Booty from the Backdoor

As per a Nasscom survey, over the year 2000-2001, piracy increased by 2%,

from 61%, and losses due to software piracy were close to Rs 1,100 crore. Every

year, piracy accounts for billions of dollars worth of revenue losses for

software vendors like Microsoft and Adobe. No matter who the perpetrators of

piracy are, it is causing the cash reserves of software vendors to dwindle by

the day.

Buying maturity



Despite possessing the purchasing power, consumers in India lack the

maturity to buy software from legal sources. This is mainly because a majority

of Indians have seen a sudden flood of software in the country but have no clue

about its origin. In developed nations, companies make the extra effort of

creating awareness about the development stages and resources of software

products. In return, consumers are more than willing to pay for the value of the

product.

Also, the channels for facilitating the purchase of software are not

conducive to legal purchase. For example, if an end user is able to buy software

worth a mere couple of dollars like WinZip as easily as a piece of hardware, the

end user is more likely to develop such a habit of buying. What actually happens

is that because it is available almost for free (as part of the package when

buying the hardware), the software is taken for granted. Soon, using pirated

versions of software becomes a habit.

Locked-in effect



"People in India don’t like to pay for the software because it is

available with the hardware they purchase. All that we can do is mail legal

notices and educate both the end users and retailers against using them,"

says Sanjeev Mehrotra, channels manager, Adobe India.

For Nasscom, bringing down the level of piracy has been a daunting, almost

unachievable task, in the last few years. According to their estimates, more

than seven in ten business, software applications are pirated, a common scene in

developing nations. "The concept of buying software has never existed for

the Indian consumer. People still want software for free or at almost minimal

cost," says Nasscom president Kiran Karnik.

Another factor detrimental to the purchase of genuine software is the high

initial cost of software and the fact that newer versions keep appearing every

now and then. But price should not be an issue if one looks at the purchase as a

long-term investment. Besides, up-gradation requires a much smaller amount to be

shelled out. Price becomes an issue only when you consider the usage of the

product. According to Adobe, people pay next to nothing for a pirated version of

Adobe software and make huge returns especially in the print and advertising

media. For Adobe, a large pool of revenues comes from people wanting to

continually upgrade. "Piracy is our biggest competition in India. We

support people, and give them valid reasons for buying legalized or authorized

copies of our products. As far as pricing is concerned, we also give people

choices on their purchases like individual boxes or elements or a collection,

based on their requirements," says Craig Tegel, MD, Pacific and South Asia,

Adobe.

Innovation block



At Adobe, the rate of piracy is as high as 90%, which means for every 10

users of Adobe products, nine use pirated versions. Lesser returns on

investments might not affect companies like Microsoft and Adobe to a large

extent, but could prevent small time developers who mostly make utility software

from coming out with innovative versions. Also with most non-English speaking

countries like India seeking localization of software, piracy acts as the

biggest obstacle in their attracting foreign investment from the likes of

Microsoft and Adobe.

Levels of piracy will remain where they are or decline if at all, only

slightly, for the next few years. But in the initial stages, consumers in India

should acquire the habit of purchasing software. Given that price is a major

determinant, companies should be able to provide the users with more choices,

and they in turn should be willing to make the purchase.

Radhika Bhuyan in New Delhi