Software piracy rockets, but fails to hit manufacturers' profits

Analysts say software piracy grew in 2000 for the first time in more than half a decade.

They also believe 37% of the programs used by businesses worldwide are illegal copies.

A trade group of software makers say the worldwide financial losses to software makers due to piracy has dropped slightly to $11.75bn (or £8.2bn), however, due to a growing market for software and lower prices.

The Business Software Alliance, an organisation of productivity software companies such as Adobe and Microsoft, has conducted the annual study since 1994.

This year's findings reverse what had been a steady drop in the rate of pirated software.

Devices that can write CD-ROMs are cheap and make pirating a simple task. Many companies use authentication codes printed on CD cases of programs like Adobe Photoshop and Microsoft Office - which must be typed in during the installation process - but software pirates find them on illegal websites.

In response to this threat, Microsoft's forthcoming Office XP and Windows XP products will require an online "product activation" sequence that uses a combination of a software serial code and a number created by scanning the hardware of a person's computer. If the customer doesn't activate the program, it will stop working within several days.

But like copy-proof "key disks" of the past, these methods can frustrate legitimate buyers and are frequently overcome by industrious software pirates. Even though Windows XP hasn't been released, there are already downloadable programs that work to disable its copy protection.

In Vietnam, only 3% of business software is a legitimate copy, making it the worst offender. China and Russia are also in the top five. In the United States, 24% of programs are pirated copies, the report says.