“The actions of the pirates have merged with the interest of Microsoft to create a near monopoly in the operating systems market for the PC.” - Dagens Politik
Microsoft seems to be fighting hard against piracy and claiming huge losses due to piracy. But the fact is that the biggest beneficiary of software piracy has always been Microsoft. Some of the reasons below will help you see through this claim.
1) Piracy is okay. Indifference is not.
The biggest fear of any company is that nobody cares enough about it’s software to steal it. While the ideal scenario would be to have 100% of the target market becoming paying customers, we don’t really live in an ideal world.
The next best thing would be to have a lot of users and then hope to convert them to customers one day. Piracy helps Microsoft have a huge user base which eventually drives revenues. This is what happened in China and India around the year 2007.
2) Price discrimination
Piracy helps Microsoft achieve a very effective price differentiation strategy. Instead of down pricing/going open source to avoid loosing customers, it can simply choose to ignore piracy.
Corporates/users who are able and willing to pay the steep price of Microsoft softwares become paying customers. Those who can not just use the pirated copies.
3) Maintaining Monopoly
It is extremely difficult for any company to sell a product slightly inferior to Microsoft’s at even half the price. The users in emerging market or the value conscious users tend to buy the pirated copy of the real stuff for a couple of dollars instead. This has also helped Microsoft, to some extent, counter the attacks from open source softwares.
“It’s easier for our software to compete with Linux when there’s piracy than when there’s not,” – Bill Gates
4) Corporate sales
Imagine how much pain it would be for large companies (non-tech) to move to open source operating systems. All the employees will have to be given basic training and the productivity of each employee would take a dip.
This is because employees themselves are used to using windows all their life. Piracy has ensured that most people are very much familiar with Windows and in most cases only Windows.
5) Adoption. Third party applications.
Since piracy ensures that Windows OS is the most widely used operating system around, most developers take all the pain to make their offerings perfectly compatible with Windows. This is true even for web developers. This trend in turn makes Windows even better and makes the job of its competitors even more difficult.
As much as Microsoft likes to crib about piracy, piracy is it’s single biggest weapon against open source. To quote Matt Asay, the COO of Canonical (company behind Ubuntu),
To hold its lead, Microsoft may well need all the piracy it can get/afford. The question is, how much is that?