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Microsoft tightens the screws

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Microsoft’s global crackdown on counterfeit and illegal software shows no sign of slowing, with the software maker this week announcing the filing of 21 lawsuits in 14 states in the US against resellers allegedly engaging in the sale of pirated software, including some alleged repeat offenders. 

Closer to home, Microsoft SA recently reached settlements totaling hundreds of thousands of rands with 21 local computer dealers found to be selling computers to customers loaded with unlicensed Microsoft software. The dealers were based in Cape Town, Johannesburg, Durban and Pretoria and a number of smaller regional locations.
And just last month, Microsoft announced its second Fair Play Day in the Latin America region, where investigations led to the seizure of more than 160 000 counterfeit copies of Microsoft software – with an estimated street value of $18,2-million – in collaboration with Interpol and national law enforcement agencies in 14 Latin American countries.
Microsoft SA’s Mark Reynolds says the global crackdowns are designed to protect honest consumers and resellers.
“Illegal software doesn’t only cost the big vendors dearly. New estimates by technology researcher IDC suggest that worldwide, the industry is losing more than $10-billion a year from pirated desktop software. The proceeds of counterfeiting help fund organised crime, and impacts directly on job creation and economic development in this country,” says Reynolds.
The software industry is a significant driver of economic prosperity in South Africa. According to a recent economic study by the IDC, spending on hardware, software and IT services in South Africa will reach R61-billion in 2007. The IT industry employs more than 355 000 people.
However, software piracy threatens the ability of the industry to continue to contribute to the economy. The IDC’s 2006 Piracy Study reported that piracy of business applications in South Africa cost commercial software publishers R2,272-billion ($284 m) in 2007. The reported piracy rate in South Africa in 2007 was 34%.
Reynolds says counterfeiting and other forms of piracy negatively impact the South African economy through lost jobs and stifling young entrepreneurs. He cites IDC estimates that a reduction in piracy by 10 percentage points over four years could generate an extra 1 210 jobs in the IT sector, R6 billion in local industry revenue and R490-million in additional taxes revenues – money that would have gone back into local communities.
Pirates often dupe consumers into buying unlicensed or non-genuine software through hard-disk loading, which is the practice of installing unlicensed software onto a PC and then selling the computer to unsuspecting consumers. In many cases customers who have been sold unlicensed hard-disk loaded computer systems do not receive manuals or the original media, although the resellers often charge them the full price.
Many customers do not realize that the software pre-installed on the computer systems they purchased is not legitimate until they perform a check through the Windows Genuine Advantage (WGA) or Office Genuine Advantage (OGA) online validation tools, which are provided by Microsoft to assist consumers in verifying the legitimacy of their software.
Microsoft is also hearing from its partner community. “Knowing Microsoft is targeting resellers of illegal software in my area gives me one less thing to worry about,” says Mornay Durant of The IT Department, a Johannesburg-based small business specialist. “When the economy is struggling, it is difficult to focus on adding value to your customers when other organizations are using unfair practices to gain an advantage, especially when it comes to pricing of software.”
Reynolds adds: "These legal actions are about protecting Microsoft’s customers from falling victim to some dealers who operate a business model of peddling pirated and counterfeit software.
"Some companies previously involved in these lawsuits have discontinued their illegal business practices; others have not. The cases announced today are indicative of the need to ensure that dealers cease their illegal activity so that customers can be sure that they purchased genuine, fully licensed software.”