Software piracy not only costs channel partners money in lost sales, it also leads to higher costs for their business, according to a study sponsored by Microsoft and the International Association of Microsoft Certified Partners. The study found that for every $1 reduction in software piracy, the Microsoft ecosystem, including channel partners, gained $4.37 in new revenue and $1.13 in lower costs for a total gain of $5.50, said Michael Beare, Microsoft director of license compliance. Microsoft announced the findings at its Worldwide Partner Conference in Houston this week.
While the link between lost sales and software piracy is clear, Beare said he suspected through conversations with solution providers that piracy also led to higher costs, but until now the evidence was only anecdotal. The study found that pirated software creates problems for resellers such as software incompatibility, the need for more troubleshooting services and longer sales cycles—all of which increase costs. A service call triggered by an illegal application that is missing critical patches is one example.