February 20, 2007

"Piracy reduction can be a source of Windows revenue growth"

Thus spake Ballmer.

First off, someone kill me if I ever talk about "sources of revenue growth" intead of "making really cool products that people actually, you know, like and stuff."

Second, how freaking out of touch is this guy? He told analysts 'the company might "dial up" the intensity of antipiracy technology baked into Windows Vista as part of an effort to squeeze more revenue from China, India, Brazil, Russia and other emerging markets.'

Damn, that's a fine idea, Steve! Those freaking Chinese are sitting on piles of gold! They pirate your software because they are a greedy, greedy people, not because Windows Vista Basic costs $295 in China and laborers rake in about $160 a month.

It's perfectly reasonable to expect people to save up for two months to buy Vista, Steve. Really. You'd be willing to spend $150,000 of your money on Vista Basic, wouldn't you? I'm sure all you need to do is tighten those screws, and the giant Chinese turnip will start squirting sweet, sweet blood to sustain you.

--

Seriously, did Ballmer even look at the names of the countries he feels are under-performing in the business of making him stinking richer? These guys have poor citizens. Microsoft makes more than these countries do.

If "poor nations" is really your target market, you've got a problem. Why not make "Microsoft Vista / Homeless People Edition" as well, genius?

Meanwhile, Mac OS X doesn't have anti-piracy measures, and yet, somehow, it fumbles along, continuing to gain market share. Funny dat. Some might say it's actually BECAUSE Mac OS X doesn't annoy, limit, and intimidate its legitimate users with crappy activation codes and automatic degradation of the operating system if it feels you are a pirate, or you've upgraded your machine, or it's a Tuesday.

Here's my announcement for analysts, as the CEO of an international software firm: I'm NOT going to spend any time going after pirates in China, India, Brazil, or Russia. It's not worth my time and effort, and it's not worth alienating my real, paying customers with clunky copy-protection. I'd rather add cool stuff to my software than add anti-piracy cruft. And the pirates ALWAYS win, anyways. Always. If you fight hard enough, you end up with a situation like we have in the online music industry, where it's more convenient for consumers to get an unprotected, pirated song than to get a legitimate one, and then you actually DO lose paying customers.

So I'm putting pirates on notice: Meh!

Labels: ,

36 Comments:

Anonymous Mark Grimes said...

I agree with all that you said except the sentiment that OSX and Windows anti-piracy (or lack thereof) can be remotely compared given that Apple's OS is a catalyst to selling hardware that is not central or even ancillary to Microsoft's revenue stream.

February 20, 2007 11:59 AM

 
Anonymous Jamie Longstaff said...

I long ago decided not to compile and encrypt my own software (which is PHP based) because the pirates will always find a way to get around it.

I subscribe to the philosophy (yours I think) that pirates probably wouldn't have ever paid for the software in the first place so trying to hard to defeat them is a pointless exercise which only succeeds in annoying everyone else who does pay.

February 20, 2007 12:05 PM

 
Blogger JulesLt said...

You're forgetting the implicit strategy there - for years they've let these countries develop infrastructures based around pirated copies of Windows because that's displaced the development of any rival technologies.

And of course, if I was China or, say, Cuba, I'd be pretty concerned if my computing infrastructure was based around closed source US developed software.

February 20, 2007 12:54 PM

 
Blogger Aaron Tait said...

Upgrade revenue, especially for operating systems, is never a sure bet. Most people just don't care about their OS and just use whatever came with their computer. The ones that do care are usually smart enough to just pirate it. The only exception to this is the Mac. For some reason Mac users have historically upgraded their OS by actually buying it as soon as it comes out. I guess we care about what we actually use, and we know Stevie Jay believes in Karma. So if we don't buy it we are SOLed.

February 20, 2007 2:31 PM

 
Blogger Paul Davidson said...

Great post! I love it when entrepreneurs who know and love their product, and aim to connect with their customers, call out execs like Ballmer who couldn't care less what kind of crap they put in a box so long as it becomes a "source of revenue growth".

The philosophy behind Windows development (and most other Microsoft products) is evident every time Ballmer opens his drooling cakehole, and it's the complete opposite of what Jobs exudes on stage.

February 21, 2007 1:22 AM

 
Anonymous Anonymous said...

Let's keep in mind that the entirety of Ballmer's qualifications for his current position is that he was a college buddy of BG's. He's the ultimate example of the Peter Principle.

-jcr

February 21, 2007 7:41 AM

 
Anonymous karsten said...

While microsoft is overracting agains pirates ever since, there're also shareware applications out there that do even worse. Display Eater for example removes the users home folder if he uses a pirated serial number. I just blogged about it, because i think that using such a copy protection is helping noone and only leads to problems on both sides, the developers side and the users side.

February 21, 2007 6:01 PM

 
Anonymous Anonymous said...

Here are a few points with respect to your comment:

"Always. If you fight hard enough, you end up with a situation like we have in the online music industry, where it's more convenient for consumers to get an unprotected, pirated song than to get a legitimate one, and then you actually DO lose paying customers."

1) I don't p2p for anything
2) It is actually rare that I buy movies and music anymore; because I don't like being treated like a criminal. (see item 2
3) Copy protection is typically limited to one or two platforms. I use multiple platforms.
4) When it comes to software; I have grown into an Open Source User for just about everything: (Office suit, IM, et al.)

For the record; I have no issue paying for software; but I have a few concerns about using it:
1) What happens when a company goes out of business; and you are no longer able to re-register the software. Well, I guess my right to use the software as a paying customer has been revoked.
2) What happens when the company no longer supports the software. That company could stop activating my software.
3) I have personally waited several days to get a product authenticated before it became functional. Boson software I am looking at you. Your customer service people are nice; but damn 3 days to register your simulators software is BS. FYI: Registration issue due to firewall policy.

Now I know what you are thinking: Why would I have to re-register the software.
1) Failed hard drive
2) Failed mobo
3) Family member breaking system beyond repair.

Ok; option 3 has happened a few plus times. I only lost 2 hard drives and 1 mother board over the years.

PS: Registration isn't always a 24x7 operations.

February 23, 2007 7:54 AM

 
Blogger Jamie said...

Nice rant Wil...and well said :)

February 25, 2007 1:49 PM

 
Anonymous Strifer said...

Nice post Wil.

Personally I downloaded a pirate version of Vista, burnt it to a disc and took a huge dump on it. The satisfaction was overwhelming.

February 25, 2007 7:22 PM

 
Blogger Wil Shipley said...

Bizarre. I can't say I recommend that, but I'm glad it worked for you.

February 25, 2007 11:30 PM

 
Anonymous Anonymous said...

do u know that someone is copying ur posts and claiming it as her own?...ankita is her name...
http://meandmysoliloquy.blogspot.com/
check this out...this is disgusting...posting someone else's writing as ur own...its so disgusting and unfair to the writer...thought I should let u know...

February 26, 2007 9:52 AM

 
Blogger Wil Shipley said...

That blog is so nonsensical I suspect it is some bizarre machine-driven content, used to create a fake identity for some nefarious purpose.

I've seen those blogs before -- if you search for certain key phrases from other blogs you'll sometimes find these fake blogs that just post snippets of other people's stuff. I have no idea what they use them for.

February 26, 2007 11:56 AM

 
Anonymous as4me said...

Wow.. I guess you won't be coming after me. Spend more time on features and you'll see more paying customers.

February 26, 2007 4:16 PM

 
Anonymous Anonymous said...

Surprise, surprise... Yet again Wil is right on the money.

Strifer:
What a great idea! I didn't do exactly that, I downloaded a copy and then made copies for everyone at school, handed em out saying "Here's something that should amuse you!" Ha!

February 27, 2007 11:00 AM

 
Anonymous Anonymous said...

I have to disagree with the comparison between OS X anti-piracy measures (or lack thereof) and Windows measures. Lets not forget that OS X imposes the biggest restriction of all - it can only run on a mac. I'm not arguing whether this is a good or bad thing, but the point is Apple doesn't make its money from OS X, it makes it from Mac sales. If you pirate a copy of Leopard, who cares, because Apple knows they have made $1000+ from you when you bought a Mac computer.

If you pirate a Windows copy, MS gets NO money from you (although it is fair to say MS makes enough money as is!!)

I would also argue that because Mac's target the premium end of the market, people who use them are perhaps not demographically or economically likely to pirate.

WGA protection in Windows stinks because it goes to extreme lengths to stop piracy (ie; every time you update Windows it rechecks etc...), but I do not think piracy measures on MS's part is unreasonable given their business model. A simple Serial Number and online validation ONCE (and I mean once its done, it never needs to be checked - by the system or by you - again) is sufficient

February 27, 2007 2:10 PM

 
Anonymous Aegir said...

A agree that Ballmer is missing the point when it comes to software piracy, but I disagree that just because Vista is expensive that somehow piracy is justified.

I would more suggest that Microsoft have failed to adjust their pricing structures to the local market appropriately. This will harm their sales for a while, but it doesn't mean they should just accept piracy. If people want to use Vista, they have to pay for it. If they feel the prices are too high they can use a different operating system, maybe a free one. If they do, they'll soon find that MS have to reduce their prices if they want to take advantage of the Chinese operating system market. However, I think Ballmer is talking tough but MS won't really need to crack down on piracy because massive pirating of the OS only entrenches MS in the market and encourages dependency on MS products such as Office. They can make their money back either way.

But still, the point is still valid: just because something is expensive doesn't mean you can steal it.

February 27, 2007 2:23 PM

 
Blogger mattjumbo said...

Man, I love Wil and all his stuff but I have to be the bad guy here I guess. Of course Ballmer's policy toward emerging markets is idiotic, but they do deserve to be paid *something* for their products.

As for DRM, I wonder if there is even a serious argument about it anymore. Cory Doctorow, and apparently most of you on this board, seem to have convinced everyone that DRM is wrong at the most fundamental level. That it is somehow bad to try to keep customers from copying any digital content in any way they choose.

I hate to break it to you guys, but people are *bad*. If there is *no* attempt made at DRM, anyone who makes money selling digital content of any kind will go out of business. No, not overnight, but eventually. I always hear "but they'll crack it anyway". Sure they will, but if you make *no* attempt at all then you are doomed. DRM just has to be good enough to deter casual users from wholesale piracy. I could have sworn that I had to buy a code to activate Delicious Library.

I'm here to tell you that if it there is no DRM on music, videos, softwate etc., I would never pay for that stuff *ever*. Now you guys can get all holier-than-thou and pretend I'm a bad person, but you might wanna check the ol' Napster/Kazaa/Limewire repository before you do.

I know DRM is crappy in terms of convenience (I have often been reduced to cursing when I try to play an iTunes song for someone only to remember that I forgot to deauthorize a computer at the university lab, etc. and have maxed out my five) sometimes, but the idea of none at all is diasatrous.

February 27, 2007 2:35 PM

 
Blogger Sigivald said...

Uh... say what?

Gates wants commercial users in China to be legit.

He isn't trying to sell Vista to every Chinese laborer - none of them have computers that can run it worth a piss anyway. (Remember, that $160 a month won't get you much computer either!)

Seriously, you can't have thought he meant that he was worried about the odd Chinese "laborer" who might be buying Vista.

(And what's wrong with poor nations being a target market? Don't poor nations need products too? Are they ever going to be not-poor without buying things like computer software?

Large companies in China and Brazil and Russia can afford to buy Windows. Gates is not unreasonable to think they ought to pay for it, if they're using it. That "laborers" can't afford Vista there is irrelevant.)

(PS. The real reason OSX piracy isn't a big deal in China and Russia?

Almost nobody there has a Macintosh, and anybody that does, and has one capable of usefully running OSX, got OSX with it, since OSX comes with them. If OSX ran on any-random-PC, it would be pirated at least as much as Windows, probably more.)

February 27, 2007 2:43 PM

 
Blogger Andrew said...

Wil sed: "I have no idea what they use them for."

They use them for contextual backlinks trying to screw google into thinking that whatever site they are linking to is actually being referenced by a real person.

Bastages

February 27, 2007 3:05 PM

 
Blogger Wil Shipley said...

But still, the point is still valid: just because something is expensive doesn't mean you can steal it.

What if it's a loaf of bread, and your family is starving?

And what if your family don't like bread. They like.. cigarettes?

February 27, 2007 3:19 PM

 
Blogger Wil Shipley said...

mattjumbo:

I think it's reasonable to assert some controls over piracy -- I've said as much in the past, and obviously my actions also speak to this.

However, Microsoft's are particularly draconian already, and for them to think that if they squeeze tighter they can get more money out of China is crazy.

February 27, 2007 3:23 PM

 
Blogger Wil Shipley said...

And what's wrong with poor nations being a target market? Don't poor nations need products too? Are they ever going to be not-poor without buying things like computer software?

Nothing is wrong with letting poor nations use your software. I would assert it's a good thing, even. Microsoft, however, has not adjusted their pricing to reflect that China is a developing nation, and instead intends to make their anti-piracy measures even more onerous. This is the idiocy.

February 27, 2007 3:26 PM

 
Anonymous Anonymous said...

Brazil is *big* into open-source. Hopefully their recent trade agreements with Asian nations, including China, will help spread the open-source love.

Also - Microsoft's business model, is to sell a crappy OS -- and then to make 5 times that amount of profit, selling certified Windows tech training. Yes?

(I read that somewhere; if someone has a source, I'd love to see it again - MS makes 5x the profit, running win tech tranining certification, than it does selling windows -- a built-in financial incentive, to "keep it crappy" - one of the reasons a Mac IT person can support far more computers than a Win IT person.)

February 27, 2007 4:08 PM

 
Anonymous Patrick Machielse said...

Microsoft isn't trying to sell 300 dollar retail copies of Vista to the average Chinese. Instead, what it would like to see is more sales of the 40 dollar pre-installed version. And rightly so.

Now, a weeks pay is nothing to sneeze at, but when you have 500 dollar to spend on the hardware, you should factor in software as well. It's a matter of educating customers about the value of software, when there is still time to do so.

It is also a matter of educating (mostly) asian business about intellect property. Apple's response to bootlegging of its designs isn't much different. Thinking of India and China as underdeveloped nations in need of a helping hand belies the current economic realities.

February 27, 2007 4:26 PM

 
Blogger Wil Shipley said...

I didn't say they needed a helping hand per se, I just don't think it's good business to charge outrageously for Windows and then attempt to clamp down on piracy.

It simply won't work. It never has. You can send Russian schoolteachers to the gulag all you want (yes, I know his case was finally thrown out), it's not going to help your bottom line.

February 27, 2007 4:35 PM

 
Blogger Paul Davidson said...

"But still, the point is still valid: just because something is expensive doesn't mean you can steal it."

It's always a bit disingenuous to say this, I think, in copyright discussions. We're not talking about a physical product that vanishes from Microsoft's warehouse or a Best Buy shelf when a Chinese fellow copies it — because stealing and copying are very different things regardless of one's position on them. At worst, we're debating an artificial regulation currently enacted in some form by many governments, which did not exist in the past and may or may not exist in the future.

For poor businessmen in China, Russia, and elsewhere, it's not a moral quandary of "do I steal to feed my family". It's more like "do I uphold a regulation I don't understand and don't care for when breaking it hurts no one and feeds my family". The best choice in most cases is pretty obvious.

Microsoft must eventually find a way to make buying Windows worthwhile for the poorest who would use it, or give up the fight. Lawsuits and gulags are not the answer.

February 28, 2007 12:58 AM

 
Anonymous Fábio said...

> Large companies in China and Brazil and Russia can afford
> to buy Windows. Gates is not nreasonable to think
> they ought to pay for it, if they're using it. That
>"laborers" can't afford Vista there is irrelevant.)
Here in Brazil, piracy in companies is pretty much non-existant, businesses either buy Windows or have switched to Linux. This started around 1999 when MS started suing companies that pirated their software.

Nevertheless, they sell with home computers an OEM crappy Windows called "Starter edition", one of its "features" only let you open 3 simultaneous windows. That's just greed, they screw their PAIYNG home users 2 times, first by providing a crappy version of their software and second by annoing the user with copy-protection.

Now you now why open-source is popular here.

February 28, 2007 4:05 AM

 
Blogger Bryan said...

Saying that Mac OS X is gaining market share because of no piracy protections is a little disingenuous, don't you think?

February 28, 2007 6:29 AM

 
Blogger Wil Shipley said...

Nope. I think Windows Genuine Disadvantage is literally driving people away from the platform. I know I've run up against it three times even though I own two legit copies of Windows and only one PC, and if I could switch any more to Mac I would.

February 28, 2007 11:07 AM

 
Blogger liams_dad said...

Lets not overlook the DVD industry. They use copy protection to prevent viewers from skipping the previews and to prevent users from changing languages without stopping the movie first.

Those 'features' become a real problem when I rent movies for my son. I rent movies for him to enjoy but instead of a happy child I get one yelling because he thought I rented 'Scooby Doo' and sees something else on the screen (previews) which I am unable to skip. Then during the movie he likes to constantly switch from english to french to spanish and back again. Each time he asks for a language change I have to stop the movie wade thru menus etc. Again not a pleasant expeience for me or my son.

So as a direct result of the DVD copy protection preventing my son from enjoying his movies, when I rent a movie the first thing I do is put it in the PC and rip it, strip off the copy protection, previews (and credits while I'm at it) and burn a child friendly version. He can simply pop it in the DVD player and the movie starts, no more previews, don't even need to push play, and one push on the remote cycles the languages without stopping the movie.

Forcing me to burn my own copy of the movie to watch it seems to be the exact opposite of what they put copy protection on it for in the first place. Although the upside is that is does give my PC one useful purpose of running DVDshrink, the only task not done on my Mac.

So the movie companies lose revenue due to copy protection meanwhile I gladly pay Apple for upgrades to Mac OS X even though they are not copy protected. Paying for a good product makes sense, paying for a product that makes me pull my hair out does not.

March 02, 2007 11:53 AM

 
Blogger Wil Shipley said...

I take your point, but, man, your kid sounds a little hyper. I admit I'm not a dad, so maybe that's normal.

March 02, 2007 12:19 PM

 
Blogger liams_dad said...

My son is not hyper... but I wouldn't say that's normal behavior either. My son has Down Syndrome so that makes the concept of previews harder for him to grasp.

Another problem with the copy protection is that even at 9 years old my son still does not understand properly handling a DVD to avoid scratches nor does he have the proper muscle control to avoid scratches if he did understand. So being able to crank out a new copy is essential.

So without DVDshrink the copy protection would be quite unfriendly for a handicapped child like mine.

While I do understand previews I don't understand why anyone would use copy protection to keep me from changing languages via the remote button.

March 02, 2007 7:23 PM

 
Anonymous Anonymous said...

No, I think what Bryan is saying is disengenuous is claiming OS X has no anti-piracy mechanism, when its anti-piracy mechanism is the requirement of $600 dongle (at minimum) to run it. You can't run Apple OS X unless you or somebody at some point has already paid Apple for the hardware.

March 10, 2007 7:53 AM

 
Blogger Steven said...

$600? Hardly. I've seen Apple-refirbished minis for (I think) $450.
This is not to mention that you can buy Macs (and Mac hardware) second-hand. You can't do that with a lot of software any more, and the ones that you can can't be returned.

And how about this: at my high school, we had a plotter that we used to cut vinyl for projects. A dongle is needed to make it work.
That dongle has been lost twice, and broken once in two years. Each time, it was literally a $1000 purchase, because the company that they bought it from can't recognize that things get lost. What they've done now is duplicate the passcode the dongle produced, and put the damn thing in a fireproof safe in case the legality is ever questioned.

THAT'S the problem with DRM. Legitimate users being screwed because the company can get away with it.
I upgrade my PC occasionally, and I've had to phone in activations before for XP. I'm never upgrading to Vista, and yes, it's in large part because of the "Genuine Advantage" POS. It's caused more trouble and time than anything else they've done, and I sincerely doubt they'll ever undo it.
I'm steadily switching everything I do and own to my Mac, and my PC is powered off 95% of the time, except for games.

Speaking of games. Steam (for Valve games). Every year, I make two moves: one to home, and one to college. Both times, Steam re-validates, deletes everything I have, and re-downloads and re-decrypts everything I've ever purchased. That can take over a week, because I limit its speed at times to not set off bandwidth alarms.
I have an honest fear that it'll one day stop working, because it thinks it's been put on too many new computers. My reinstall flag goes up every few months (I also reformat my PC occasionally). It's bound to trip a switch sometime soon, and when it does I'm permanently done with Steam unless reactivating it is extremely easy.

April 24, 2007 12:38 PM

 
Anonymous Anonymous said...

Well it looks like it's been awhile since anyone has posted to this BLog but I just wanted to say that Microsoft has gone way overboard on it's anti-piracy efforts in this user's opinion. After more than a year of purchasing, installing, and activating Windows Home Server, and even participating in the beta program for the Power Pack, I now have a brick after recent Security updates. You are told you can no longer even log in because you have not activated the product, ok so I hit ok thinking I will just reactivate, nope I am told the product is already ACTIVATED. Click the only button remaining another OK button and it totally disconnects the client from the Server... only other option is to shut down the Server - I'm not a company Microsoft, I am a lowly end user, I can't hurt you , why do you want to hurt me. After 3 hours on Technical Support (all heavily accented people from India??) I have given up. Set up a FreeNAS box in 15 minutes and copied all my files over. Ok I lose the backups for my families computers - oh well.. Thanks Microsoft for making me a MAC or LINUX future convert.

October 26, 2008 9:55 AM

 

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