Study says reducing piracy enriches Microsoft's partners

Data seems to indicate that good behavior is good business

In praise of piracy

"There are plusses and minuses to partners from less piracy, and Microsoft/IDC don't seem to have considered the minuses," said Ivan Png, a business professor at the National University of Singapore. For instance, some customers, especially in developing nations, may only have budgeted for buying PC hardware or services because they expect to pay little or nothing for software, said Png -- who, ironically, has done consulting work for Microsoft.

In interviews with seven unnamed Microsoft partners, IDC also found that "they have to walk away from projects when they discover pirated software -- which obviously affects deal completion."

Moreover, when partners discover customers using pirated or noncompliant software, this "can halt solution deployment -- which then lowers average utilization and billing rate."

DeGroot said the situation is rarely so obvious to partners, though. More often, partners "walk in to do a deployment, are handed a disk and a volume key, and have no idea what the real license limit is. They could kill the job -- and the customer relationship -- by insisting on seeing the invoice or checking the volume licensing Web site to make sure it's legal, but they can plausibly deny that they knew the customer was not compliant. They might ask 'You do have enough licenses to install this, right?' and if they get an affirmative answer, they've covered their ass, at least in their mind."

In an e-mail reply to questions, IDC analyst John Gantz, a co-author of the study, said the research firm stands by its assertations, which he said are based on prior research such as its calculation last year that for every $1 Microsoft makes, partner firms made US$7.80, and also incorporates recent interviews with seven unnamed Microsoft partners located around the globe.

"I agree that the willingness of a VAR or system integrator to work with pirated software -- to walk away from a deal -- will vary by country, partner type and culture. The model takes this into account," he wrote. "I also believe that even for those who support or work with unlicensed software, there are benefits to working with licensed software that are greater than the costs of doing so."

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Eric Lai

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