Contrary to what has been instilled in the minds of many, forcing prices to a "ridiculous point" like that of pirated software, would only generate a situation that is unpredictable and unhealthy from an economic standpoint, said Microsoft (Malaysia) Sdn Bhd managing director Butt Wai Choon.
"To some extent, yes, lowering the price of software would increase the demand for it. However, the rate of increase in demand will drop as price is lowered even further. Hence, piracy would not be curbed entirely just by lowering software prices," he told Malaysia.CNET.com.
"Instead, I believe products will price itself based on demand and supply forces to a certain point where it is the right equitable price for the market," he said.
Older word-processing applications such as WordStar and WordPerfect are some examples. "Though these softwares were pirated they still gained market leadership because of the value of their products and not because of lower prices," said Butt.
"Neither did Microsoft Office compete on pricing to gain market share."
Lowering prices, he added, would also be a cause for concern among local software developers, particularly the budding 300 to 400 Multimedia Super Corridor (MSC) companies that are meant to propel Malaysia to a Silicon Valley-like environment.
"If software prices were to be lowered, local developers would not be able to recover costs of development. And in turn, they would not be able to plough money back into R&D in order to develop enhanced versions of the software," said Butt.
Incidentally, the software giant on May 1 kicked off its five-month anti-piracy campaign where so far, 19 system builders have pledged to sell only original software.
These vendors would also raise awareness among its customers about the risks of using pirated software, and in return Microsoft would give special incentive like cash rebates.
According to BSA estimates, the Malaysian software industry lost close to RM300 million because of the lucrative piracy market.
Ways to combat piracy
To combat the rampant piracy problem, Butt said education, enforcement and technological mechanisms that are tougher to copy, are key areas that need to be reinforced.
"People need to be educated on intellectual property rights and realized that resolving piracy does not depend solely on pricing issues. Much depends on the value and innovations that the software brings to users."
"Education would help to move things up a notch or two," he said but admitted that it would be difficult as it dealt with moral issues telling people that using pirated software constitutes an act of stealing.
Law enforcement would be harsher on the people but necessary to bring the culprits to justice.
"Enforcement should not be left to the government alone but should also be carried out by legal officers, auditors and even landlords who could all advise their customers that piracy is wrong," said Butt.
The third area, he said, is for vendors themselves to build into their softwares more technological mechanisms which are almost impossible to counterfeit.
"We vendors need to take on that responsibility to ensure that our software cannot be easily copied."
Microsoft has edge-to-edge holographic images etched onto its CDs and copper-interwoven holographic images incorporated into its Certificate of Authenticity stickers.
The latter technological mechanism go into systems that are pre-installed with Microsoft software.
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