How Piracy Helps Microsoft Make Billions

Dennis Faas's picture

Microsoft estimates it lost $14 billion last year to software piracy.

The loss may prove to be the most profitable sales never made.

Although the world's largest software producer spends millions every year to combat illegal reproduction of its products, piracy helps the company to establish itself in emerging markets and fend off threats from free open-source programs. (Source:

The sharing of pirated copies establishes Microsoft products as the software standard. As the economy grows, people and companies begin buying legitimate versions, and they usually buy Microsoft because most others already use it.

Microsoft and other software companies have learned that software piracy in the long term actually boosts popularity and increases sales of their products.

Microsoft along with other companies, have experimented with technical tricks to prevent copying, such as disks that could be used only once and hardware that had to be connected to the PC before a software program could run. This type of copy protection did not do well and the technology was abandoned soon afterward. By 1986, like most other software companies, Microsoft abandoned copy protection altogether. (Source:

The piracy rates worldwide are dropping every year and are increasing the revenue for software developers. Vietnam, which has the highest piracy rate in the world at more than 90%, has improved from 100% in 1994. Comparatively, the U.S. piracy rate dropped from 31% in 1994 to 21% in 2004 -- the lowest in the world. (Source:

Even with the Internet making piracy easier than ever, Microsoft's revenue and profit is still rising steadily. It earned $12 billion in revenue in 2005. (Source:

This record of success leads experts and software companies to regard piracy as less of a problem than it is made out to be.

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