$500M Piracy Ring Busted In China

Blahbooboo3 writes "Reported by several news organizations, pirated software worth more than $500 million has been seized by authorities in China as part of a joint operation run by Chinese police and the FBI. Microsoft estimates that the software piracy of an international counterfeiting syndicate, over the past six years, cost the company at least $2 billion in lost software revenue. Microsoft said that key information in the investigation came from its Windows Genuine Advantage program, an anti-piracy system that can check whether an OS is legit. It's generally accepted that Microsoft has done well out of software piracy: it helps products become widely used, and as the market matures, people start to pay for their software. And this has been a major factor in Windows beating Linux in China, as Bill Gates has admitted."

Comments

FIRST

[Anonymous Coward]

FIRST

Re:FIRST

[HermMunster]

It was a $2 billion ring as of yesterday in the news. But we know who has been exaggerating these numbers. More likely the $2 billion is more like $2 million. It is hard to get $2 billion of anything, so we all know that's utter nonsense. If they have $2 billion they can easily afford to defend themselves. And, since when did China adopt US copyright practices. And since when is $2 billion dollars equal to $2 billion dollars in China? Not really possible.

Why

[McGiraf]

Why create your own corporate police when the tax paid one does the work?

Re:Why

[packeteer]

Because the tax paid one won't spend day and night hunting down and destroying anything that gets between a company and its profit. Oh wait yes it will...

Re:Why

[Anonymous Coward]

*umount

Re:Why

[Qwerpafw]

This kind of piracy hurts the US, so we really should be all for enforcement. Counterfeit software from American companies that is sold abroad means that the money is not flowing back into the US, and is instead entirely in foreign pockets. That means fewer taxes for the US GOVT, which in turn means that your personal taxes are higher in some small way.

You taxes pay for the US infrastructure that allowed companies like microsoft to arise, and thus companies pay back into the tax system. But when foreign counterfeiters reap the benefits of the labor of American companies, your taxes are paying for their profits. Busting counterfeiters is good for taxes, and a good use of government money, not bad.

Now, I know slashdot hates copyright enforcement, and the tactics of the RIAA, MPAA, and BSA are deplorable. Microsoft certainly benefits in some way from software adoption due to piracy. But before you crucify me for supporting police action against counterfeiters, keep this in mind:

This is not piracy as you know it.

These counterfeiters were selling what appeared to be genuine software, at normal retail prices. They forged the holograms, faked the boxes, and generated the serial numbers. The consumers buying the software were unaware of what was going on.

Imagine buying a copy of Micrsoft Vista, and shelling out the full $250 or whatever for VistaFlavorX(tm). You install it and everything runs fine. Then, six months later the computer locks you out when Microsoft realizes it's pirated.

Putting aside the issue of WGA, can you not realize how much that would suck for the mom and pop consumer? These chinese counterfeiters were not the "little guys," and they were certainly not "sticking it to the man."

They were profiting off American companies, American labor, American tax dollars, and in the end they were screwing over the little guy.

Re:Why

[Anonymous Coward]

Counterfeit software from American companies that is sold abroad means that the money is not flowing back into the US, and is instead entirely in foreign pockets. That means fewer taxes for the US GOVT, which in turn means that your personal taxes are higher in some small way.

Just wondering... how do you feel about all the US manufacturing jobs being destroyed by the cheap labour in China? Is it good for the US? Only a sliver of the population really gain from it, the majority end up getting cheaper crap at WalMart whilst putting themselves and their neighbours out of jobs.

Re:Why

[networkBoy]

And it is the movie equivalent of theise guys that the MPAA should go after.
On the bright side, because of them I was able to buy some out of print disney DVDs for my kids...

Re:Why

[IdleTime]

That is why I always recommend Linux...

Nobody comes knocking down your door, no tax implications, no fees to fat cats, no copy problems.

Re:Why

[kimvette]

That means fewer taxes for the US GOVT, which in turn means that your personal taxes are higher in some small way.

I have a better solution: cut spending.

Re:Why

[smilindog2000]

There's a natural progression countries like China go through. Initially, their population doesn't have enough cash to afford American prices, or even heavily discounted prices. The government allows/encourages piracy at this point, since the alternative of not having access to American IP puts their country at a disadvantage. This doesn't directly hurt the US, since these countries wouldn't buy our IP anyway. At this stage, the country may also have many low-wage engineering/software companies that do nothing but low-cost contract work for foreign companies. As the economy improves, and high-tech contracting companies flourish, local demand for IP protection grows. This allows local companies to make profits off of locally generated and consumed IP. As IP begins to have actual monetary value in an emerging economy, Microsoft (and others) assert their rights to payment for their IP. Microsoft is doing us a favor: they can be the bad guys, but everyone involved in any IP industry in the US will benefit, and Heaven knows the Chinese have plenty of US $ to buy our IP now.

Gates is smart enough to know that piracy helps him in many cases. If you pirate Windows Office for home use, you knock out your home desktop as a place for Open Office to flourish, and you probably wouldn't have paid the $300 for a stupid office suite anyway. By remaining addicted to Windows and Windows Office, you insure his future revenue stream at your next job. By allowing piracy in emerging markets, he keeps out Linux, and eventually stands to make a lot of $. He's not stupid.

So, how much should a person pay for software? In theory, our economy would benefit most if those who benefit more from software pay more, and those who can afford more pay more. So, for example, in Romania, Windows Office should cost far less than $100, while here in the US, $300 is not totally unreasonable. At work, where a copy gets hammered all the time, $1000 might be reasonable, while at home where all I do is occasional recreational writing, it should be free or close to it. I don't believe Microsoft in principle would disagree with any of this. So, how is it possible to charge some people more, while other people are charged less? As shrink-wrap products, it's nearly impossible. We have the same problem with aids medications. How much should a poor African pay? The same as a wealthy American? See... it doesn't work out. Literally, people die because of this issue.

Piracy is a partial solution. It allows Microsoft to sell one copy to many customers. As a country becomes more able and willing to pay, they crack down, reducing the piracy ratio. Can or do we do the same for aids drugs? Do we allow rampant illegal cloning of drugs in Africa? We probably should if we don't. Hopefully, one day most African countries can join countries like China, and begin enforcing IP protection, not because of Microsoft police, but because they can afford it. Anyone else got a better solution?

Re:Why

[Anonymous Coward]

>So, how much should a person pay for software? In theory, our economy would benefit most if those who benefit more from software pay more, and those who can afford more pay more.
"From each according to his ability, to each according to his need"? Yeah, that sure truned out real well,.

Re:Why

[infaustus]

"Only a sliver of the population really gain from it" "the majority end up getting cheaper crap at WalMart" Sounds like more than a sliver of the population gains from it to me....

Re:Why

[gronofer]

This kind of piracy hurts the US...

If you want to take this point of view, it also harms the US by allowing foreign companies to reduce their expenses, thus making it easier to compete with US companies. However even without the "piracy", if MS chooses to sell its software more cheaply in foreign countries, I don't think there's much that the US can do about it.

Re:Why

[tepples]

[With GNU/Linux,] Nobody comes knocking down your door SCO RLY?

Re:Why

[Anonymous Coward]

There is even more to that.
Imagine, a US company buys high end CAD software. It pays full price plus annual maintenance fees.
This CAD software is then cracked overseas and bought/ illegally copied by several companys overseas.
Now how can the US company compete with all these other companys if there costs of doing business are so much higher because they paid
for software and already pay more for labor? When these US companys go out of business, the software can no longer be paid for.
Who pays for the software to be upgraded now? I am sure that you can see where this is going from here...

Re:Why

[McGiraf]

"This kind of piracy hurts the US, so we really should be all for enforcement. Counterfeit software from American companies that is sold abroad means that the money is not flowing back into the US, and is instead entirely in foreign pockets. That means fewer taxes for the US GOVT, which in turn means that your personal taxes are higher in some small way. "

Well, I am not an American and I do not care how much taxes the Americans have to pay. :)

$500 million

[Anonymous Coward]

It's a start, but $500 million is nothing compared to the scale of piracy going on in China.

I spent some months over there recently and I didn't see a single piece of legal software. If we could get China to pay for everything they've ripped off us .. wow, our economy would be booming.

Re:$500 million

[skoaldipper]

Software? How about movies? Shoot, crack down on that and everyone in Hollywood could be eating caviar and crapping gold bricks. Oh, wait. They already do.

Re:$500 million

[JonathanR]

But that is the fallacy of such an argument. They say that the software traded has a value of $500 million, but the truth is that this is the value placed on it at western RRP prices. The true value of the software is much closer to the actual revenues that the pirates derive. This makes the revenue stream probably closer to a hundredth of that ($200 rrp say selling as a pirate copy for $5). If the pirates could make their $500 million, you bet they would.

Re:$500 million

[Anonymous Coward]

Uhm, what sort of math makes a hundreth of $200 = $5?

Maybe you meant a fourtieth?

Re:$500 million

[nurb432]

The value of the software sitting on a shelf is nil. Its all about 'potential lost sales'. Remember no bits were harmed in the original copyand since at best you can only purchase a right to use, a copy has no actual value.

Re:$500 million

[westlake]

But that is the fallacy of such an argument. They say that the software traded has a value of $500 million, but the truth is that this is the value placed on it at western RRP prices. The true value of the software is much closer to the actual revenues that the pirates derive.

So when my house is stripped and my car is stolen, I am only entitled to a recovery at the thieves' market price?

The five-fingered discount.

You have a promising career in claims adjustment.

Re:$500 million

[superpulpsicle]

China is far more suitable for the linux model. Knowing the communist government someone would probably get hanged for downloading windows. It's not worth it. They should go redflag or ubuntu.

Re:$500 million

[Anonymous Coward]

Pretty close. Maybe less. And a car is a *very* bad example of copyright infringement (nothing physically stolen with software, remember?).

You haven't thought this out.

In a good situation for the thief, your car was stripped and possibly sold in bits for more in total than you'll get insurance. A bad (desperate? stupid?) thief would only get a few bucks.

You get what the value is in the nice little book the claims adjuster has - which is probably less than you'd pay at a dealership. Same for the house. Insurance companies sure as heck aren't your friend, despite the ads. My car runs great, but it's old and I'd get next to zilch for my car - much less than it's worth, IMHO.

The value is quoted to the company's benefit. You'd claim your car was solid gold if you could.

Re:$500 million

[uncoveror]

Considering that a "legitimate" copy of XP, Office or Vista costs more than the average Chinese worker earns in several months if not a full year, Microsoft's lost revenue is nearly nil. To someone who can barely afford to eat, the idea that "intellectual property" has any real value is unspeakably absurd.

Re:$500 million

[Anonymous Coward]

Total Bullshit! Very few of their customers would have bought it at Micro$oft list, just like no one would buy half the crap the recording industry puts out if they had to pay full CD price for it.

If there were no cheap bootlegs or free downloads Linux, BSD etc. would be taking over much faster than they are now. Go get 'em coppers, you're digging your corporate master's graves.

Re:$500 million

[cooldev]

The true value of the software is much closer to the actual revenues that the pirates derive.

Then maybe the pirates should set up their own development shops, charge slightly more, and go for volume. Since AutoCAD as already mentioned; let's go with that. I'm pretty sure that a group of pirates could get together and build an application with the same quality and feature set of AutoCAD and sell it legally for $10 instead of selling an illegal copy on the street for $5. I mean, how hard could it be?

I mean, it's not like a few thousand person-years of development by people with BS/MS/PhD's and tons of talent, skill, and passion is worth anything, right?

(It's like all the world's sarcasm detectors silently cried out and died.)

Re:$500 million

[JonathanR]

I mean, it's not like a few thousand person-years of development by people with BS/MS/PhD's and tons of talent, skill, and passion is worth anything, right? And it's not like AutoDesk (to take your example) spent all those talent soaked man-years to develop a product specifically to market in China. That cost has already been amortized over many many sales in the western economy.

You forget that all developing economies emerged and prospered by ripping off and copying technology from developed economies (think Japan). They could re-invent the wheel, but they don't bother. That is not a true loss to the original wheel-inventor.

Re:$500 million

[cooldev]

Ok, so you're saying piracy is OK -- even though in this case 70% of the pirated software went to the US and other western countries -- because the western economy should subsidize China?

Given our current trade deficit that's even more laughable. Yes, the US is currently a service-based economy and China is mostly a manufacturing economy. Let's give away or let them steal all of our services and IP while buying all of their products. That makes *total* sense to me.

The good news is that the reality is that China doesn't want to just manufacture cheap goods. As they enter the world stage they are also taking steps to honor intellectual property. This benefits us both.

Re:$500 million

[JonathanR]

I guess that China's benefit from piracy is at least some moral compensation for the less than ideal working conditions that most Chinese manufacturing workers suffer, in the name of plentiful cheap imported goods that the US (and other western nations) enjoy.

I would suggest that piracy in China will wane at a similar rate to the improvement of living/working conditions (or exchange rates move to compensate). By then, the institutional infrastructure will be in place to ensure legitimate copies of AutoCAD are used, but you'll be the one missing your cheap DVD players, microwaves, refridgerators etc.

And the global picture...

[Fuzzypig]

...will show that this will make no difference what so ever! Fred will still copy his knocked off copy of Vista, XP or Office for his mate. It's like trying to scoop water out of the sink with your hands, while the tapes are on full. Some other group will see a gap in the market and will jump in, thankful that haven't been caught yet.

Re:And the global picture...

[merodee]

How is it any different than a drug raid uncovering a major drug ring, such as this one? http://www.canada.com/topics/news/national/story.h tml?id=a79c12ab-4707-42f5-b3dd-aa89d05c5ba9&k=2925 3 Illegal software isn't the same as illegal drugs, but you'll still make a difference somewhere. It almost seems impossible that all illegal drugs will be stopped, just the same as it is impossible to stop all illegal software.

Re:And the global picture...

[morgan_greywolf]

How is it any different than a drug raid uncovering a major drug ring...?

It isn't. And there are people who would use that exact point to argue that illicit drugs should be legalized. After all, we're spending billions and billions of dollars going after these drug rings and it's all for naught.

The difference with software, however, staying on topic, is that Microsoft knows that it's pointless to try to stop all piracy and, in fact, they count on it. As Bill Gates once said (paraphrasing): "We don't want people to pirate our software, but if they're going to do it, we'd like them to pirate ours because we hope that they'll get sort of addicted to it."

Sure, Microsoft works with the BSA on a few major busts every year to make examples out of some particularly bad pirates, but they know darned well that they aren't going to stop piracy any time soon.

I wonder what slashdotters like best

[OeLeWaPpErKe]

Illegal piracy ... and microsoft's dominance

-or-

The RIAA/MPAA/BSA/ ... and (unfortunately only "hopefully") more variation and choice in software

Turns out it just doesn't work without laws ... hmmm.

Re:I wonder what slashdotters like best

[McGiraf]

with drm and dmca and the new law they're lobying, linux is not gonna be helped by laws. The will try to make it illegal for sure.

Re:I wonder what slashdotters like best

[OeLeWaPpErKe]

Actually history would seem to suggest exactly the opposite.

Re:I wonder what slashdotters like best

[Verte]

If consumers want to be locked in to crappy closed source software, let them be. The best way to bring people to Free software is to let them try the alternative.

But of course.

[AltGrendel]

I'm sure that the RIAA will find a way to connect all this with their campaign to prohibit file sharing on college campuses.

The fact that it has nothing to do with bittorrent means nothing. It will be used as an opportunity to say something on the lines of "If its happening there, it must be happening here. Evil,evil,evil!"

3/4 to go

[Klanglor]

1/4 of the Piracy is irradiated. 3/4 to go and the software bureau can close office.

Re:3/4 to go

[Anonymous Coward]

1/4 of the Piracy is irradiated. Won't that just give them super-powers?

Re:3/4 to go

[MrNaz]

Not according to Litvinenko.

Codename "Summer Solstice"

[Whiney Mac Fanboy]

Codename "Summer Solstice" - no, not a porn film, but the name of the FBI operation encompassing multiple copyright investigations - including the one in question.

(link is to the FBI press release for this case).

Re:Codename "Summer Solstice"

[Shakrai]

Codename "Summer Solstice" - no, not a porn film, but the name of the FBI operation encompassing multiple copyright investigations - including the one in question.

I'm so glad that the FBI has taken time off from ignoring warnings about terrorists training to fly jumbo jets to go after the real threat to the American way of life: Chinese software pirates......

Once on Bittorrent...

[Anonymous Coward]

... digitally-stored media is pretty hard to 'seize.'

As the market matures

[hateful monkey]

Apparently Microsoft has decided that the market is now mature enough to start tightening up on the availability of pirate versions. They have the 90% market penetration, now they want to get the money out of that market. The first hit was free now it is time to pay. The Chinese government has been under a lot of pressure to show more concern about "intellectual property" so let the dog and pony begin.

Re:As the market matures

[arbitraryaardvark]

mod parent up.
I am skeptical of the claim that 2 billion was lost from this one pirate.
How much does Microsoft make in all of China?
As Mencius wrote, in a world without walls or fences, who needs windows or gates?

Re:As the market matures

[cHALiTO]

Well, now we can verify. Next year, MS should make at least 2M above expected, right?

Re:As the market matures

[Chief Wongoller]

Yes. The vast majority of fledling Chinese businesses simply cannot afford the genuine artice, so pirated versions are the only option. Both Microsoft and the Chinese government are well aware of this. Microsoft tolerate it because they view it as a kind of loss leader. It's a bit like offering interest free credit on your new PC. Initially the corporation loses money, but in the long run the consumer pays more, and the corporation has a much larger market sown-up than it would have had if the consumers had paid a market price (because effectively their getting the same product, but at a discount)if the first place.

Re:As the market matures

[ichigo 2.0]

Sure. Could you tell me their expected profit with a low enough margin of error? Because that would be valuable info, and is something many others would like to know as well. Consensus estimates are not to be relied on, as an average of guesses is still a guess.

There are so many factors at play that it isn't possible to infer if this raid has any effect on their bottom line.

Re:As the market matures

[cHALiTO]

Well, now, isn't that just convenient? :)

Re:As the market matures

[man_of_mr_e]

Actually, there's a difference between counterfeiting and piracy. Microsoft's efforts seem to be oriented towads stopping counterfeiting (where people buy what looks like legit software, and think it's legit), rather than piracy (where people intentionally crack software). The latter is virtually unstoppable, and they know that. But they CAN make it very difficult for counterfeiters to pass off their wares (no pun intended) as the real thing.

Re:As the market matures

[ichigo 2.0]

Yes, for Microsoft and the legitimacy of their anti-piracy efforts. ;)

Re:As the market matures

[rtb61]

The reality is still different, in the medium and long term, M$ will never be able to make any real money out of it's products in China, by far the majority simply will never be able to afford the products, and don't count products that are be sold in China and just re-exported to western countries, so it is all just about keeping Linux out permanently and not a 'loss leader' as will be in a permanent loss state, as soon as M$ stop, Linux takes over.

What of course is odd is that a authoritarian anti-democratic communist leader has such great respect and devotion for M$ and it's products, what the hell is that really meant to be about, why the public display of comradeship, why the fawning adulation between authoritarian anti-democratic communist leaders and the board of M$ ?!?

Re:As the market matures

[Anonymous Coward]

I only wish they had 90% market penetration. Windows desktop market share here is almost certainly above 99%, and I wouldn't be surprised if they had another nine on top of that. If you think that Linux and MacOS have a low market share in the West, it's still huge compared to China.

Re:As the market matures

[Yetihehe]

why the fawning adulation between authoritarian anti-democratic communist leaders and the board of M$ ?!?

Because they just call themselves communist, but in reality they are oligarchy or totalitarian?

$500M?

[fijal]

does $100 windows x 5k copies count?

Re:$500M?

[carou]

does $100 windows x 5k copies count?

You're a factor of 1000 out.

But, in principle, yes it's very likely they're calculating value based on the US purchase price of the official software (not including manufacturing costs, warehouse, distribution, retailer's cut etc.)

My God!

[JamesRose]

They must have copied that DVD of Vista like 3 times!

Don't worry about Linux

[tigeba]

There is always Linux Genuine Advantage http://www.linuxgenuineadvantage.org/ to keep it safe from piracy.

Re:Don't worry about Linux

[iminplaya]

The FAQ ruined the whole thing. It should have read:

Q: Where do I send my licensing fees? I couldn't find any information on how to send them in.
A: Please send a check or money order for $699usd to,

The SCO Group
355 South 520 West
Suite 100
Lindon, Utah 84042 USA

Please wait six to eight weeks for a framed, autographed copy of your permit

The price of piracy

[tigress]

I've always been amused by the figures that are put on software piracy.

Unlike things like producing a line of denim clothing and putting the Levis brand on it, creating pirated software costs virtually nothing. It takes just as much effort to copy a DVD containing your latest vacation photos as copying a DVD containing a $10k software package.

Just because they discovered a few thousand copies of expensive software doesn't mean that it either cost that much to produce, or has that much sale value (pirated software sells for far less). Neither does it mean that the loss in sales is nearly as much, as many of those who buy/download pirated software would never have bought the software in the first place.

Re:The price of piracy

[maroberts]

The reported financial values remind me of those $100million drug busts, when you find you can buy the same quantity for $100 from your local dealer....oops!

Re:The price of piracy

[smooth wombat]

Neither does it mean that the loss in sales is nearly as much, as many of those who buy/download pirated software would never have bought the software in the first place.

Then it is still a lost sale because the person obviously wanted the product but was too cheap or poor to buy it legally.

One can argue that the overall value of lost sales is not correct as more than likely the figures used are based on U.S. dollars, but the fact that people do have these illegal copies does mean lost sales. Either the person did want to use the product, in which case they should pay for it, or they didn't want to use it. You can't have it both ways.

Re:The price of piracy

[nasor]

If the "value" of pirated software was anything like what the industry claimed, everyone with a CD burner would simply make a copy of AutoCAD (retails for around $17k) every month and retire early.

Re:The price of piracy

[Andy Dodd]

"Either the person did want to use the product, in which case they should pay for it, or they didn't want to use it. You can't have it both ways."

Not quite. Let's use Adobe Photoshop as an example
They can:
1) Want to use the product but not afford retail price.
1a) They pirate it
1b) They choose an alternative (Paint Shop Pro or GIMP) that isn't quite what they wanted but does an acceptable job and is cheaper ($100-150 and free, respectively).
2) Want to use the product and can afford/justify its exorbitant cost
3) They don't want to use the product

True, in all cases but 2), it represents a lost sale for Adobe. But in the case of 1a), it is false to claim that piracy was the cause of that lost sale. The sale was lost no matter what for case 1), whether or not piracy or competition was the cause.

Re:The price of piracy

[Anonymous Cowpat]

yes, they SHOULD pay for it, but given the choice of pay for it or don't use it, MOST would choose not to pay for it and do without.

There are 3 kinds of people:

1. those who want the software and will pay anyway
   
2. those who want the software but only if they can get it free (/very cheap)
   
3. those who don't want the software, free or not
   

Now, if you have X many people who have the software and say 20% fall into the first category and 80% fall into the second category.

Now, remove the software from the second category and everyone in that category has the choice to move to the first category and get the software at full price or stay in the second category and not have the software. The mistake that Microsoft's declaration makes is that it assumes that ALL the people in the second category will go to the first category and pay up. This is nonsense. Which means that, since the second category actually can still get the software; Microsoft's calculation as to how many of them WOULD be in the first category, given the choice, (and thus their calculation of the lost revenue), is wrong.

Re:The price of piracy

[kalirion]

Given my financial situation, I would not even think of buying a car for more than $20k. If I could press a button and have a $300k Ferrari magically appear in front of me, I'd do it. Does that mean a $300k loss for the manufacturer?

Re:The price of piracy

[cdrudge]

Which version of AutoCAD retails for $17k? AutoCAD 2008 appears to cost around $4000. There are other "editions" that cost more, but nothing in the $17k range.

Re:The price of piracy

[Anonymous Coward]

I thought everybody did. Certainly my two sons doing engineering at College do!

Personally I prefer Vellum's 'DrawingBoard'

A.P.Fiddlement
MIT

'If I were competent, I would be terrifying!'

Re:The price of piracy

[Kjella]

or has that much sale value (pirated software sells for far less).

Pirated software (in particular CD-with-sharpie, not counterfeit that tries to fake the real thing) doesn't have much sales value because of competition. Let's take say the Adobe CS3 Master Collection, priced at 2500$. Let's say you're willing to pay 1000$ tops, so you're not buying it from Adobe. But if you buy a pirated copy for 1000$, you're a fool even though it's 1500$ off Adobe's value. Why? Because every pirate-wannabe with a little knowledge can find, download and burn that for you so you could easily find someone who'd do it for 100$ (or less). Does that relate to the product at all? Does it relate to how much that person is willing to pay? Not really. It only says how easy it'd be for someone else to do the same thing. The market for pirated goods is very close to Bertrand competition, where each "company" = pirate is supplying the exact same goods, only competing on pricing which would in a perfect market lead to price = MC = ~0$ for digital copies. It's only the imperfections which makes it possible for pirates to make money at all.

Re:The price of piracy

[Alex_WGA MSFT]

While it's true that many copies of pirated software are of low quality and sell for very little, equivalent of a few dollars, the software produced by this group was of very high quality and was intended to fool everyone including the resellers and customers. This product typically sells for the price of genuine product or just a few dollars under both to maximize the profit and because it tends to reduce suspicion that it's fake. There's an image on my blog of an acutal counterfeit DVD from the case that was announced. http://blogs.msdn.com/wga/

Re:The price of piracy

[shawn(at)fsu]

I think you are wrong on two counts. One if everyone did it then everyone would have to find someone to buy it every month. Something is only worth as much as someone else is willing to pay for it. Two just because someone can do a thing doesn't mean he or she will. Just as some people feel that software piracy is not a crime some people feel that it is and will not do it just because it goes against their morals.

Re:The price of piracy

[Anonymous Coward]

Wow, talk about missing the parent's point. "Something is only worth as much as someone else is willing to pay for it." That's his point (could be a her, but this is Slashdot). The point is that value assigned to software piracy is extremely inflated. So inflated that I'd be able to sell one piece at the price they claim and make a killing -- this is not true. See how that works.

Re:The price of piracy

[CodeBuster]

"Everything is worth what its purchaser will pay for it"

Publilius Syrus ~100BC

Re:The price of piracy

[vuffi_raa]

absolutely- I mean you can make a weak argument that everyone that wants it should pay $25 for a cd of music (though it is still too high) but to expect an average person to pay $900-$2k for a s/w package is pretty unrealistic- most will not or can not pay for it if it is not used for professional purposes. seriously if someone wants to increase the # of sales a piece of s/w needs to be in the $49-$299 range (and you will lose people at the $299 range) Every piece of s/w that I have bought personally (a lot I have been given licenses through various work situations, when contracting I have been able to often expense licenses or upgrades) has been in the $99-$299 range and the higher the cost the more I consider piracy.

Re:The price of piracy

[orkysoft]

Well, then you just burn a few more. Pretty soon, it'll add up to real money!

OPERATION "Summer Solstice"

[Anonymous Coward]

You should have said:

Operation Summer Soltice. Of course, the FBI use the OSS acronymn, because the WGA is driving people to OSS.

Windows beating Linux

[140Mandak262Jamuna]

The main reason is that once people use Windows, they get locked in. Incompatible file formats, refusal to interoperate with anything other than Windows. The only choice they have after that is to continue to pirate or pay an enormous switching cost to go to Linux or pay the tax and become even more locked into MSFT. Since piracy is so rampant in those parts of the world, they will switch to Linux last. Though China and India are poor and could ill afford to pay full price for Windows, and you would logically expect them to be switching to Linux first, they wont because it is so easy to pirate Windows. So MSFT will protest and go through all the motions of fighting piracy but in reality it knows it is the piracy of windows that is keeping Linux at bay.

Re:Windows beating Linux

[SerpentMage]

How about Windows is easier to use?

Naaaa, couldn't be that!

You can debate, argue, point all one wants. BUT the reality of the matter is that people seem to continue buying Windows, year after year. Some of that may be lock in, but I doubt 100% of that is lock in. Thus when everything is done and said, maybe there might be a few million people who actually prefer Windows...

Re:Windows beating Linux

[140Mandak262Jamuna]

Windows is not really easier to use. It is more familiar. Most workplaces make their users use windows due to corporate policy. Since they are already familiar with Windows and they want to exchange data between workplace and their home PC they buy Windows.

If windows is easy to use, how do you explain that most people don't even use 10% of the capabilities of the machine? How many people have Media center pc with a DVD writer and go out and buy the DVD recorder from Circuit City because they could not figure out how to burn a DVD?

Windows wins because it is familiar, it is saturated, it is incompatible with everything else. And also because some Linux geeks would insult intelligence of the windows users rather than help them use Linux. Some other Linux geeks would tut tut and still help debug and fix their friends broken windows machines.

Re:Windows beating Linux

[afidel]

The problem with Windows isn't file formats, that's generally the easy part of migrations. The problem is user training, proprietary addons to Office, custom programs (less of a problem with modern tools) and the capital costs of most alternatives. As far as Windows interoperating with other system, I have never had a problem linking a Windows system to any other computer system. I have integrated Windows into Sun NIS+ domains, hooked up Windows boxes to mainframes and mini's, mounted exported NFS mounts from a VMS cluster, and run an X desktop from an SGI workstation just to name some of the ways I've used Windows to interoperate with other systems.

Re:Windows beating Linux

[kie]

Here's some personal anecdotal evidence suggesting a different reason...

My experience in Hong Kong is that most people haven't even heard of linux,
although many are willing to try it once I tell them about it and give them a CD.

Similarly uptake of Firefox in HK is fairly low for the same reason
that people are unaware.

Re:Windows beating Linux

[EmperorKagato]

Windows is not really easier to use. It is more familiar.

I thought easier to use and familiarity go hand and hand?

How many people have Media center pc with a DVD writer and go out and buy the DVD recorder from Circuit City because they could not figure out how to burn a DVD?

Because Circuit City had a damn good sales staff!

I'm not sure what you mean by incompatibility; you may want to go in depth. You can mount NTFS in Linux, lots of hardware works for Windows, I'm not sure where the incompatibility exists.

Re:Windows beating Linux

[milwcoder]

Off the top of my head, I can easily throw out a handful of acronyms representing some linux domain knowledge that is required in order to effectively run a linux system. A handful is just an understatement if one really wants to learn linux. As it is, a way for linux to be adopted by more people is to start a community linux administrator project, where some linux administrator will manage a number of home users systems remotely for a small stipend. Otherwise, I don't see how linux can go further than the market of highly technical users. I'd not unleash linux on less technical power user, because it is not "configuration-easy". They may turn out complaining that linux is "not configurable" or "configure" the system into a complete mess.

Re:Windows beating Linux

[hackstraw]

The main reason is that once people use Windows, they get locked in. Incompatible file formats, refusal to interoperate with anything other than Windows.

That statement is so wrong. AFAIK, NIS doesn't work on Windows. Without Cygwin, and even with it, most of the Linux software does not work in Windows. OS X apps don't work on Windows.

What locks people in is that for most people Windows simply is "good enough". Just like for most people crappy cars (like the one I drive) -- because its good enough. McDonalds is the #1 restraunt in the world, not because its known to be great food, because its good enough for the money.

For those that can afford to and know better _and_ care, they choose things more carefully. Remember, 98% of all of the action in the world is below the 2nd standard deviation above the mean. And it always will be that way.

Re:Windows beating Linux

[xra]

You can debate, argue, point all one wants. BUT the reality of the matter is that people seem to continue buying Windows, year after year. Some of that may be lock in, but I doubt 100% of that is lock in.

The majority of people don't buy Windows. The majority of people don't even know what an OS is. They buy a computer that comes pre-installed with Windows. In their minds Windows is an integral part of the computer and they know no other alternative.

Thus when everything is done and said, maybe there might be a few million people who actually prefer Windows...

People become used to Windows. When given another OS they expect the same exact setting, to run the same exact applications.

Re:Windows beating Linux

[KoldKompress]

[Brings out the old trusty 'Car' Metaphor]

Imagine you have a car with terrible steering. It always veers to the right, and has terrible understeer.

Now you get a brand new car, and it doesn't veer to the right. And it turns perfectly, without understeer or oversteer.
You'd still have to get used to not having to correct the understeer.

Just because you're familiar with it, doesn't mean the car with the understeer is the easiest to use.

Re:Windows beating Linux

[_Sprocket_]

I thought easier to use and familiarity go hand and hand? You've touched on a really good point. A lot of the "Linux is so hard to use" discussion I see simply boils down to people unfamiliar with Linux. They're Windows power users who are put off by a system that doesn't behave as they would expect it to (that is - like Windows) and who forget Windows' own warts.

I used to be in the Windows power user camp. Linux appealed to me and I dove in head first. Now I'm so far out of practice with Windows that Linux is a snap and Windows is a PITA to deal with (much to my own chagrin). The experience has left me really understanding the value of simple familiarity.

I have a nagging suspicion that if "ease of use" was a real issue, Apple would still own the market. I never liked the Mac. But before I was introduced to Unix, I was forced to support Mac desktops (job requirement). And so, kicking and screaming, I managed some familiarity with them. And I had to admit... once I could get over the "this doesn't work like Windows - I feel dumb and uncomfortable not being able to do simple things" learning curve... I saw why people were such fierce fans. The Macs handled many issues with much more finesse than Windows. Clearly there was more to being a market leader.

Sure - Linux isn't a panacea; it has its own share of issues. But neither is Windows - and it's the market leader. But because Windows is a market leader, Linux (and other offerings) is going to have a rough time just because it is, in fact, different.

I'm not sure what you mean by incompatibility; you may want to go in depth. You can mount NTFS in Linux, lots of hardware works for Windows, I'm not sure where the incompatibility exists. I've been using Linux at home and in the workplace since the late '90s. It has gotten easier over the years. But there are still occasional gotchas involved. And more times than not, when I run in to a compatibility issue, its because the service I need is being provided by a Microsoft product.

On a side note - can you point to a mechanism that allows me to SAFELY mount and modify a NTFS partition under Linux? Without questionable re-used of Microsoft's libraries. Last time I checked, reading was about the only thing you wanted to do. If you wished to write to a NTFS partition, you took a risk - or wrapped libraries you snagged from a Windows install.

Re:Windows beating Linux

[SerpentMage]

Having and still using three systems; OSX, Linux, and Windows I think Linux on the desktop is not going anywhere. Yes you can mod me down as flamebait, but I have waited for the longest time to get a usable Linux on the desktop. Linux for programming is fantastic. It does things how I expect it to be.

Though Linux on the desktop for "easy" jobs like mail its ok as well. But here are the issues I just keep running into.

1) Media is choppy. I keep having problems where I can't listen to multiple streams at once. Let's say I am watching a DVD, put it on pause and then want to listen to a podcast. I get audio device errors galore.

2) If I compile something heavy duty and then want to watch a DVD, no can do, even though I multi-core CPU. Windows? No problem I regularly run big simulations on one CPU, while watching a DVD at the same time.

3) Get me a decent word processor, and spreadsheet. NO Open Office is not it. AbiWord is actually pretty good for basic tasks, but fails for anything beyond that.

4) Get me a printer that actually works! I am not kidding on this one. I can't print documents for the life of me. Yes blame it on the printer companies, but the end result is that I can't print, and I am not about to write my own printer software.

5) Get me a scanner software that actually works well. I have this old Cannon scanner that I can't get to work for the life of me. Windows a snap.

6) SKYPE? That's a joke. Try watching a DVD, and speaking at the same time? Or compiling or speaking at the same time. For reasons that are beyond me SKYPE goes choppy at times so that I have use Windows.

The interesting thing is that quite a few of these peeves were touched upon by Con Kolivas, who complained that Linux on the Desktop is getting no love whatsoever. Even on OSX I have some of these problems. On Windows? No problem whatsoever. So why should I beat myself on the head with Linux? Linux on the server is great, don't get me wrong. But on the desktop? Forget about it...

Re:Windows beating Linux

[_Sprocket_]

1) Media is choppy. I keep having problems where I can't listen to multiple streams at once. Let's say I am watching a DVD, put it on pause and then want to listen to a podcast. I get audio device errors galore. I agree on this. Now days, it's an iffy thing. Some of my systems behave flawlessly. Some systems are quirky. Some just don't play nice with multiple streams at all. And that all depends on the application, of course. I wish it was all smooth - it is on Windows. However, I also note that things have improved a lot over the years (albeit slower than one would like). Most of the time I don't run in to this particular annoyance.

2) If I compile something heavy duty and then want to watch a DVD, no can do, even though I multi-core CPU. Windows? No problem I regularly run big simulations on one CPU, while watching a DVD at the same time. I get some mixed results on this as well. Depends on how much effort I put in to setting nice levels, etc. The argument that I shouldn't have to do this has a lot of appeal.

3) Get me a decent word processor, and spreadsheet. NO Open Office is not it. AbiWord is actually pretty good for basic tasks, but fails for anything beyond that. To each their own. I use Open Office daily. I have no problem with it. But I also do tend to favor AbiWord for basic tasks as well (dunno why - probably just habit having used AbiWord from day 1 of my "Linux Desktop" experience).

4) Get me a printer that actually works! I am not kidding on this one. I can't print documents for the life of me. Yes blame it on the printer companies, but the end result is that I can't print, and I am not about to write my own printer software. I don't have problems with this. However, I have to admit that I'm mostly printing at work where the infrastructure plays nice with CUPS. At home, I've always checked in to the printer support on Linux before making the purchase. The last time I had some problems was an old all-in-one unit that was given to my daughter... though we did eventually get it working (and it reminded me why I'm careful about my purchases).

You're right here, of course. But you have nobody but yourself to blame. ;)

5) Get me a scanner software that actually works well. I have this old Cannon scanner that I can't get to work for the life of me. Windows a snap. Kind of the same deal as printers. You're working with a slim margin consumer electronics market. Buyer beware. I wish it was different.

6) SKYPE? That's a joke. Try watching a DVD, and speaking at the same time? Or compiling or speaking at the same time. For reasons that are beyond me SKYPE goes choppy at times so that I have use Windows. I don't use SKYPE. But playing WoW and using Ventrillo is my own personal hell. It can be done - I've seen references to it. But I have to deal with (apparently) a somewhat quirky on-board sound chip as well as the fact that I'm using Cedega to drive both WoW and Vent. That I can do this is kind of cool. That I have to do it is frustrating - especially when the outcome is unreliable. If I had native clients, I suspect I'd be much better off. But I'm suspecting the often-promised Linux Vent client will see the light of day just after Duke Nukem Forever hits the shelves.

The interesting thing is that quite a few of these peeves were touched upon by Con Kolivas, who complained that Linux on the Desktop is getting no love whatsoever. Even on OSX I have some of these problems. On Windows? No problem whatsoever. So why should I beat myself on the head with Linux? Linux on the server is great, don't get me wrong. But on the desktop? Forget about it... Its all about personal preference. Windows annoys me. It doesn't work the way I want it to. When I want to do interesting things, it gets in the way. And I end up having to modify the interface rather heavily to almost work like a Linux desktop does. Linux annoyances hit me less than Windows annoyances do. But I suspect a lot of that has to do what I expect out of my desktop and because I'm used to a Linux environment. As was noted earlier - familiarity plays a strong role.

Re:Windows beating Linux

[Guido von Guido]

3) Get me a decent word processor, and spreadsheet. NO Open Office is not it. AbiWord is actually pretty good for basic tasks, but fails for anything beyond that.

CrossOver Office works pretty well for me for Word and Excel. They're not perfect--I see the occasional weird little glitch, but they work well enough for my purposes.

What I need and don't have with a Linux desktop is Photoshop. I try the Gimp every now and then but it just doesn't work for me (poor LAB and CYMK support are the big ones).

Re:Windows beating Linux

[HungWeiLo]

The decision making becomes a little different when your annual income is $X and the brand new car cost $X (and the understeering car can be bought from a street vendor at the train station for $X/1000)

Re:Windows beating Linux

[Fire Dragon]

The main reason is that once people use Windows, they get locked in.

Once anything gets to be the local standard, people will get locked in. To do business with your neihgbour, you have to have same standards. If everybody else on your business area uses some format, you have to be compatible with them to keep your business alive. If Red Flag Linux(?) would get to be the standard, you wouldn't see that many windows stores around. In earlier days when there was Word Perfect and MS word compiting on wordprosessing market, it depended on your key contacts what format you used.

Since piracy is so rampant in those parts of the world, they will switch to Linux last.
They keep using pirated version of MS software as long as it will be profitable. By being profitable you have to consider charges like not being compatible with others and what you would have to pay to be. And what would be the changes of being busted using pirated software.

So MSFT will protest and go through all the motions of fighting piracy but in reality it knows it is the piracy of windows that is keeping Linux at bay.

As far as I know, China as strong attemps to adobt their own Red Flag Linux(?) systems on govermental side. That would mean that business would have to adobt open formats for documentation. I doubt that that many people in China has that much belief in openess of govermental supperted OSS, but being frigheted by the change of MS busting their shop for using pirated software or being busted by goverment by using govermental controlled software, will favour govermental OSS. I mean, goverment can bust you anyway they want if it will please them(or cousin of competing corporation).

I would say that it has been a bad business decision from MS to start doing major busts in developing software enviroments. Personatelly I would have waited a bit longer to be certain that MS standards are really THE local standards. Once everybody has fully integreted their systems on pirated MS products, they won't have any other choices than paying MS tax. Now their systems aren't that evolved, it will only take short time to rewrite some excel-sheets to mySQL databases.

On those markets you can go to harden some foreing(US or EU based companies) to check their licensing schema to mach their total MOL-contracts. Not by making it big headlines, just enough to make local branch-managers to fix things to look like everythings is OK on MS perspective. Just to keep rumours flying around about MS busts. MS has nothing to gain on some local small business to go belly-up by licensing fees, multinational corporations might want to reconsider their actions before their next bidding with MS come around in their moire western countries come up.

Re:Windows beating Linux

[EmperorKagato]

It's in the 2.6 kernel.

The Gentoo builds were flagging the module as experimental until 2.6 came along.

Rather expensive disks

[zolf13]

$500 million / 290000 ~= $1700!
I wonder what software (besides 47000 disks of Windows Vista) they were making.

Re:Rather expensive disks

[Anonymous Coward]

Wow. legitimate pirated software worth more than $500 million! Before I thought all pirated software had a zero value and was worthless, so if its worth something, it must be legit or partly legit. BTW I believe they sell disks for RMB7 per disk, under $1USD at the dealer level - so 500 million disks - good, this means the price of blanks and memory will tumble again.

This is/was a criminal organization

[sbate]

Microsoft needs to protect their investment having their territory muscled in on. It demands a proper response. Bill needs to go to Beijing jack a car and get to work. First he will need to find a way into the party on the big boat and hook up with the Hot Babe and take her to the club...

Ob chinky joke

[Anonymous Coward]

And this has been a major factor in Windows beating Linux in China

That plus the fact that "rinux" just sound silly.

Re:Ob chinky joke

[Anonymous Coward]

How is incorrect steriotypes considered funny? The Chinese actually are the asian country with a distinct R and L sound. Those without that distinction pronounce R as L. Not L as R. And no I'm not Asian. Please do buy a clue in the future please. Or ya know...get the hell out of your own country.

Re:Ob chinky joke

[WindBourne]

How is incorrect steriotypes considered funny? The Chinese actually are the asian country with a distinct R and L sound. Those without that distinction pronounce R as L. Not L as R. And no I'm not Asian. Please do buy a clue in the future please. Or ya know...get the hell out of your own country.

How is incollect steliotypes considered funny? The Chinese actually are the asian country with a distinct L and L sound. Those without that distinction pronounce L as L. Not L as L. And no I'm not Asian. Please do buy a clue in the futule please. Or ya know...get the hell out of your own countly.

Fixed it for you. BTW, for getting out of a country, would that be China?

How convenient

[this213]

All this just after Microsoft decides to come down to pirate copy prices in China
http://www.salon.com/tech/htww/2007/07/10/microsof t_china/index.html

Now that they have no competition, they can mark the price back up a thousandfold where it belongs.

Cover their "losses"? How do you lose something you never had to begin with?

Re:How convenient

[this213]

To the mods: How is this redundant to the article? "And Microsoft's own prices have dropped so low it now sells a $3 package of Windows and Office to students." Maybe you should read before you just go pushing buttons

Re:$500 million EXACTLY

[hesaigo999ca]

Thats is so true, as well, knowing someone who goes to China often and tells me all sorts of stories,
remember that the person who pays 5$ for a windows copy, will A) know not to ask questions or tell anyone about it B) buy a copy for thier friends if they need it without telling any names, C) if they get caught are in as much trouble therefor would not want to implicate anyone.

Short of using extreme torture tactics, these guys stick together....this to me was the chinese goverments fault because they wanted to throw the dog a very very small bone. What I know is this is not even the tip of the iceberg.... it is more like a scratch of a scratch of a scratch on the tip of the biggest iceberg you have ever seen... : )

Counted how?

[niceone]

How did they count the $500m - I bet it was by adding up the retail value of all the software. Probably worth much less than a million at the prices these guys sell at.

Re:Counted how?

[1u3hr]

How did they count the $500m - I bet it was by adding up the retail value of all the software. Probably worth much less than a million at the prices these guys sell at.

TFA said 290,000 CDs. These normally retail for about US$0.50 in China, up to US$3 or $4 sometimes in Hong Kong. So "street value" between $150,000-$800,000 max. Street value is how drug busts are valued, why not software? For the same reason, of course: they choose the larger number to make it sound more dramatic. And Slashdot goes along with this crap and puts this imaginary number in the headline.

That was his last post

[Anonymous Coward]

a real shame he quit

Arr!

[Kirth]

The title is of course misleading, because it concerns counterfeiting and not software piracy:

Software Piracy ('soft-"wer 'pI-r&-sE): Robbery of software on the high seas; the taking of software from others on the open sea by open violence; without lawful authority, and with intent to steal.

Re:Arr!

[Anonymous Coward]

This is the most logical and concise definition of software piracy I have heard of! :-) We need to use this definition in the future! Way to go dude!

Re:Arr!

[Anonymous Coward]

On an unrelated note, that's the lowest User ID I've ever seen. I bet you were here before Anonymous Coward!

Yawn... Call me when the hit $500 billion

[The Lord of Chaos]

With the way the lost revenue due to piracy is inflated, $500 million is equivalent to some guy selling CD's out of the back of a truck.

Vista sales

[superphreak]

So that's why Vista sales are down...

What? You don't think so? Aw, c'mon...

Deliberate allowance of piracy = case of estoppel?

[Futurepower(R)]

Question for a lawyer: Does Microsoft's deliberate allowance of piracy create a case of estoppel?

Since Microsoft allows piracy, can the company lose its copyright?

Microsoft definitely encourages piracy, in my opinion. For years, local computer stores carried to office suite alternatives: Legal Microsoft Office, and pirated Microsoft Office for $50. Word Perfect and Lotus could not compete.

I'm not sure what local computer stores are doing now.

They didn't "lose" anything.

[Anonymous Coward]

One thing I really hate in all of these piracy cases, movie, software and music alike, is that they always cite "lost" revenues.

First of all, to lose something would imply that you had it in the first place, which in the case of IP piracy like this is highly implausible.

Secondly, if these people didnt pirate, its almost certain they wouldnt have bothered to actually purchase these things and would have used some other alternative.

Estoppel by silence

[Futurepower(R)]

Estoppel by silence: "A type of estoppel that prevents a person from asserting something when she had both the duty and the opportunity to speak up earlier..."

I'll see your $500M, sir...

[Yfrwlf]

...as I pass it by for a whopping $1B! All it'd take is making thousands of copies of the smallest, most expensive codec you can find. I wonder if I'd get an award. :)

I don't think I could accomplish this with Adobe CS3, though...

moo

[slothman32]

So they count "lost revenue"?
I have lost revenue because people aren't buying my software.
I want to sell it for 100 billion but since people aren't buying it must be pirates. Do I get a newspaper story for "losing" that much?

P.S. If anyone has 10E11 then Email me to get the address of my site.
P.P.S. Did you know that the interjection, I get to use that word!!, "arr" was actually started from some actor in the '60s (19 that is)?
Or at lesast I heard that.

Re:moo

[Anonymous Coward]

If you bothered to read the article you would see it is about counterfeit software, not priated and hence yes MS DO lose full value of the software for each one as the counterfeiters are selling it at full retail price (or slightly below) to unsuspecting resellers and stores who then sell to the consumer. The buyers don't realise they are buying fake copies.

Why Techies are not good in business.

[Bigmilt8]

ANY amount of money lost from piracy cuts into a companies bottom line. For every dollar that is lost, it has to be made up somewhere. And where does that normally come from: JOBS. Besides, this is theft.

Mixed Messages and Microsoft

[deweycheetham]

A few weeks back Bill Gates stated "that piracy made things easyer for Microsoft" or words to that effect. Now they are complaining the pirates are getting their cut while making things easyer for Microsoft. I wish they would make up their minds and quit whinning about it, as their market share grows in china. (Stike me down as a Troll or Flamebate, and ding my Karma down again)

Chinese Government M$... paranoia

[russ1337]

What I found interesting was this tid-bit:

Mundie also began talks with Chinese security officials to convince them that Microsoft's software was not a secret tool of the U.S. government. As a result, in 2003 the company offered China and 59 other countries the right to look at the fundamental source code for its Windows operating system and to substitute certain portions with their own software - something Microsoft had never allowed in the past.

That sounds like they let the Chinese Government take out the bit that does the spying for Microsoft and lets the Chinese insert the bit so it spy's for them.... Thus confirming the Chinese suspicions that it was a tool that could be used by the US Government (albeit with the use of a 'security letter ' or under general access they may have for foreign intelligence).

*puts tinfoil hat back on*

$500 million from what perspective

[malfunct]

Who's $500 million is it? It could either be $500 million in pirate revenue at pirate street prices or it could be the imagined value to the IP owner and it makes a big difference when you try to figure out how many copies of the items were seized.

give linux CDs for free?

[Anonymous Coward]

why not FSF collects donations and opens a China operative that distributes GNU Linux CD for free by mail, as free magazine gifts, and also to those street sellers? it's not going to be very expensive, yet penetrates the market, and will eventually pay off via more Chinese programmers joining the Linux camp. Linux people can certainly learn something from the MS and the OLPC success stories.

How to stop piracy

[WindBourne]

China has 2 reason why piracy is rampant. The first is that generations have been raised that all this property belongs to the state, and if the state does not claim it, then to the people. IOW, they have a different view about property rights that they are now being asked to change.
 
The bigger issue is that the chinese gov. has tied their money to America's. In effect, they have made imports to America dirt cheap, but exports to China very expensive. This is designed to kill America.What GWB should be doing rather than trying to pushing more laws, is pushing for china to allow the money to float freely. Right now, if they money was untied, the price of our goods to china would drop to somewhere between 1/2 to 1/5 of the current amount. IOW, a chinese person would see our goods cost 1/2 to 1/5 of what they are currently being charged.

Well...

[nowhere.elysium]

While I'm not entirely anti-piracy, at least not when it's levelled against corporations, I'm hoping that this means I can walk down Brick Lane without the normal Chinese DVD touts screaming "You Wan' Dee Wee Dee?!" at me. Wishful thinking, I know, but I can dream.

You are wrong

[geekoid]

no, not theft. a crime, certianly. There are very specific reasons why this isn't theft. All of which have been repeat for over 200 years, by far smarter people then those who read slashdot.

No, it does not take away from Jobs. MS needs X amount of people to develop the software. What this may impact is the price of software, but that's not true either because there is no real competition for MS so they charge as much as the can get people to pay, which is a lot higher then it would be if they had competition.

In fact, MS is so widely spread in China BECAUSE of copyright infringement. This is no different then the rapid growth in the US. Largely do to people bringing home copies from work so they can work from home.

All of that is an issue because MS overcharges for the software. Before you say it, Supply and demand means a lot more then what anyone posting on slashdot seems to think it means.

Re:You are wrong

[Bigmilt8]

I will concede it isn't the text book definition of theft (I'm not a lawyer). Yes, it does take jobs away. MS (or any company that is pirated) does not just employ developers. There are countless consultants, Account Mgrs, etc. that are paid by them. Mainly, it's not about the price of software as more about the revenue lost from pirated copies (another reason I say Techies don't know business). For every missed dollar lost to piracy, that lowers companies revenues (and eventually stock). Who wouldn't charge as much as they could for a service or product? It's a cornerstone of capitalism. If you think this is wrong, why don't you ask your employer to pay you just enough to sustain you above the poverty level (or actually less). That's all you need to survive. Taking a copy of software home from a licensed work copy, is not the same as operating a factory pushing out millions of dollars in forgery.

Pirates?

[Hexact]

How quaint, aren't pirates called terrorists now?

Re:Pirates?

[Anonymous Coward]

No, but they should be. Then they can be thrown in gitmo with all the islamic terrorists.

It isn't $2 billion in lost revenue!

[dalutong]

Statements like that always bother me. They use simple math, something like "if 1,000,000 copies were sold, worth $100 each if bought legitimately, then that's $100 million dollars in lost revenue!" No it's not. The real question is how many would have bought it at all if they had to pay the full price? With China's average incomes, I imagine this would have been a tiny fraction. So it's really 30% (or whatever percent would have actually bought it) of that $100 million.

Re:It isn't $2 billion in lost revenue!

[Alex_WGA MSFT]

While it's true that many copies of pirated software are of low quality and sell for very little, equivalent of a few dollars, the software produced by this group was of very high quality and was intended to fool everyone including the resellers and customers. This product typically sells for the price of genuine product or just a few dollars under both to maximize the profit and because it tends to reduce suspicion that it's fake. There's an image on my blog of an acutal counterfeit DVD from the case that was announced. http://blogs.msdn.com/wga/ [msdn.com] Also, the counterfeits produced by this group were intended for sale in the US as well as in Europe, the Middle East, other countries in Asia, Australia and Canada.

MS BS

[groovebot]

Microsoft estimates that the software piracy of an international counterfeiting syndicate, over the past six years, cost the company at least $2 billion in lost software revenue.

That's bullshit. The Chinese are pirating software because they can't afford the real thing. If they weren't pirating Windows, they simply wouldn't have it. Therefore, Microsoft has lost no money to software piracy, because there was never potential for them to get any. However, if Microsoft started selling legit copies of Windows in China for very cheap (I'm talking as cheap as the counterfeits), they'd probably start making more money on the Chinese market.

Re:MS BS

[Fire Dragon]

However, if Microsoft started selling legit copies of Windows in China for very cheap (I'm talking as cheap as the counterfeits), they'd probably start making more money on the Chinese market.

This is very complicated issue. If I'd fly to China and bought hundred copies of legimate copies of Vista for very cheap, why couldn't I use them in western countries. After all, MS sold them and licensed them, so those must be legal.

As for being able to sell as cheap as for counterfeits, legimite copies would need to have some holograms and other printed stuff on them and that would make them much more excpencive. It's also controll AND support issue. By buing a legimite copy of software you expect to get some sort of support(even with MS). At the moment they donät have to provide that much support on those regions becouse of the piracy ratio, nut if all copies would be legal, they would have extend their support to apply for all of them.

And as for dropping the price for legimite copy to almost zero, you would also lose the sales of current highly prized legal copies currently sold. Making nothing against making something isn't worth of it, at the moment.

DVD's are sold on different prices around the world, but becouse the region codes, you cannot easily transfer cheaper products from another side of world to your local neighbourhood. At the moment I can buy legally a cheaper version of DVD from anywhere, if it has been published in EU. If some movie is waiting for its release date here, it is illegal for me to import it to my country from some other region. Comparing this for selling software dirtcheap in Chine/India, there wouldn't really be any laws that would prohibit me from buying cheap software from Chine legally if those prices would be lowered to match prices of counterfeits.

According to industry calculations...

[okmijnuhb]

They way the industry calculates losses from copyright infringement, this adds up to a net haul of what, 200 cd's?

China story

[John Sokol]

I visited Shen Zhen China (just inland from Hong Kong) about 2 months ago and while I was there Spiderman 3 came out 3 days earlier in China then in the US. On Wednesday there time which is +16 from Los Angeles.

So I went to see it opening night. Ticket prices were about $10.40 each 80 RMB. Per Ticket, a very high price in China considering most people in that neighborhood only made 1000 RMB or less even.

As I left the theater, there was a street vendor there holding out a very professional looking DVD package of Spiderman 3 and offering it for 20 RMB I think it was around that price. Which is around $2.50 US.

Interesting thing is they sold more copy's of our TV shows like CSI, and soap operas then movies!
They also sold more Japanese movies then US ones.

How Microsoft Conquered China

[westlake]

How much does Microsoft make in all of China?

Currently about $700 million USD or 1.5% of global sales.

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." Indeed, in China's back alleys, Linux often costs more than Windows because it requires more disks. And Microsoft's own prices have dropped so low it now sells a $3 package of Windows and Office to students.

Microsoft's China strategy is clearly paying off. More than 24 million PCs will be sold this year, adding to the 120 million already in place. Although the company's China revenues average no more than $7 for every PC in use (compared with $100 to $200 in developed countries), Gates says those figures will eventually converge. "What we have here is not about me, and it's not about where President Hu went to dinner. It's a relationship, where we've really found a way of doing things together that will generate a substantial part of Microsoft's growth in the next decade. I don't know any company in the IT industry where things have worked out as well as they have for Microsoft."

-----

As Mencius wrote, in a world without walls or fences, who needs windows or gates?

China.

Mr. Bill Gates! Mr. Bill Gates!" a young woman shrieks as the black car pulls up. A pallid student in a nylon windbreaker pushes his way through the security line and hands the world's richest man a small envelope with a floral design. "It's very important," he pants.

Another day in China, another round of adulation. Today the Microsoft chairman is being named an honorary trustee of Peking University. Yesterday it was an honorary doctorate from Beijing's Tsinghua University - the 13th in the school's 82-year history. Gates, wearing the same lopsided grin he has had on his face for the past few days, takes the envelope from the young man. For him this is a triumphant visit to China, a victory lap of sorts, on which I've been invited to tag along. The country is his.

No other Fortune 500 CEO gets quite the same treatment in China. While most would count themselves lucky to talk with one of China's top leaders, Gates will meet with four members of the Politburo on this four-day April trip. As one government leader put it while introducing Gates at a business conference, the Microsoft chairman is "bigger in China than any movie star." Last spring President Hu Jintao toured the Microsoft campus in Redmond, Wash., and was feted at a dinner at Gates' home. "You are a friend to the Chinese people, and I am a friend of Microsoft," Hu told his host. "Every morning I go to my office and use your software.

How Microsoft conquered China [July 17, 2007]

Monetary loss?

[Sierpinski]

I know I'm probably going to get flamed from hell and back, but I just have to ask this question:

Can they really report monetary loss if someone using the pirated version of would never have purchased it in the first place?

I'm not condoning illegal activity, but under the following circumstances, can monetary loss still be claimed if someone downloads (for example) Microsoft Office 2000, but:

1) doesn't incur any direct charges to Microsoft (ie cd media, bandwidth, etc)
2) would never have purchased the software in the first place (ie poor college student)

I would think that they would only be able to claim a loss if they otherwise would have made money, if not for the piracy. I know the EULAs and laws and what not, but I'm talking more about actually saying 'we lost money'. On top of that, the person is gaining experience and skill with that product which, I would think, could drastically increase their chances of actually paying for it in the future (ie poor college student gets a job due to his mad Office skillz and makes enough money to buy Office 2003) or supporting/working for a company that uses it.

Again, I'm not condoning piracy, but those claims of monetary loss always make me think of someone running out of the Microsoft bank vault with a few bags with '$$$' printed on them, and it makes me laugh.

Re:Monetary loss?

[CarpetShark]

Of course they can't. Just like Microsoft can't pay public officials to get people fired, can't operate above the law and ignore court orders to split their company into pieces or to compensate for their monopolistic practices etc.

It's called corruption.

Wrong estimates

[Romwell]

Did anyone consider that $500M in software in China is actually worth $5M or less, since it's being sold on black market dollar-a-piece anyway ? Same applies to "lost revenue". Reminds me of RIAA tactics of estimating "losses".

Re:Chinese Government M$... paranoia

[PMBjornerud]

Sounds like it's time for module-based surveilance tools. Good thing it'll be secret, or I'd bever be able to choose between Communist Home Professional or Fascist Ultimate.

The reall question is....

[Anonymous Coward]

What were all those canadians doing pirating in China? because the media tells me that all the pirates are from canada. Arrrr!

Try $10m

[Anonymous Coward]

$500m in bad math = $100 * 5m copies

5m copies * actual revenue per copy = 5m copies * $2 = $10m

Still a lot of money, but hardly threatening Microsoft's profits. Didn't Microsoft cost themselves over a billion dollars this year thanks to their sale of Xbox space heaters? Just to put things in perspective, they would need to bust 100 piracy rings of this size just to match losses due to

A. their own incompetence,
B. greed in pushing products out before they're ready
C. some combination thereof

Re:$500 million - Suspicious Math - $1,100 a copy?

[JohnnyComeLately]

Read all the way through the article and you'll see an interesting reply from a reader. They took some thousand copies (I'm too lazy to go back and look at the number) and yet say they recovered $500M worth of software. Both are very large numbers and most people weren't math majors in college...so the numbers easily fly. However, if you do the math the reader points out it comes to about $1,100 a copy. Hardly, a "conservative estimate" as the article states if this is in fact a direct cost associated with just those copies confiscated.

Why steal?

[Anonymous Coward]

Why steal an OS when there is a free alternative like Lunix?

A situation like that makes it seem like nobody really wants Lunix: I mean heck, if MS is successfully winning against a FREE product, they clearly have to be putting out an overwhelmingly superior. The truly amazing thing is that, in China WITH piracy, the marketshare of Windows vs. non-Windows is STILL about the same as in other markets.

Not that such analysis will be popular around here, but the unvarnished truth is never much loved. Especially here.

Ya..

[msimm]

What ever happened to the Republicans?

Uhhhh, yeah.

[Impy the Impiuos Imp]

Of all the features of Western, free civilization for the West to convince China to adopt next, isn't cracking down on piracy fairly low on the list compared to, oh, not going to jail or being executed for political views?

Now finally MS prices will drop, right?

[Anonymous Coward]

I mean, after stopping this piracy and saving all that money, the prices will come down quickly, right?

Excellent News!

[GaryPatterson]

With the cut in piracy, surely we'll soon be seeing the benefits of lower-priced software! After all, one of the reasons for software prices being high is piracy, isn't it?

Re:Deliberate allowance of piracy = case of estopp

[gronofer]

Question for a lawyer: Does Microsoft's deliberate allowance of piracy create a case [nolo.com] of estoppel [wikipedia.org]?

If Microsoft is deliberately allowing "piracy", then it's not actually copyright infringement, but licensed use.

No wonder those disks are so expensive

[LeadSongDog]

thar be GOLD, matey!

So the original version goes

[LeadSongDog]

CNN Money spewed the MS line verbatim: http://money.cnn.com/news/newsfeeds/articles/prnew swire/AQTU12124072007-1.htm

But VOA told a different story: http://www.voanews.com/english/2007-07-24-voa23.cf m

Here's the challenge: identify the carrier with the most torque applied to the story.

Imaginary Fun Bucks!

[Aereus]

I always love these statements that claim companies lost millions or billions of dollars due to the piracy. Because as we all know -- without piracy, every single one of those people would have gone out and legitimately purchased the product in question... I'm sure companies do lose revenue to piracy, but the amount lost is only a small percentage compared to how many download total. How many people were likely to legitimately purchase Photoshop for $500, for example, among how many copies are downloaded each year?

Big deal...

[geminidomino]

As has been pointed out several times, we already know MS likes the rampant piracy over there. It gives them a foothold.

This is just like Blizzard banning a few hundred 'token' gold farmers, so they can claim they're doing SOMETHING.

"Anyone can do anything" is a license?

[Futurepower(R)]

If you say that, then their "license" is that anyone can do anything.