What do channels have to say about software piracy? To what extent does it affect them and what are they doing about it? DQCI finds out from the channels themselves.

It is common knowledge that most home users and business houses use pirated software. From where do they procure these? If sources in the software channel are to be believed it is from the hardware assemblers . 

“Assemblers are the starting point of the piracy chain,” says Paresh Shah of P H Teknow, a Microsoft channel partner. Ujwal Andhari, Director of Softcell Technologies agrees, “Those who sell hardware have an incentive to sell such software bundled with the machine. Major PC brands do not pirate, as branded machines come with licensed software,” he says. 

Hari Prasad, Senior Associate, Software Solutions, Vikas Microchip Technologies feels that only channels concentrating on the SOHO market are responsible for this problem.

Guha K, of Bangalore-based Cranes Software International too thinks along these lines. “I don’t think that authorized dealers are a part of the piracy market, though assemblers are. The software that comes along with their assembled PCs are largely pirated. With assembled PC sales holding more than half of the market share today, piracy seems to be common in the home segment,” he says.

However, A V Gopalakrishnan, Director of Visualan Technologies follows another line of thought. He says that piracy originates from the end-customer. “If the customer wants hardware without legal software, a channel partner can either give up the order or risk supplying it. 99 percent of the channels are forced to pirate, as end-users are unwilling to purchase legal products.”

Modus operandi 

Pirating software is child’s play requiring just a CD-writer. Piracy can be done even from a pirated copy. “It is possible to buy a legal copy and use it to make copies. Or there are shops which make copies for you,” says
Ujwal. 

Another trick is ‘unbundling’ — software that is bundled along with PCs, are unbundled and then sold separately by replicating it. All this makes software piracy, a low-investment, low-risk, but high-margin business. 

Typically pirates deal with the latest software or packages, which are in demand. OS, high-end graphics, as well as accounting packages seems to be their favorite targets. Ujwal says that in terms of value, piracy occurs in MS Office, but in terms of volumes it is the Windows OS.

Guha K, Cranes Software Bangalore too concurs, “The entire series of MS Office and Windows OS are pirated largely in the home and SOHO segment. Among professional users, pirated versions of products like C, C++, Visual Basic and Java are in great demand.” 

In this whole game, the genuine partner who does not pirate, takes a beating at his bottomline. This means that sales go to those who are ready to install pirated copies of the software. Hari elucidates, “Our major investment is in buying software from our principals. If it does not sell because of pirated products in the market, we don’t get returns from our investments. This affects our bottom line”. 

Guha to nods assent, “Several software products, which are priced at Rs 4 lakh to Rs 5 lakh is sold in the gray market at around Rs 4000. We work on a two to three percent margin, and with pirated software, we stand to lose almost Rs 40,000 on a monthly basis,” he reveals candidly.

So, why pirate?

Piracy and price go hand in hand and are directly related to one another. Paresh says that end-users are not ready to pay for software largely because of the high cost of software. 

Ujwal adds, “In India, there is a slight discount than the prevailing dollar price. But even then it is expensive,” he feels. Sanjay Singhal, CEO Orient Computer Forms raises a moot point, “How can you afford a computer when the total price of all applications far exceeds the cost of hardware? How do you expect a customer to dish out Rs 4000 for Windows when he wants to buy a PC within Rs 15,000. Make it anywhere between Rs 1000 to Rs 1200 and the customer will not even think of piracy.”

Another software reseller asks, “Is there no other mechanism where development costs are written off? For how long will the likes of Microsoft keep fleecing the common man? If today the price of an OS comes down to affordable levels, there will be no piracy,” he says. 

Thankfully, there are certain customers are willing to pay the price for the software. “Professional users believe that legitimate products give better performance. They see this as an investment and they have resources. So pricing is not a barrier for them,” Hari informs. 

This kind of buying pattern is largely seen in software development centers who want the full version of a software. 

Guha offers an interesting perspective to this problem, “We find that competitiveness of top giants can lead to piracy. For example, if company ‘A’ wants to dent the market share of company ‘B’, then the former releases illegal copies of the software products of company ‘B’ in the market. This brings down company B’s market share as well as its turnover. So it could also be the competitiveness of two companies that could also lead to piracy.” Well, that’s quite a revelation! 

There are others with differing views. “One has to pay a price for the product, high or low. I feel that even if you give a licensed operating system for Rs 1000, the end user will still try to save on that,” Gopalakrishnan states.

Beating piracy at its game

Ask for suggestions to beat piracy and every channel partners wants to have a say in the matter. “The decision to not sell illegal software has to be inculcated,” says Paresh. Ujwal too feels that it is a matter of personal integrity. 

However, Sanjay is of the opinion that it is already too late for these measures. “The market is full of stock that will be difficult to flush out. Besides customer demand also exists for such software,” he says.

Gopalakrishnan feels that Microsoft must give the OS free and charge the customer on a usage basis. Once the customer has paid for a certain number of days the product should become his property. 

Sanjay Singhal would like companies to set up installation labs where they install software for a fee. “Let the customer walk in with a bare system and walk out with a legally installed copy for an affordable price,” he says. 

Hari is of the opinion that principals should consider the price factor more seriously and come out with cost effective software products. 

One of the key reason why things have reached this stage due to the licensing terms and unreasonable conditions laid down by principals. Gopalakrishnan says, “Vendors are very much at fault, but you have to live with it as there is no alternative,” he says. 

Sanjay too feels the same. “If these companies are so concerned about piracy, why don’t they implement a lock mechanism like the one which Tally has?” he reasons.

A Delhi-based software reseller has similar feelings. “If price is a problem, the vendors could introduce something like a separate version for India,” he says. 

The channel unanimously believes that piracy is fed by the high price. Which means that the best way for vendors to curb this menace is by rethinking their pricing strategy.

Bobby Anthony in Mumbai, with inputs from Sunila Paul in Bangalore and Mohit Chhabra in Delhi.