
   $7,903 for Virus Cleaning
   $10,617 for Unauthorized Access
   $21,500 for Theft of Information
 Microsoft’s internal testing on pirated software yielded the following findings:
   348 Counterfeit Windows XP CDs tested from 17 countries
   34% of the CDs couldn’t be installed fully
   43% had some spyware, malware or other added binaries
 There are 98 unique websites offering access to counterfeit product keys and pirated software for Windows XP and Office.
 25% of Web sites offering counterfeit product keys or pirated software attempted to install either malicious or potentially unwanted software.
 59% of the key generators and crack tools downloaded from peer-to-peer networks contained either malicious or potentially unwanted software
Vanson Bourne Research Study (UK) – June 2007
 62 out of 100 IT decision makers polled say they had no idea how many software licenses their organization used.
 63% of IT decision-makers in companies with more than 3000 employees have no clear idea of what software was in use compared to 54% in
  companies with between 1000-3000 employees. Survey estimate that an independent software asset management audit can save an organization
  with 5,000 full-time employees up to £2 million.
IP PROOF POINTS
Intellectual Property is important to the US economy:                                Partner Community:
 IP industries account for half of US exports                                        Counterfeit software hurts our honest sales channel
 IP represents 40% of US economic growth                                            96% of all genuine Microsoft products are sold through partners.
 World Health Org – 10% of all pharmaceuticals are counterfeit                      Partners who must compete with pirates lose revenue, system sales
 Motor and Equipment Manufacturers Assoc. – $12B of counterfeit parts                 and the opportunity to service those customers over the years.
  worldwide, $3B in the US.
 Chris Israel is no longer the US Coordinator for International Intellectual
  Property Enforcement. He joined the Institute for Policy Innovation (IPI) as
  Senior Research Fellow.



            MICROSOFT ANTI-PIRACY FACT SHEET APRIL 2008                                                                               Page 1
APPENDIX
INTELLECTUAL PROPERTY RIGHTS
Key Messages:
 Microsoft has a proactive anti-piracy approach and is committed to protecting customers and partners from piracy and vulnerabilities associated with
  piracy.
 Microsoft is dedicated to ensuring the value of genuine products.
 Microsoft is taking the necessary steps to protect its intellectual property.
 Microsoft has solutions for customers to access genuine products because using counterfeit software is risky.
 Microsoft takes an active role in protecting the channel from counterfeiters.
 Technology contributes to economic development and piracy and counterfeit can thwart that opportunity.
ENGINEERING
Key Messages – Windows Genuine Advantage:
 MS has a special responsibility and obligation as an industry leader and an IP company to address software piracy and to protect our intellectual
  property.
 Our customers can expect fairness, great service and a positive experience in the implementation of our anti-piracy measures.
 The changes MS made in Windows Vista represent the most accurate and effective measures in our evolving anti-piracy efforts.
 Counterfeiters continue to devise new ways to steal software and defraud the public, as we discover new schemes we will take appropriate action to
  protect the public and the legitimate channel.
 Customers who discover they have been sold a non-genuine version of Microsoft Office can provide a proof of purchase, send MS their high-quality
  counterfeit product, and file a counterfeit report, and we will provide them a genuine copy of Microsoft Office free of cost. This offer is limited to one
  copy per ship-to address.
Key Messages – Office Genuine Advantage:
 Through programs such as the Genuine Software Initiative, Microsoft is supporting sustained social and economic opportunity for the majority of the
  world’s population.
 Microsoft is committed to having Microsoft Office participate in the advantages of Microsoft’s overarching Genuine Software Initiative (GSI).
 OGA is part of Microsoft’s commitment to protect its customers and partners from counterfeiters through education, engineering and enforcement.
 OGA differentiates the value of genuine Office software from counterfeit software enabling customers to enjoy the capabilities they expect, confidence
  that their software is authentic, and ongoing system improvements which help them do more with their Microsoft Office software solution.
 As part of its ongoing efforts to drive greater awareness of the value of genuine Office, as well as help to level the playing field for its honest partners.
Key Message - Software Licensing and Protection Services (SLPS):
 SLP Services help enforce protection of software from piracy, while enabling agility and power in defining products and enforcing flexible license terms
  through a streamlined and cost-effective process.
ENFORCEMENT
Key Messages:
 As part of the Genuine Software Initiative to combat software counterfeiting and other forms of software piracy, Microsoft works with local legal
  authorities to take actions to stop those who distribute non-genuine Microsoft software, as well as genuine software that are distributed via non-legal
  means.
 Legal action is designed to help protect IP and honest resellers and partners from unfair competition by dishonest dealers who sell and distribute illegal
  software and components to consumers and businesses.
 Microsoft’s goal is to impact the economics of distributing illegal software, making it a cost-prohibitive business model rather than a profitable one.
 Microsoft works with government bodies and law enforcement agencies across the world to identify and investigate those who compete unfairly by
  producing, distributing and/or selling illegal counterfeit software or components. A concerted effort globally reflects industry, government and
  enforcement’s continued support and commitment to protect consumers, legitimate resellers, channel partners and PC manufacturers that sell
  genuine software.
SOFTWARE ASSET MANAGEMENT (SAM)
Key Messages:
 SAM is an industry recognized business practice that has become increasingly popular among businesses of all sizes. Currently, there are standards and
  best practices in place around SAM.
 SAM is a comprehensive way to control and better manage and track software assets and licenses.
 Microsoft is providing tools and resources to help customers with SAM.
 Microsoft is working closely with customers and partners to implement a comprehensive SAM process.
 SAM is a business process not a tool.
Microsoft’s Value Proposition 3 Pillars:
 (1) Education and training (2) Participation in the development and promotion of ISO standards (3) The development of SAM tools.




             MICROSOFT ANTI-PIRACY FACT SHEET APRIL 2008                                                                                  Page 2