Study says reducing piracy enriches Microsoft's partners

Data seems to indicate that good behavior is good business

Microsoft may have a massive army of channel partners selling and supporting its software, but not all are equally loyal. Some knowingly install counterfeit software alongside legitimate seats. Others turn a blind eye to customers with lapsed licenses.

Microsoft has used the stick to try to correct such behavior, suing partners selling counterfeit or nonlicensed software. Now it is also trying to use the carrot and appeal to partners' economic self-interest.

Wednesday, the company released an IDC study claiming that partners potentially could gain an additional US$5.50 for every $1 Microsoft makes from eliminating pirated software.

Counterintuitively, it's not retailers and other software resellers that would gain the most from less piracy, according to IDC. Rather, value-added resellers (VARs) and independent software vendors would accrue increased revenues from shorter sales cycles for add-on software and faster delivery of technical services, as well as lower costs for delivering service to legitimately licensed software. The study was co-sponsored by Microsoft and the International Association of Microsoft Certified Partners (IAMCP).

For instance, most partners will hesitate to do work for a customer that's potentially pirating software because they worry that if the "customer is discovered, the liability could suddenly jump to them," said Michael Beare, director of license compliance for Microsoft's worldwide antipiracy team, in an interview last week before the Worldwide Partner Conference, where the study was released.

Citing IDC's findings, Beare also claims that pirated software tends to be poorly maintained or insecure, in part because end users don't want to download updates from Microsoft and expose themselves to the company's antipiracy detection technology. As a result, such software is more difficult for partners to work with, increasing their cost of work, he claimed.

Oh really?

But several experts interviewed by Computerworld questioned Microsoft and IDC's assertations, arguing that they appear to be based on unproven assumptions and suspect methodology.

Paul DeGroot, an analyst at the independent Directions on Microsoft, said that although Microsoft has "every right to discourage piracy ... I think the additional revenue for the channel from legal software is speculative.

"My guess would be that partners make more money from customers who use legal software because those customers are less likely to be cheapskate corner-cutters," continued DeGroot. "Making a cheapskate corner-cutter send Microsoft extra money isn't going to make the ISV or partner much richer, in my view. It'll probably kill the relationship, with a net cost to the partner for the time spent burning bridges with a bad customer."

DeGroot also questioned the claim that pirated software used by businesses tend to be buggier. Companies pirating software don't use counterfeit software downloaded off the Internet, he said, but use "legal, official Microsoft volume media to install more copies than they have licensed." Obtaining patches and updates can be done without exposing software directly to Microsoft, he said.

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Eric Lai

Computerworld
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