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83% of all PC Software in East Africa is Pirated: Does it Matter?

By Wayan Vota on November 23, 2011

pirated-software.jpg

In the global market for personal computers, 2010 was a watershed year. For the first time PC shipments to emerging economies outpaced those mature markets, 174 million to 173 million. The Business Software Alliance celebrated this milestone by reporting that emerging economies now account for more than half the global value of PC software theft, $31.9 billion by their count.

In their 8th Annual Software Piracy Study, BSA found that:

The commercial value of the unlicensed software installed on personal computers in Eastern and Southern Africa (ESA), which excludes South Africa, reached $109 million in 2010. The figure stands at almost double the global piracy rate for PC software, which is around 42 percent. BSA also notes that the figures have risen by 3.6 points on the previous five-year average.

Here is a real question to ask: Does this piracy matter?

I don’t ask this question to be flippant. In economies where a majority of the population lives on less than $2 a day, every dollar counts. The cost of commercial software can be a major barrier to ICT adoption. Even Microsoft recognized it when they discounted Windows XP to less than $5 per license before they discontinued it in 2010.

At the same time, software developers need to be paid if we want them to develop new and exciting software. And without a robust credit card payment system, developers cannot offer subscription or pay-per-use systems for their efforts. They must expect to be paid fully at the time the software is purchased in a physical retail outlet, which adds friction and cost to the transaction.

So I can see where there is a demand for free and a supply that is anything but. So in the middle there is much software piracy. Should we be overly concerned about it? Does it matter that many people are stealing intellectual property? Or should hackers continue to be modern-day Robin Hoods freeing us from the corporate overlords? Or does piracy hurt everyone – from the foreign multinational to the neighborhood coder?

What are your thoughts?

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Written by
Wayan Vota co-founded ICTworks and is the Digital Health Director at IntraHealth International. He also co-founded Technology Salon, MERL Tech, ICTforAg, ICT4Djobs, ICT4Drinks, JadedAid, Kurante, OLPC News and a few other things. Opinions expressed here are his own and do not reflect the position of IntraHealth International or other ICTWorks sponsors.
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20 Comments to “83% of all PC Software in East Africa is Pirated: Does it Matter?”

  1. jm says:

    It does not matter the same way to everyone, as you might remember this article: http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/
    “Today Gates openly concedes that tolerating piracy turned out to be Microsoft’s best long-term strategy. That’s why Windows is used on an estimated 90% of China’s 120 million PCs. “It’s easier for our software to compete with Linux when there’s piracy than when there’s not,” Gates says. “Are you kidding? You can get the real thing, and you get the same price.”

    Therefore, it matters for open source adoption in some way…

    >At the same time, software developers need to be paid if we want them to develop new and exciting software.
    Local developers who do custom development might get paid though. Custom software is usually less pirated (and might be built WITH pirated software!!)

  2. Tom says:

    According to Mark Bowden, the greatest threats facing the internet are structurally rooted in the majoritarian pirated market. The Configur worm – essentially the HIV/AIDS of the virtual world – thrives precisely because of this environment and threatens unold dammage. Great interview with Bowden on the subject here: http://www.npr.org/2011/09/27/140704494/the-worm-that-could-bring-down-the-internet

  3. Jaume Fortuny says:

    Software piracy has two sides.

    There is a lucrative side against which to fight. In long-term, software piracy devalues technological workplaces and increases costs.

    But from my experience in the field of ICT, I have seen how the piracy became an engine of development. I’ve seen people hacking because they could not pay a price in the economy environment of the time. I’ve seen who hacked for accessing tools that have helped their training. And these and many other cases have used the software piracy to develop socially and economically. From the moment they had a higher economic position, they have been able to purchase software licenses and have done so. And this helped to increase the software market.

    Today, with the wide range of free and open software, the need to go to piracy to develop is not so clear. There are options to piracy. Maybe the key point is to have more and more open-source software that gives chances to all economies and help to foster development.

  4. Wayan Vota says:

    I had not thought about the virus issue, but you are right. We’ve had several support calls from clients who bought Linux computers and then had a friend install pirated Microsoft – what they wanted all along, but were too cheap to pay for up front. The pirated Windows XP was usually so virus-ridden it wouldn’t even take an anti-virus program.

    Usually the fix – re-imaging all the machines with a new, legal OS – costs the client 2x-3x more than just buying legal to begin with.

  5. Wayan Vota says:

    I don’t see open source software as the solution to piracy.

    If we take the Apple app store, where there is a thriving and multi-billion dollar market, there are few open source applications yet piracy is rare and people rave about the experience. What is common are multiple price points – from free to foolish – and an understanding of pricing by both the consumers and the producers of software.

    Where I see piracy the most is when software is priced beyond a consumer-acceptable price point.

    Microsoft Windows and Office are heavily marketed and often government-required (see Ghana’s textbooks) yet are not priced to be affordable by the general marketplace. In the gap between customer-assigned value and company-mandated price, piracy flourishes. Now if Microsoft prices its software at a point that was less than the hassle of piracy (say $20 for 7, $50 for Office), I don’t think there would be much of an issue.

  6. Jaume Fortuny says:

    Well, Wayan. At least we agree that the difference between market price and the purchasing power of people is a call for piracy.

    But reflection on the open software go beyond. Apple’s fight against a “legal piracy” (represented by Android) in its patent fight against Samsung or HTC. Android is seen by Apple as a real option to Apple market where the high cost of devices/software is a barrier to entry in the Apple world. So Android can be a pseudo-Apple option for low-income people.

    You expose it very clearly. At bottom, piracy exists when there’s a gap between customer-assigned value and company-mandated price.

    Then:
    – Is the policy price of the company who make piracy flourish?
    – Can the company prevent piracy with their policy price in a global market?

  7. Martin Mungai says:

    Factually true, majority of the PCs in East Africa are running on pirated Microsoft OS. When Bill Gates remarked that it would be better for the pirated windows to compete with Linux as a long term strategy solution for the China piracy issue, it worked.

    The same principle appears to work here as well, Microsoft products whether pirated or not still remain far more popular than any other OS. True the developers need to be motivated and hence the legitimate argument against pirated software. For a region where majority of its people are living on less than $2 a day, pirated products which initially come ‘cheap’, is in itself a relief to people wishing to bridge the digital divide.

    The masses are not fully sensitized on the moral and ethical issue of having pirated products on their computers. When Microsoft lowered the license fee to less than $5 per license, few people took notice of that. The bottom line here is, people want to buy computers, they have it in mind that it comes with windows OS installed, and so they do not understand when they are told to pay more for a genuine OS to be installed. The argument being, that if I have paid $500 for the machine, why should I add a couple of dollars to have genuine OS.

    I would however imagine that the solution to this would be for Microsoft to get into partnership with different brands of computers, have legal OS installed and have the cost integrated with the overall price to the customer without having to ask them to add more money for legal OS.

  8. Wayan Vota says:

    I have no clue where that last paragraph comes from. Microsoft has all kinds of partnerships with computer makes and they all bundle the cost of Microsoft in with the price of the machine. As such, the $5 WinXP deal was noticed, and its discontinuation in favor of $30-50 Win7 is certainly noticed.

    All I can think of is that you’re referring to recycled/donated computers or those assembled by small companies. All the big African computer companies have Microsoft integral to their product offerings. In fact, Microsoft often demands that OEMs configure their offerings in such a way to discourage a direct Linux-Microsoft computer comparison to find out the exact Windows7 cost.

  9. Martin Mungai says:

    Well, I actually wasn’t referring to recycled computers, although that could be true. You see majority of the PC (here am referring to Laptops – which have become very popular lately) that are sold in Kenya say Toshiba for example are made in China. When sold in Kenya, believe you me some do not come with Windows, just bundled OS: DOS. The vendors would probably ask the client if they want Genuine windows7 installed at an extra cost. But, again, I could be wrong on that one though.

  10. Wayan Vota says:

    The reason cheap laptops don’t come with Windows 7 is that Microsoft is charging $50+ for the OS, installed by an OEM. Even more if bought separately. Back when WinXP was $5, it was such a small price break that it could be easily absorbed in a netbook price and no one would notice. Win7, not so much.

    Hence my overall point – piracy exists where customer value and product price are far apart and a fake substitute can be easily obtained.

  11. David Lehr says:

    This is a super interesting argument and as the former general manager for Adobe Systems in China one I feel qualified to weigh in on.

    For East Africa: What is the size today of the market for East African developed software? I am guessing it is pretty close to non-existent. There are many reasons, BUT without protection of intellectual property it will remain SMALL. Ever wonder why the so many talented people in China have become world leaders in hardware production, but there is very local domestic software.

    For the Companies: If you are not there to sell your product, it will get there via the pirates! When I lived in China in the days before Photoshop was available in Chinese from Adobe, you could buy it on the street having been localized by some enterprising criminals. I tried to find them to hire them to do it for Adobe, but couldn’t. And, if you are not there to sell or support, even legal users will wonder why to pay.

    Small shops and students are both ripping you off and helping you grow. As they evolve in size and careers they will likely need to get legal (if for nothing else than big companies are easy to sue or criticize in the press). The great news is that since they are used to using your software and perhaps expert in it, they will want to use the same thing legally. So casual pirates may become real buyers.

    On My Thoughts: I used to strongly believe that users had a choice – pay the price, or don’t use it….After all, those of us who have computers buy them since stealing is not an easy option; why should it be different with software just because it can be stolen. That said, I am really grateful for the companies that do make their products available at affordable prices, especially when these products are critical to human development. To err is human, but to copy is the highest form of honor!

  12. jm says:

    >piracy is rare on Apple app store
    Do you have numbers ?

    Because that was not the impression I get from the Internet and in the streets.
    In Asia, if you buy your iPad outside of a traditonal Apple shop, it is jailbroken by default, with apps installed. So not much different from a PC.

    If you go over youtube, you have “a lot” of tutorials explaining how to install pirated app on your jailbroken iPad… (would number of jailbroken device be a proxy for piracy numbers on iOS ?)

    Anecdotal evidences:
    “iOS app is being pirated, to the point where over 90% of the users haven’t paid for it. What can I do? ” http://www.reddit.com/r/gamedev/comments/hs5y5/my_ios_app_is_being_pirated_to_the_point_where/

    Tap-Fu Developer Claims 90% iPhone Piracy Rate
    http://www.gamasutra.com/php-bin/news_index.php?story=25809

  13. The argument for FLOSS is very quickly dismissed. For users who only type a letter and fill in a simple spreadsheet, what is the added value of closed source software? Every dollar for an OS + Office suite is a waste when that dollar is scarce.

    As mentioned above, viruses on software you have to pay for are a big issue and costing hefty amounts of money in productivity and also in wasted, very expensive bandwidth. In East-Africa, 1Mb/s is still about 500USD, so you dont want malware messing with it.

    Secondly, FLOSS allows for far more localization. Instead of waiting for the big foreign corporates to localize into the hundreds of languages in Africa, FLOSS allows the local economy to invest into exactly that. This lowers the entry into ICT for a lot of people who do not master the big languages and stimulates the local economy.

    Lastly, there are very healthy business models around FLOSS. The basic rule of Stallman still applies: the developer gets paid for the work done. Once the work is done, the work is open. This model is much much cheaper (you dont have to worry about pirating), much faster, much more direct than big reselling models.

    This allows developers in developing nations to hook into very high-tech communities and start to contribute, make money and learn. How else will local developers ever learn how to build an operating system? Or do we want to keep that an exclusive US piece of knowledge?

    Focusing the argument on companies who are not opening up in this thread bypasses the huge part of the software business that is thriving on open. Twitter, Facebook, Google, all use and contribute highly to FLOSS projects and are doing much better than both Microsoft and Adobe.

    If you want to read more, from someone far more successful than yours truly, this is from one of the 2 founders of GitHub http://tom.preston-werner.com/2011/11/22/open-source-everything.html

  14. Wayan Vota says:

    I agree with all your points about FLOSS, and I too promote it to clients. But to be specific, Microsoft has done an amazing job marketing Windows/Office as the only acceptable software for businesses, governments and in education. To the extent it’s often a requirement for schools to teach ICT.

    Now we can debate all day long on the positive and negative aspects of this, but the reality is clients demand Microsoft. Often they don’t care if it’s legal or not. Does that matter?

  15. As an academic, one has being asking the business and organizations why there’s lack of adoption of FOSS especially Universities none adoption of FLOSS. The problem is the perpetuation of most ill advised decision makers concerning FOSS adoption. I have being using FOSS especially Ubuntu, LibreOffice, OpenOffice, GIMP, etc. But even though doomsayers or those who suppose to be supporting the ICT in organization inability to unlearn and re-learn ways of supporting the FOSS products is a very serious impactor for the development. By continuously providing CD/DVD free of charge will impact on adoption.

    Universities questioning whether there is a demand for FOSS ready professionals, and argument by business and industry that are there professionals coming to the industry from colleges and Universities further not assisting to move on FOSS adoption. Both bottom-up and top-down approach should be used to faster adoption. Governments who has FOSS policy they should held accountable officials who ignore adoption for FOSS especially in South Africa and developing world as to spend most of their budget where is mostly needed, education and health.

    FOSS evangelist

  16. Anonymous says:

    I’ve worked in a few developing countries – the longest was in Afghanistan – and the consequences of the proliferation of pirated software was a proliferation of malware and viruses (it took up 90% of the IT guys’ time to deal with) and no support for users. Soooo much downtime… In addition, it seemed to me to contribute to this attitude that stealing is okay – afterall, Bill Gates is a multi-billionaire (yes, I heard people say this).

    FOSS most definitely is the answer. It’s as stable and powerful as what Microsoft puts out, it works with Microsoft products, it’s legal, it’s easy to upgrade (and upgrades are frequent) and it’s *not* stealing. I switched to NeoOffice myself several years ago and I haven’t looked back!
    http://coyoteblog.posterous.com/embrace-foss-and-open-source

  17. Ben_C says:

    You can’t buy PC software in Kampala in any but one or two shops and even there the range is extremely limited. I think the software companies cry foul, but actually they are not supplying to these countries. Windows software is slightly different, as there are more places you can buy it, as it is sold with new computers.

    Add in DVDs and I would suggest that 83% is very low. I’ve never seen an original DVD on sale in Kampala and the only ones I have ever seen are in my own library!

  18. Wayan Vota says:

    That the 83% figure is low. They claim 99% of students pirate software and slightly less of others do. Interestingly, they claim that most people do not use anti-virus software either. They just reformat the hard drive when a pirated OS gets too virus ridden. Yes, they reformat once a month or more often if needed.

  19. Martin Mungai says:

    Its not any different either in Kenya, As I stated earlier, very few people are willing to add any extra dime in the name of acquisition of genuine OS. Most Anti-viruses as well are not genuine copies! There is a huge market for these products if only the software companies entered into a sort of agreement with the vendors, that is tailored for the EA and African markets. Make them available and affordable. The weak laws and against piracy has more than encouraged this vice to thrive. Infact, ask any ordinary citizen in any of the East African countries whether they are aware they are breaching any law, and you’d be surprised that, the only anti-piracy law they are aware of if any is Music/Video piracy. Software piracy is ‘not’ considered as a crime to the general public. Am glad you are on the ground to witness first hand these things.

  20. Sander says:

    I have experienced that while pc’s came loaded with pirated software, the consumers (government in a subsaharan development country) still had to pay for the licenses.

    When I pointed out that they needed licenses, the only thing they could do was buying separate licenses from the same vendor. The purchased licenses then to not be sold separately from a pc.

    Even more, the pc’s have been bought using a public tender, which by these piracy actions has become invalid and fraudulous. Because of their lack of knowledge, people would not have found out if I had not pointed it out. It felt like a large criminal network, big enough to make me feel unsafe.

    So: yes it matters.