Pirates caused the software industry to lose nearly $48 billion in sales last year, even as most countries experienced declines in their piracy rates, according to the latest annual study commissioned by the Business Software Alliance.
The fifth annual report, released on Wednesday, determined that from 2006 to 2007, overall losses grew by $8 billion and worldwide piracy rates increased by 3 percentage points to 38 percent. At the same time, piracy rates dipped in 67 of 108 countries included in the report. (About half of the increased dollar losses are attributable to the declining value of the dollar, BSA said.)
"What that means is in countries in many of the emerging markets where there is an extraordinary growth of PC sales per year, the sales of legitimate software are lagging dramatically behind that," BSA President Robert Holleyman said in a telephone interview, adding that he doesn't see the trend toward overall increased piracy losses reversing itself in the near future.
The study found, for instance, that so-called "emerging markets"--namely Brazil, Russia, China, and India--accounted for 46 percent of all new PC shipments last year but only 17 percent of new software shipments, Holleyman said.
Piracy rates rose in only eight countries, with Armenia, Bangladesh, Azerbaijan, Moldova, and Zimbabwe holding the top five spots for highest piracy rates. The United States, Luxembourg, New Zealand, Japan, and Austria were the countries with the top five lowest piracy rates.
One mildly encouraging spot was Russia, which has experienced a one-year piracy reduction of 7 percentage points, to 73 percent, and 14-point drop over the last five years, thanks in part to stricter government enforcement efforts, the group noted.
The methodology used by BSA and its analysts, IDC, for these reports has attracted a fair share of controversy in the past, with some claiming it overstates the piracy problem.
"They dubiously presume that each piece of software pirated equals a direct loss of revenue to software firms," said a 2005 piece in The Economist, echoing concerns voiced by two pro-fair use trade groups, the Computer & Communications Association and the Consumer Electronics Association.
To derive its figures, the group says (PDF) it considers analyst expectations of how much software was installed on PCs in a particular year versus how much software was paid for or "legally acquired" in the same year. The difference between the amount of pirated and legally acquired software is then used to calculate a country's piracy rate, and that rate is multiplied by the revenue from legitimate sales to arrive at the estimated losses.
Holleyman, for his part, argued the studies actually provide a "conservative" estimate of his industry's losses, in part because it doesn't assume every piece of software downloaded through the Internet is pirated and thus represents a sales loss.
"It's certainly true that not every piece of pirated software would be replaced immediately with licensed software if piracy rates went down," Holleyman told News.com, "but we do believe...that the evidence is that all of the pirated software will be replaced with legitimate software over time because people need good software."
Clarification: This story was updated at 3:24 p.m. PDT to clarify details of the SAP Enterprise Support plan for new customers.
SAP said on Tuesday that it plans to release a pair of tools that could ease the process of customizing how business software works.
The company launched the tools, NetWeaver Business Process Management and NetWeaver Business Rules Management, at its Sapphire conference taking place this week in Orlando, Fla.
Combined, the tools make it possible to alter and modify business process rules, which determine how SAP's financial, human resources, and accounting software works. "In SAP, we have delivered a business process model. But users cannot change models," said Peter Graf, SAP's executive vice president of global marketing.
Henning Kagermann, SAP co-CEO
(Credit: SAP)Graf said that traditionally, to change business process rules, IT and businesspeople would meet and "IT would go away for two months and build something, and then it would not be what business wanted."
"(With this announcement) we have introduced a level of abstraction, a repository of Web services, defined so customers can use them, and then can combine them to put together a new business process," Graf said. "This is a way for IT and businesspeople to look at the same visuals and decide on a process and make it work."
Graf said that the tools can be used by both IT developers and business process analysts and do not require hand coding. "They are more universal in nature," he said.
The tools are currently in beta testing and will be available later this year, SAP said.
Separately, the company announced a new service plan intended to provide support for SAP's software and the composite processes, built atop a service-oriented architecture, that work with other software.
For new customers, the SAP Enterprise Support plan replaces standard support contracts, and costs 22 percent of a customer's software license fee annually, Graf said. Enterprise software is traditionally sold with a maintenance plan, which can cost up to 25 percent or more of the overall licensing fee for the software alone. SAP's standard support costs 17 percent of a customer's software licensing fee annually, Graf said.
Updated 6:42 AM PDT with details from SAP's announcement.
Leo Apotheker
(Credit: SAP)The supervisory board of software maker SAP on Wednesday approved the appointment of Leo Apotheker, the company's top sales executive, to co-CEO.
Starting now, Apotheker will share the top executive position with current CEO Henning Kagermann, who is set to retire next year.
The move also points to Apotheker taking over as sole chief executive. "In my view, facing (upcoming business and technology) challenges together with the new executive team, Leo Apotheker is an ideal CEO and thus my preferred successor for Henning Kagermann," Hasso Plattner, SAP co-founder, said in a statement.
The supervisory board also appointed three new members to the SAP executive board, effective July 1: corporate officers Erwin Gunst, Bill McDermott, and Jim Hagemann Snabe.
Henning Kagermann
(Credit: SAP)The move comes as no surprise. Apotheker, a 19-year SAP veteran who runs the company's sales and marketing operations, currently holds the title of deputy CEO. He has been seen as the logical successor to Kagermann since the departure of Shai Agassi one year ago.
Agassi, who had been seen as a front runner to replace Kagermann, left the company last March to pursue alternative energy and green technology ventures.
(Credit:
Data compiled from IDC by Ars Technica)
It turns out that all of the world's problems could be resolved by stamping out piracy, or so goes the story from the Business Software Alliance. The BSA--"Be prepared (to intimidate people into slobbering submission)"--never met an alleged software pirate that it didn't hate, and believes that piracy has a huge negative impact on the global economy, including the U.S. economy, as Ars Technica reports. In fact, it paid (commissioned) IDC to come up with the following numbers:
If the amount of software piracy in the U.S. were to be reduced by 10 percentage points over the next four years, IDC believes the end result would be $41 billion in economic growth, $7 billion in additional tax revenues, and the creation of over 32,000 new jobs. In countries with higher rates of piracy, the impact would be even greater.
Maybe, maybe not. The real question for the BSA is this: since the software industry apparently can't solve the piracy problem by of small and medium-size businesses based on tips from disgruntled ex-employees, perhaps it would do better to encourage its members to go open source, obviating the incentive (and ability) to pirate software.
... Read moreCarl Icahn is hungry.
The billionaire investor has grabbed a larger chunk of BEA Systems, upping his ownership stake to 11.05 percent, according to a Wednesday filing with the Securities and Exchange Commission.
That move aims to bring more pressure on BEA's board, which Icahn has called upon to sell the business software company.
His beef?
A view that BEA's shares are undervalued and an acquirer, in a consolidating market, could bring greater heft to the company's "innovative technology" and transform the financial performance of these assets.
Icahn, who late last month increased his stake to 9.88 percent from 8.5 percent, may be poised to launch a battle for BEA's board. As of June 30, according to Reuters, Icahn had just a 2 percent stake in BEA.
Icahn is no stranger to proxy fights. Just ask Ed Zander over at Motorola. The Motorola CEO actually managed to ward off such an attempt.
What would happen at BEA is anyone's guess.
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