Pirated software 'poses the risk of high losses'

BEIJING - A company could lose $106,000 every time its IT system crashes because of pirated software, just one of the many potential problems arising from the absence of licensed software, a report has found.

An external hacking attack could cost a company $109,000 and the loss of valuable data could cost $63,000 as a result of using pirated software, which poses potential security threats, said a report by market research company International Data Corp (IDC) on Tuesday.

The report was based on a survey and interviews with 600 organizations in China, including the financial services industry, government, manufacturing and public utilities. The report found that about 86 percent of companies use pirated software because of its low price.

While more companies in China, especially large ones, use licensed software to avoid these possible losses, small businesses and individuals still prefer pirated software, said Michael Guo, managing director of IDC Greater China.

"One of the main ways to get more companies to use licensed software is to let them realize that the real economic benefits, in effect, largely surpass the high cost of licensed software'," he said.

He added that software vendors might provide more valuable services, such as giving users online storage with the purchase of licensed software, to attract more users.

China surpassed the United States as the world's biggest personal-computer market for the first time in the second quarter. But the growth of licensed software revenues hasn't kept up with the fast growth of the PC market, despite the government's frequent campaigns against intellectual property abuses.

Last year, 78 percent of the PC software installed in China was pirated, compared with worldwide rate of 42 percent, according to a report released by the Business Software Alliance (BSA), an industry group of software vendors, and IDC in May.

If the piracy rate of China's PC software was reduced by 10 percentage points by 2013, 250,000 new high-tech jobs would be created, in addition to increased revenues of $16 billion and taxes of $4.4 billion, according to a separate report by IDC late last year.

Robert Holleyman, president and chief executive officer of the BSA, said last month in Beijing that lawsuits over the use of pirated software from companies like Microsoft Corp and Adobe Systems Inc are likely to increase in China in the next year.