The Way to End Software Piracy is To:

[bazooka]

Sell one hundred dollar computers.
http://www.theregister.com/2004/10/21/ballmer_100_buck_pc_fix/
That is what Steve Ballmer thinks.

Ballmeromics: the hardware way to end software piracy
By John Lettice
Published Thursday 21st October 2004 17:18 GMT

Steve Ballmer this week came up with a novel explanation for high levels of software piracy in emerging economies. Hardware, he says, is too expensive. What these people need, he said, is a "$100 computer."

We at The Register have had occasion previously to observe that Steve is rich and we are not because he can see things that we cannot. And well - there he goes again. There is a possibility that this is another one of those 'Steve didn't really say/mean that' occasions, Steve being something of a master of the misquote, but the context would tend to support the cheaper hardware equals less piracy interpretation. At the Gartner Symposium in Florida CNET reports: "One way to stem piracy is to offer consumers in emerging countries a low-cost PC, Ballmer said. 'There has to be... a $100 computer to dow-market in some of these countries. We have to engineer (PCs) to be lighter and cheaper,' he said."

Take into account the paraphrase and the nip and tuck and it's pretty clear that the quote isn't exactly as it left its mother, but in any event he is talking about piracy as being Microsoft's biggest problem, and he is talking about ultra low cost PCs being the way forward for emerging markets. He's certainly right about how a $100 PC would be a great enabler, but it's entirely unclear how this would stop people who pirate Microsoft software because they can't afford it from just carrying on.

There is however no reason to reduce prices, says Steve, because most of the people can't afford PCs, so obviously don't steal software, whereas the people who can afford PCs are "relatively affluent" and can therefore afford software. And "those affluent people cannot pay, so they don't pay," he adds bafflingly. Assuming he meant to say something opposite, then you could kind of pursue the logic. There's no point in cutting prices because the people who have computers can afford to pay, but just won't. But if the people who don't currently steal software because they can't afford computers suddenly can afford computers because they're $100, then... Well seeing they still can't afford software, won't they start stealing it?

Over in the eWeek, report meanwhile, the war on Linux continues. Ballmer comes up with the usual party line on security. But as The Register has a special coming up on that very subject we'll move quickly on with him to Linux in Europe.

In the CNET report he claims "Paris said Linux was dramatically more expensive than Windows." For eWeek, however it morphs rather nearer the truth with: "There is no ROI case for the city of Paris." But presumably he said both. In any event, the bottom line for Paris (as reported here) is that ripping out all the Windows and replacing with open source will be expensive, but that escape from lock-in to a single supplier is important, so a phased switch is currently the most likely option. Neither of the things Steve said is untrue, as such, but he neglects to mention the key point that the city is trying to escape his clutches, and spins it as an illustration of Windows being cheaper than Linux.

On, though, to Munich, where Ballmer's persuasive talents failed to block the defection last year. Here he says the city is still either diddling or dithering (we'd say 'dithering', unless he sang it in an Irish accent), and anyway people only keep saying Munich because it's the only big one they've got to mention. But actually, Munich paused to consider its likely exposure visa a vis patents, perfectly justifiably, and is now moving ahead again. But we'll try not to mention it for a bit Steve, if that helps any. ®
Related Ballmers:

iPod owners very honest, not thieves at all, says MS
Love DRM or my family starves: why Steve Ballmer doesn't Get It
Ballmer calls for horse-based attack on Star Office

They have $100 computers, and the tactic doesn't work.

[888888]

Hardware is already incredibly cheap. 50 cents per gigabyte hard drives and 40 dollar fully integrated motherboards are amazing deals and would be unheard of years ago.

[Capmaster]

Steve Ballmer can afford to be philosophical and eccentric :P

No doubt his solution would somehow involve huge sales for Micro$oft

Which ...would drive up the price of his hundred million shares of MS, or however much he owns.

There ought to be a "Conflict of Interest" flag or disclaimer of some sort whenever a bigwig like Ballmer makes a statement about "Where I see the Internet in ten years" or "Personal Computing in the future". Many prophecies are self-fulfilling.

[Faustus]

Yeah best way to end piracy (it will never completely end) is to offer it at prices the average joe finds acceptable.

[Dr. DOS]

This summer I sold a K3-450 with monitor, key, speakers and mouse for $50.00 at a garage sale.... sub $100.00 is doable for some P2 and P3 machines

[ViRaL1]

The EASIEST way to end software piracy is not to charge for software. If there's it's all freely available there can be no piracy. Problem solved. Now where's my f'in Nobel Peace Prize?

[Capmaster]

The EASIEST way to end software piracy is not to charge for software. If there's it's all freely available there can be no piracy. Problem solved. Now where's my f'in Nobel Peace Prize?

And just how is Gates supposed to get as rich as the European Union that way? :P

[ViRaL1]

Support fees.

[housepig]

And just how is Gates supposed to get as rich as the European Union that way? :P

that's outside the parameters of the question.

[dxj40c]

I don't think you can stop most pirating with price alone. Unless, of course, you are selling it for less than the pirates are asking. I would bet that if Photoshop was $19.95, it would still be pirated.

This leads me to another question: I was trying to sell a lot of older software I no longer had use for at a half-price book store. They will buy video games, cds, and cheapo useless software (greeting card designer and stuff like that). I was trying to sell stuff like Photoshop 4, Illustrator 7, Corel Graphics Suite 7, Microsoft Office 97, Windows 95, Windows 98se , and 5 Windows 2000 Professional OEM discs thrown away at work because they came with the new computers and the company uses a corporate edition with lots of licenses) all legal software in the original box with manuals, but they said they couldn't buy it. Does anyone know why? I sold it all in a garage sale, did I break the law or something?

[Scottie]

I got a friend lets call him Scott, he has pirated software lots of it, I don't think he would stop unless the software was cheaper and was better then most software out there.

lets face it alot of software is shitty,

or if maybe they had some type of web updaters on the software and that it could tell it has been pirated and somehow disable it.

Scott says he hates that.

[ViRaL1]

I sold it all in a garage sale, did I break the law or something?

Nothing wrong with that. It's perfectly legal to sell your software and transfer the license to someone else. The stipulation is that you transfer everything that was included (discs, manuals, warranty card, COA if there is one) and you completely remove the software from your system.

[RabidDog]

the cost of software has to commensurate with the cost of hardware.. no-one is going to buy a $100 puter and then pay $270 for win/xp.. cheap hardware equals cheap software. The only way to stop piracy is to charge for usage .(daily) but really really cheap say 10c. he still gets midas-like but people dont notice.


(I reckon he taught GW to speak in Public)

[handyguy]

If computers were $100 & came with software, that would be great. But then software manf's would have to drop the price of their software too, & they wouldn't want to do that.

No way Gates would sell windows software for that cheap.

[ViRaL1]

M$ could afford to sell Window$ that cheap, especially if they were sure almost every PC was coming with it.

[glockjs]

most of the best software out there is free.

[iooi]

Sell one hundred dollar computers.
.

Right So how does selling cheap PC's stop software piracy.
If you think about it it will encourage even more as it will open up a whole new pc market to people who couldn't afford one before and now can.... Are these people going to be able to afford the prices the like of microsoft, macromedia etc charge for software...... Are they hell.....
The only way is to make software afforadble. Even the likes of microsoft know that as they had to do it in countries where piracy is so bad no one runs legit stuff... What did they do reduce the cost. Wether it worked or not we dont know as i dont think they ever published the results, so i guess that would have been a big fat NO. People will have thought why pay for something when i can get it for free....

[handyguy]

In our thrift shops, all our computer are under $100...

That is, if people can sneak them in. We dont allow computers anymore cause of the charge to get rid of them is too high.

[bazooka]

Sell one hundred dollar computers.
.

Right So how does selling cheap PC's stop software piracy.
If you think about it it will encourage even more as it will open up a whole new pc market to people who couldn't afford one before and now can.... Are these people going to be able to afford the prices the like of microsoft, macromedia etc charge for software...... Are they hell.....
The only way is to make software afforadble. Even the likes of microsoft know that as they had to do it in countries where piracy is so bad no one runs legit stuff... What did they do reduce the cost. Wether it worked or not we dont know as i dont think they ever published the results, so i guess that would have been a big fat NO. People will have thought why pay for something when i can get it for free....

I know. I was passing on the thought process of Steve Ballmer.

I know this will not stop what they call piracy.

[hech54]

For one thing.....they should NOT let news cameras inside their factories. Seeing those machines churn out HUNDREDS apon HUNDREDS of those fancy hologrammed Microsoft CDR's....then place that disc into a box 10 times the size of the disc to make you feel like you are really getting something...add in about a dozen manuals to give that package more weight thus increasing your "feeling" that you are getting more than you really are is about as dumb as ....
Letting video cameras into a factory that makes pills(medicine)....seeing those machine churn out MILLIONS of......well....you know the rest.

[adam]

Are you being serious? You really think they make the box bigger to make you think you are getting more for your money?

I mean, its software. We all know that software comes on disks and we all know what size those disks are. Its not like a bigger box would make the product more appealing.

The reason the boxes are slightly larger then the disks is because they have to include a decent amount of documentation (manual, licensing info, advertisments, promotional offers, etc...) and because people don't want to have to read these documents on cd-sized pieces of paper. It also has alot to do with the fact that the legal disclaimers (some of which are required by law) take up about a 1/3rd of the back and they still want to be able to show promotional info too.

Now chips, there's the conspiracy. I don't buy the "they settle during transport" excuse. Does the bag also get inflated with air until its about to pop during transport?

[hech54]

YES I'm serious. It's called "marketing". In this day and age what the hell do you need a manual for?...it's all in the help files of the program or on the companies online help pages.
The perception that you are getting more than a CD in that box is EXACTLY why it is in that box.
That $500 software package that fits on ONE CD is going to sell MUCH better in a box than if "Joe Blow" sees that same software in just a jewel case with a $500 sticker on it.

How much do we pay for CDR blanks? Now how much do you think people like Microsoft pay for CDR blanks?....to put $500 software on.

[adam]

If I spend $500 on software I expect a full color manual, regardless of what size box it comes in.

Your entitled to your opinion I just honestly thought you might be joking because I can't understand how a larger box would, in any way, make software more appealing.

When software is released in jewel cases alone it is usually because it is a cheaper release (old/outdated software) and so they can save money by skipping the manufacturing of the manual and other promotional material, and yes the pretty box. These things aren't excuses thrown in there to get away with a larger box, they are a part of the product itself which are a selling point to many customers like myself, and necessesitate the need for a larger box.

Neither Microsoft nor any other software manufacturer uses cdr blanks to release their software. Their price per pressed disk is still cheaper then what we pay for cdrs, but I don't see what this has to do with price setting of their software. The cost of pressing runs, after the glass masters have been made, is surely one of the smallest parts of their costs. For something like an operating system like windows their real expenses are in R&D and salaries. How many people does MS employ full time?

[hech54]

Prime example:
There is an almost $11,000 price difference between the 6 cylinder Ford Mustang and the 8 cylinder Ford Mustang. Why? Are they different cars?
Do you think that it costs Ford Motor Co. more to make the V8 Mustang than the V6 Mustang?
Absolutely NOT.
Do you think it even costs Ford Motor Co. anywhere near the $16,000 (factory invoice price) to actually make the basic V6 Mustang?
Absolutely NOT.
Do you think Ford Motor Co. is losing money at the end of the year selling the "old" model Mustangs at Dealer Invoice prices....or Below Factory Invoice prices that are advertised SO often on TV and radio?
Absolutely NOT....and do you know why?
It costs Ford Motor Co. a whole lot less than $16,000 to make that car. If this was not the case...they would stop production of the old model a whole lot sooner so as to NOT take the loss.
I'm afraid that is the way it works my friend....like it or not....with every company....including software companies selling a $500 factory pressed compact disc. Software companies need to do a whole lot more
"window dressing" to justify a $500 CD....the R&D has been paid for LONG before the software hits the market. If not...they are doing something terribly wrong and won't be in business very long.

No conspiracy theories...no "they are all out to stick it to us"....it's business....plain and simple.

[bugster]

Software companies need to do a whole lot more
"window dressing" to justify a $500 CD....the R&D has been paid for LONG before the software hits the market.

In most cases this is completley wrong. R&D costs are frequently not recovered until a certain number of sales have been reached. Of course if that number of sales is not achieved, THEN the company is in trouble.

This is true of many product types, not only software.

[hech54]

True...but I was taught that the R&D of the current project should have been paid for by the sales of the previous project....if there was a previous project of course.

[adam]

I don't see how you can compare engines to software. There is clearly a physical difference between a V6 and a V8. There is clearly no difference between the same disk packaged in a jewel case versus a box shaped the size of a house. We know in either case that the software is still going to be contained on a disk that fits inside our cd-rom, and that it is going to function as something installed on our pc, where the size of the container it was shipped in is completely irrellevant.

Also a larger engine is undoubtedly a strong selling point regardless of how much more it costs to manufacture (I imagine there is actually a decent increase in production costs, but I really wouldn't know) and I still don't understand how a larger box would sell software better except to inform the consumer that the product comes with additional items, which as I mentioned are part of the value of the product, not just an excuse for a larger box.

I know for a fact that many products are packaged in oversized containers to give the illusion of increased value. But this does not apply to every product whose box is larger then the substantive part of the product. Very often there are practical and logistical reasons, for instance the need to include documentation of a reasonable size... or how about the need to recognize what the product is? I dont know about you but I have to squint to read what's written on the spine of my jewel cases. Face it, compared to the amount of information that needs to be conveyed on the box, and the amount of documentation that consumers expect to be included with their software purchases, a cd is tiny.

Anyway, I just don't see the connection between a larger box and perceived extra value, in something that is a known fixed size, whose value is not determined by its size. Same thing for pills. I buy it by dosage and all pills are roughly the same size, ie: small enough to swallow. What purpose would it serve to package them in a larger container?

True...but I was taught that the R&D of the current project should have been paid for by the sales of the previous project....if there was a previous project of course.

Not by a long shot. You would be very close to a monopoly if you could consistently expect to earn 200% of your costs with each release of...anything. Software developers often take out large loans to cover the costs of production. With the exception of some legacy software, every software release is a gamble, and the budget allocated to each project is determined according to its total projected sales, not just by how much the company has in its reserves.

[ViRaL1]

Not by a long shot. You would be very close to a monopoly if you could consistently expect to earn 200% of your costs with each release of...anything.

Why would you need to make 200% with each release? Maybe the first time, so that you can pay for the next release, but then revenues from each successive release should pay for its successor. (i.e. Make enough on 1.0 to pay for 2.0, enough on 2.0 to pay for 3.0 etc)

I could be wrong (it's happened before).

[adam]

I guess I meant each initial release, I don't really know what I was thinking. Basically I'm saying its wishful thinking to assume that every software release will be successful all the time, such that you are always paid up by the time the next project comes up. Software companies diversify their projects just like all other businesses. Some make money, some don't. R&D is also not an investment that is always tied to a specific product. Software and hardware manufacturers pour money into R&D generally hoping to come up with something to give their company an edge, above and beyond what they are doing on any given software release. Look how many patents Microsoft holds that have absolutely nothing to do with Windows or any other software or hardware they currently manufacturer.

But I'm not just talking about updates, ie:version 2.0 versus 3.0. There are very very few software developers who have all their eggs in one basket. Most software companies have many different product lines, and of course the vast majority of games are just one offs.

[zzyzzx]

You really think they make the box bigger to make you think you are getting more for your money?

Yes.