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Sat 25 Jun 2005 04:00 AM

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Construction industry counts rising costs of software piracy

Software piracy affects all types of software, from standard office applications and computer games through to design programs used within the construction industry. The global racket costs software developers billions of dollars a year, but it is the firms which use these pirated programs that will ultimately lose out, as software companies will be unable to afford to plough huge sums of cash into market-specific research and advancements. CW reports.

Construction industry counts rising costs of software piracy|~|78prodbody.jpg|~|An elephant lends a heavy-handed approach to stamping out piracy.|~|Software companies spend hundreds of millions of dollars on research and development (R&D) every year. This leads to new and better products that enable tasks to be performed faster and more efficiently than before.

Without such expenditure, the software we use and benefit from today would never have been developed. It goes without saying that the reason such huge sums of money are pumped into R&D is that once a new product is developed, it can be sold at profit.

And if it offers something new, then people want to pay for it and it may generate strong revenues. If the promise of these revenue streams did not exist then few companies would see any incentive in developing software.

Software piracy does exactly that. It robs sales from software developers by depriving them of sales revenue that can be reinvested into R&D.

Software piracy affects all types of software, whether it is standard office applications, computer games or design software used by the construction industry.

Like the entertainment industry, software developers are vulnerable to piracy because the products they sell cost little to produce in the way of physical materials. A CD, for example, can easily be produced for less than one dollar. But the intellectual value of the product — which includes the R&D and product development costs — is far greater.

This means pirates can copy the product very cheaply without being hit with the other far more expensive development costs.

This is a global problem, and in 2004 the BSA/IDC study on software piracy found an increase from $29 billion to $33 billion in losses due to piracy, despite a one percentage point decrease in the piracy rate overall (35% in 2004 compared to 36% in 2003). “Piracy robs innovators of revenue for R&D and governments of tax revenues, while deterring investment in new technologies and rapid dissemination of the latest software applications,” said Robert Holleyman, BSA’s president and CEO.

Although it is a worldwide problem, it is particularly acute in the UAE where many software developers face serious problems when it comes to piracy. As far as specialist construction software is concerned, the most frequently pirated programs are the commonly used design applications. “A lot of detailing businesses use illegal copies of Autocad. A legitimate copy costs somewhere in the region of AED15 000, which is a significant investment,” says the manager of a Dubai-based detailing company.

“The problem is that the companies that have made that investment can’t compete effectively because they are up against detailers who can do drawings far more cheaply, because they use pirated software without having made this investment,” he adds.

Software developers have similar concerns and regularly encounter problems where companies try to avoid paying out for expensive licenses. “Companies often buy one or two licenses and then try to install it onto 20 computers which doesn’t work, so they will call up with some story claiming that their computer’s hard drive has crashed and they need another three codes, when all they want is to do is run pirated copies of the software that has to be unlocked. This happens every week,” says an international software developer working in Dubai.

The programs that are most affected by piracy are the more basic, well established ones that most users already know how to use. New programs often require specialist training that can’t be provided if just a pirate copy is purchased. But as that software becomes more widely used, more operators know how to use it without the need for additional training, which makes piracy a viable option for companies.

Most software does come with a degree of protection to prevent this from happening, but the level of protection varies depending on the product used. If a software lock is used as opposed to a hardware lock, then it can be cracked relatively easily with unlock codes posted on the Internet. “The Internet has made it very easy for any one, in any market, to get and successfully use pirated software,” explains one software developer.

Unlike other construction products such as plant, where if counterfeit products are used there is an obvious downside for the contractor — namely machine performance — there is little stopping a contractor employing detailers who use illegal software.

But it does make it harder for legitimate firms that are conducting their operations legally to do business, as they need to charge somewhere in the region of AED1000 for a drawing, while a firm using pirated software is able to charge just AED400.

The industry can get away with this in the short run, but in
the medium to long run it will ultimately lose out, as software companies can’t continue to afford to make market-specific research and advancements with companies that aren’t spending money with them.

This is hardly a deterrent though, and all software developers agree that stringent legislation that is enforced by the local authorities is the main way to combat what is a growing problem.

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