Microsoft Exec Admits That Company Benefits From Piracy

from the a-secret-no-more dept

For some time, big software companies have tried to make the argument that a copy of pirated software is equivalent to a lost sale This is pretty ridiculous for a couple reasons. For one thing, there’s no reason to think that a given user of pirated software would have actually purchased a legitimate copy. Furthermore, the argument ignores the fact that companies actually benefit in some ways from piracy, because a user of pirated software is likely to purchase software from the same maker at some point down the road. This latter point is something that even Bill Gates has admitted, even while Microsoft continues to talk tough about cracking down on piracy. Now the company is stating more clearly that it knows there are some benefits to piracy. Jeff Raikes, head of the company’s business group, said at a recent investor conference that while the company is against piracy, if you are going to pirate software, it hopes you pirate Microsoft software. He cited the above reasoning, noting that users of pirated Microsoft software are likely to purchase from the company later on. He said the company wants to push for legal licensing, but doesn’t want to push so hard so as to destroy a valuable part of its user base. The company recently got a stark reminder of this lesson when a school in Russia said it would switch to Linux to avoid future hassles with the pirate police. Of course, this moderate stance seems at odds with the company’s recent hyper-aggressive anti-piracy push, which resulted in many mistaken piracy accusations. Either way, Raikes’ comments completely destroy the line about pirated software being equivalent to lost sales; if it actually were, Raikes would be telling people to pirate the software of Microsoft’s competitors.

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Comments on “Microsoft Exec Admits That Company Benefits From Piracy”

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Scott Wendt (user link) says:

A lost sale is better than competitor gaining a us

It may well be that piracy is a lost sale (though not all piracy would otherwise result in a purchase) but that is not as bad as not having a user at all which still better than the competitor having a paying user. The goal is to keep piracy at a casual level and have as high a level possible of conversions from pirate to customer as possible. Its sort of the same reasoning as giving away LOTS of software to schools so that people have thier eyes in front of your software and not someone elses.

Dennly says:

MS software piracy

There is NO MS software worth paying for, or even using, except the operating system, which then opens up the whole world of independent software (commercial, shareware and freeware).

It’s only because Windows is bundled with new computers that I use it, otherwise I’d be off like a shot to the competition.

Having said that, the non MS software really works and IS worth paying for (when not free!).

Bill, when you’re in a hole, stop digging. Either ask us to pay for REAL apps, or just give them to us!

Joe Blogs says:

Re: MS software piracy

Try reading your post before you submit it.
you contadict yourself,

Most everyday computer users don’t even know how to install windows, and the fact is that most computer would be considerably less if they had no OS or software installed initially.

Those that do know may buy the required software or go down the piracy route, I know lots of undergraduate students take the later route if they build computer as they cant afford the software yet!!! These are the potential buyers when they do have the funds.

iPir4te says:

Re: MS software piracy

Just because the computer comes with Vista or XP, doesn’t mean you have to use it. My old laptop “came with” Win2K – the very first thing I did was format and install Linux.
I also use Firefox instead of IE – because I choose to.
Just because your car comes with OnStar, doesn’t mean you have to use it either.

The only thing you “have” to use is iTunes for your iPood – unless someone’s cracked the DRM for that… ???

sh00tar says:

Re: Re: MS software piracy

Actually, you don’t have to use iTunes at all. In my opinion, it is an over bloated program with features that I don’t need. The only thing I need iPod software to do is transfer songs to my iPod and transfer them back to my PC and that’s it!! I don’t want any built in music players or other redundant features that other programs on my computer already do.

Anapod Explorer is what I use to transfer songs to my iPod. It works well with all versions of the iPod. One thing to note, if you’re already using your iPod with iTunes and wanna switch to Anapod, say bye-bye to all the songs you have on there. You will need to format your iPod and then power it on without being attached to a computer. It will reset it’s directory structure and you can now attach it to your computer and set it up with Anapod explorer. Send mp3, wav, mp4(ALAC), etc. files to the iPod without any problems.

sh00ter says:

Re: Re: Re: MS software piracy

forgot to mention that the above will only work for audio files not downloaded from the iTunes website. > iTunes

Do any of you actually buy your songs from iTunes? I don’t.

This ties in perfectly with this whole piracy issue. I’m downloading them for free to sample them and will actually buy them at a later date…… a much much later date 🙂

iPir4te says:

Re: MS software piracy

Just because the computer comes with Vista or XP, doesn’t mean you have to use it. My old laptop “came with” Win2K – the very first thing I did was format and install Linux.
I also use Firefox instead of IE – because I choose to.
Just because your car comes with OnStar, doesn’t mean you have to use it either.

The only thing you “have” to use is iTunes for your iPood – unless someone’s cracked the DRM for that… ???

Enzo (user link) says:

MS ain't all bad

“There is NO MS software worth paying for”
“the non MS software really works and IS worth paying for”

Not sure I agree entirely with that generalisation.
I’m no fan of MS and generally try to use alternatives where possible but MS Office for example is a very decent app. Is there a better alternative worth paying for? I haven’t found one yet. OOo? Decent but not worth paying for.

As for piracy … it stands to reason that any software developer would prefer people use their software rather than a competitor’s … be it pirated software or not.
Isn’t that really why companies give away free versions of their software … to get you using their products with the hope of making money off you in future?

Casper says:

Re: MS ain't all bad

I would have to say that MS Office is not worth paying for. I moved away from it a few years ago and have not looked back. There is nothing included that you really miss, and all the random features people claim it has over it’s competitors are never really used… and I was extremely happy to be rid of that stupid paper clip. Every time I installed a fresh install and that little thing popped up, I thought I was going to lose my mind.

As for piracy, I really think it’s blown out of proportion. If someone could have afforded the crazy price tag, they probably would have bought it in the first place. I know that my copy’s of XP have all either come with a computer or I have gotten free from MS conferences. If it were up to me to go buy a copy of Windows, I wouldn’t do it. Just like I won’t buy a copy of Office. They are not worth the money. People turn around and bash operating systems like Ubuntu, but they forget that they are comparing it, a free system, to a $400 system that has been on the market for over a decade. Does Ubuntu do what I think it should for free? Yes, it actually does far more then I would expect from a free piece of software developed by a cooperative group. Does Windows do what I think it should for $400? No, I think a $400 price tag should get me something considerably better then a more polished OS. It should come WITH an office application (free), a sweet of REAL tools to make it useful to people other then secretaries and grade school teachers, and have a GOOD support program. When I spend $400 on a piece of hardware, I expect the manufacturer to support it and replace it if it has problems. What am I paying the $400 for with Windows? Ease of use?

In the next year or so we will be looking to move our entire agency away from MS Office. We reviewed the options, and if you compare MS Office side by side with it’s competitors, there really isn’t any justification for the price tag. If it wasn’t such a headache, we would probably even move away from Windows all together, but the Linux distributions are not quite mature enough (good enough for home use, not quite good enough for use by non-tech people)… and MAC isn’t really realistic in an office setting for numerous reasons.

Chrup says:

Re: MS ain't all bad

Office on Mac is even better than its counterpart on Windows and a Student-Teacher version costs you $150 and gives you 3 CD keys for 3 legit installations. As a ‘all-in-one’ (email, calendar, address book, notes, tasks, projects), I haven’t found anything that beats it on a Mac yet. OOo only works under X11 on a Mac and that’s much to much of a hassle to get to work.

Michael Long says:


“Raikes would be telling people to pirate the software of Microsoft’s competitors.”

Since the software most commonly pirated is Windows itself, just which other companies’ desktop OS would they pirate? Solaris???

The second most commonly pirated is Office. Since there’s pretty much no competition in the professional office productivity space, which competitor there would you suggest that people pirate?

How about Windows Server? Exchange? No?

So it’s rather obvious that your conclusion that his “comments completely destroy the line about pirated software being equivalent to lost sales … Raikes would be telling people to pirate the software of Microsoft’s competitors” is pretty much false to fact.

Because, by and large, there are no competitors…

The infamous Joe says:

Monkey with a keyboard.

I don’t know what kind of crazy things you people do with MS Office, but check out, it seems comparable to office, though, to be honest, I don’t use either that often anymore, so I don’t know if MS Office does [useful] things that Openoffice doesn’t…

One thing is certain, you can’t beat the price. 🙂

Jay says:

Re: Re: Monkey with a keyboard.

and how often does one need to program in vb in excel? If you can write vb code, why are you doing it on top of excel? You can use C code in OO, but again, why are you writing code in a spreadsheet? It is a spread sheet. BTW, try using access to access a sql table that other software uses. Try to save as a swf file from powerpoint. Try opening a wordperfect doc in word. Try using a mac, a linux box and a xp box to edit the same file without loosing anything. Try exporting a word doc as a pdf and maintain internal link targets. BTW, how big is the same file in doc format vs odt?

tmasman says:

Re: Re: Re: Monkey with a keyboard.

>> BTW, how big is the same file in doc format vs odt?
Mute point with Office 2007 as I think they are taking a play right out of OOo’s playbook… The new file formats (.docx, .xlsx, etc…) are zip files with XML files for the content… (Sound familiar?) & the file size is 25% of original doc/xls files.

On the other hand, am I going to suggest my company of 40 users spend the $$$ to update to MS Office 2007? No, I’m going to suggest we convert to using OOo. It’s not worth the money for a company this size to invest the thousands for an interactive toolbar (the ribbon).

Matt says:

Re: Re: windows for server ???

“Re: windows for server ??? by Kluster on Mar 15th, 2007 @ 2:46pm

Who in his right mind would use a Windows based computer as a server ? Windows is for technologically impaired users aka gamers and grandmas.”

Ummm, do you have any idea what your talking about. The servers thing I agree.. but putting gamers on the same level as grandmas… wtf 0_o. Explain to me why most games don’t run on Linux? Explain to me why Linux runs better on “Older Technology” instead of the bleeding edge/latest in tech. Hell, i’m an avid gamer and I would never consider Linux as my main OS because frankly.. i’m extremely Technologically minded – I love the latest tech, if I buy a new GPU I can be almost 100% certain its going to work extremely well. If I went and Pirated/bought a new OS and pratically had to downgrade my components.. I would be pretty pissed off.

I don’t think you really thought your comment through before posting it my dear friend.. as you obviously seem to be pretty ignorant if this is what you believe.

Dustin (user link) says:

Re: OOo

Is OOo worth paying for (if you had to)?

Kind of a mute point isn’t it? But I’ll go with your hypothetical and agree that MS Office is the better piece of software if I were willing to pay, though only because it’s got Publisher. The home edition is completely worthless and I’d never consider buying it. One problem then, MS doesn’t have a standalone Publisher, and the cheapest suite with it is $500. So I say, “to hell with it” put my money to better uses.

Now if OOo were to decide to stop being free and charge, say, 50% of the equivalent MS price (about $50) then yes, it would still be worth it.

I think says:

Re: Re:

People wouldn’t update their software, thereby opening systems to security problems that could be detrimental to the community as a whole …

Nevertheless, I see more and more stories about large organizations moving away from MS OS and apps. The US D.O.T. and subsequently the F.A.A. are both looking at *NIX and Google’s Online Apps … entire gov’ts have moved to Linux (Ubuntu seemingly the most popular choice). Now, THAT’S a lot of lost revenue …

john caddidy says:

Give me a break!

you guys keep harping on the old and very tired theme that “free is good.” even if — as in this case — we’re talking about piracy. then again, seeing how you guys don’t create any of your own content…and no, i don’t consider what you produce as content — considering how it’s mostly one of you guys running your mouths based on what some news organizations reported.

seriously, go back and check out your posts. a incredibly high % sings the same old song.


Casper says:

Re: Give me a break!

I am actually a developer and I don’t consider 90% of the software I see for sale worth selling. People think if you make a utility to convert a picture from one file type to another, it should be listed for sale on a cheesy HTML site. If you make a product well enough, people will buy it, assuming you have a realistic price tag. Is Macromedia Dreamweaver worth $400? Yes, if your a web developer, but the average person who just wants it as a tool is not going to pay that kind of money for something to tinker with. We are not talking about companies pirating vast amounts of software that they might otherwise have purchased. We are talking about individuals who want to try it out or learn how to use it.

Software developers are spoiled. We really are. We think if we make something, people have to buy it. That is not how it works. If you make a product that is worth buying, people will not have a problem paying for it. In my case, the projects I work on now are based only on their usefulness. If the client does not like it, they don’t use it, and we don’t get paid. If someone wants to try it out, we work with them to try it out. Not some stupid 90 day demo.

What it comes down to is opinions. Some people think anything they create is worth money, and that everyone who uses it should pay. Other people think you should only pay for it if you are using it to make money. I sit somewhere in the middle, I think people should pay if they can, but companies should not limit their audience. If a teenage kid wants a copy of Dreamweaver to start playing with web development, I think he should get it. There is no harm to the company, he couldn’t have afforded it anyway, and in the future, when he is working in the field, guess what products he is going to use….

mage says:


this is nothing new. why do you think adobe borland, microsoft, big software vendors allow this to happen? they know most pirates are young people. that if a 16 year old gets to know the interface of photoshop when he is 20+ working in the tech field he will use photoshop for his business, or his company will be using it. same with visual studio. that 16 year old kid will learn the interface so well he wont even mess with another IDE studio app. That person is now a Life time Microsoft software supporter. and more then likely will buy future versions of Visaul studio.

Anonymous Coward says:

piracy… ahhhh piracy where to start…

bought my first computer 7 years ago now

an u know the guy that comes over an strips it out and starts u off in the right (or rong direction)…

bit of a toutor so to speak..

well i’ve never paid for a thing since…

2 personal pc’ later an 3 build’s for coworkers…

im still going strong

but i think u have to enjoy lackluster preformance and zippo support… hours, of how does it affect my work and, can i find a way arround that, just so i can do this…

now if that’s not your thing… buy it!!!

OO all the way unless u know the guy to install office for u 🙂

Ironic says:

My thoughts

I actually am more likely to pirate from a company like MS because they are so extremely anti-piracy. Their products are not as polished as they could be and are too expensive for many consumers.
I can understand Microsoft not wanting whole companies (especially large ones) to pirate, but their attacking people pirating for personal use is a lose/lose situation. When they go after the general consumer they get the rep as an evil corporation. Thus people don’t feel bad pirating from them.

drwho says:

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nate says:

Pirate software

Let me give you an idea on how this piracy thing works here in Latin America and why MS executives here admit it works.
Most people use pirate MS products at home. So thats what they know how to use, what they became experts at. NO company will ever advertise looking to hire Solaris experts but windows experts. Now companies are more easy to control than individual users. And they are more likely to have the funds to pay for a license. It would take months for a company to find enough users of Solaris to work for them or even to train them.


Reed says:

Re: Prices

JJ Said,

In my opinion, MS priced itself into piracy. It is hard to pay more than $100 for any of it’s home products.

$279 for word+excel+outlook is too expensive.
More than $100 for a home OS is too expensive.

I agree totally here. Is software even worth this much? Considering it will be outdated and replaced within 3 years is it really an investment?

If you bought a MS product and you were guaranteed for life like Craftsmen Tools then yes I think it would be worth it.

On the other hand if you shelled out almost half a thousand dollars for Office 2003 only to find out it can’t read Office 2007 files I would be pretty pissed.

MS strategies of forcing everyone to start over again and purchase new software is dead ending the whole computer industry. They throw around their weight to keep all independent developers out thereby choking out innovation.

Sure some of MS products are good and XP is pretty damned snappy when it comes to speed, but it ends there. The majority of their products are poor hacks of the ideas they borrowed and are unable to execute properly.

Open Source will sweep in to clean up the mess MS has created and give everyone the chance to build on ideas rather than just steal them and make poor copies. Its like bringing in the discourse of sciences where everyone can build on each others idea to make an even greater product.

It is not just an idea, it is a revolution (Yet another great idea MS will embrace in several years and try to claim they started it LOL)

Spencer Ferguson (user link) says:

Microsoft Software Piracy

As someone with some level of insider knowledge, Microsoft is extremely image conscious and isn’t about to go after a home user or individual user of the software. Instead, they target corporations using unlicensed software or those that peddle it. The fact is, stealing is stealing. If you can’t afford a Ferrari you have no business driving a stolen one…

As for Microsoft pricing on Office and Windows, it is driven by the market. Simply, both products have a majority of the marketshare and thus the price must be alright by most people.

jin says:

in essence, i think what piracy does is it allows people to consider “what software would i choose if cost was not an issue”.

normally, people don’t, CAN’T think of products like this. you think in terms of “what is the best i can get for what i can afford.”

and lots of businesses profit from this! a lesser car company can get customers because though it does not make the best car, it makes a cheaper one.

piracy kinda short circuits the market for lower cost solutions. i firmly believe that an app like paint shop pro hasn’t taken off because it is irrelevant that you can get 90% of photoshop ($600) capability for $100 when you can get photoshop for free.

and it’s also probable that this is the reason why linux is not more widespread.

this basically enables the “victims” of piracy to eradicate competition and maintain a monopoly position.

haha, i guess piracy control is somewhat like the decisions faced by the oil cartels – you want to limit supply to maximize profits but you don’t want to limit it so much that you inspire potential consumers to start looking elsewhere for solutions (alternative fuels, etc.)

|333173|3|_||3 says:

While I use XP (for DirectX and because it came with the computer, and getting it was tax efficeint), the only part of Office that gets regular use from me is excel, and only because of the xl2latex program, used for converting an Excel spreadsheet to a LaTeX table.
I use LaTex for documents, and produce output as PDFs, (PDF screen for presentations, but I have only done that once), thunderbird instead of Outlook, FileMaker instead of Access, and Publisher is a waste of space most of the time (I haven’t used it for years).

I quite like the ribbon toolbar in office 2k7, but it is not something I will pay for.
FireFox2 beats IE7 by a mile, and has a greatly superior UI anyway.

If someone made an Open Source rip-off of Dirextx, then that would help convert gamers away from window$.

I use vPod with my iPod, which does not require reformating to use along with iTunes, but you have to extract your CDs yourself. For playback, there is Pod Player, which is not as good as iTunes for finding songs or editing info, but is good for playback (it is on my iPod, it is quite small), and Winamp has no problems with AAC files.

Cheese, you kept hiting submit until the page changed, didn’t you.

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Dennis potter says:

piracy and microsoft

They talk tough about piracy but however they fail to mention the fact that gates himself and mircosoft are being sued themselfs for software infringment and patant violations by may of the attorney generals of the united states in U.S. district court, and other violations that i am a claimant to.

give em up Bill, your days are numbered!

Gopesh Kapoor (profile) says:

Dear Microsoft

Dear Microsoft:

My name is Gopesh Kapoor, and I own a small computer repair and sales business in Manhattan.

My concern is that each month, business in my sector continuallly diminishes. The amount of piracy in NYC has grown to

astonishing levels. For example, the following ads were placed on craigslist in a PERIOD OF 20 MINUTES:

Every single day, more and more “software” vendors turn up, and more disturbingly, an even larger number of people turn up to

buy from them. For those of us who run legitimate businesses, this is becoming an increasing concern.

According to a recent NY Times article, Microsoft has spent a ton of money setting up an anti-piracy operation with staff

members that include former government intelligence officers, former district attorneys, etc.

This anti-piracy operation IS NOT DOING THEIR JOB. If they were, the levels of piracy would be DECREASING, not INCREASING on

a daily basis.

The costs of this anti-piracy operation is probably built into the price of legitimate MICROSOFT products. RECOMMENDATION:

FIRE this group of incompetents (they are taking your money and not doing the work you’re paying them to do), and LOWER the

price of your products.

Or, please feel free and continue to ignore my suggestions. In order to stay afloat, I’ll start to consider turning to

piracy MYSELF.

If you continue to employ the idiots in your anti-piracy division, chances are that I’d be able to make tons of money through

piracy of your products and never get caught.

Gopesh Kapoor, CCNA, CISSP

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