copy protection versus market dominance 29 april, 2001 by johnmichael patrick monty monteith

It looks like everyone is finally taking notice of Microsoft's new attempts at software copy protection. Of course, we gave you a heads-up on this issue back in November 1999 with a less than glowing review of Microsoft's quirky anti-piracy techniques. Since then the folks in Redmond have put their idea into full swing, and now everyone is crying foul. However, with a little time I think we could all grow to like these new anti-piracy tactics as it could mark the beginning of the end for Microsoft's application dominance.

Back in the early 80's it seemed like nearly all software had some form of copy protection. Some used format error blocks on floppies that were extremely difficult to duplicate. Others went so far as to require hardware devices called 'dongles' to be plugged into the computer before the software would work. Whatever the method, considerable effort went into stopping those damned pirates. In fact, many times the copy protection was more impressive than the software it was protecting.

Around about the time the Macintosh started moving into the market was when copy protection started to disappear. The Mac was using single files for the entire application and made it easy for a person to move that program from floppy to hard drive or to another computer. In addition, because the Mac was the king of 'ease of use', any form of copy protection was generally discouraged.

What also sped the destruction of copy protection was the rise of the hard drive. Whether you were using a Mac or a PC, the ability to easily move software to your hard drive was a major selling point. If copy protection kept a user inserting a floppy, the vendor was not going to be around for long.

While this was happening a number of software vendors, including Microsoft, picked up on a trick. When software is not copy protected, it tends to proliferate the market more quickly. Software vendors may not be making money on every piece of software being used, but they can force their product to be the market leader. This technique is especially important when it comes to application software like the Office suites. By making a product like Microsoft Office the de-facto standard, even though a considerable number of people have illegal copies, still many more are forced to buy the product simply because it is the 'only choice'. Suddenly everyone is using the product, and no true competition can exist.

At the same time, companies like Microsoft would quote figures, such as, "… three out of four copies of software being used is pirated." As a result, software companies could justify charging four times the price to "make up" for the piracy. That is why an application suite, like Microsoft Office, could cost hundreds of dollars, and why an operating system upgrade will cost a hundred dollars.

That was then. Now, with personal computer sales slowing, Microsoft had to find some way to boost their bottom line. Enter copy protection. In 1999 Microsoft used some less obvious copy protection techniques on their Microsoft Office software to verify that users had actually purchased the software. The software would require the user to put their original media into the drive every so often just to verify that they did not acquire the software by borrowing a CD from a friend. Now with Office XP and Windows XP the copy protection has been taken a step further: online verification. Essentially, whenever you install your copy of Office XP or Windows XP the software must verify that it has not already been installed previously. Verification ideally happens through an Internet connection to a Microsoft server tracking all installations. If it has already been installed twice, then you must give Microsoft a call to explain yourself before you may proceed. I joked about this technique a few years ago, but apparently the joke is now on me.

Do not get me wrong, for legitimate users, this is not a bad thing at all. You do not have to give Microsoft any more information than which state you are in, so no need to complain about privacy issues. The software will detect whether you are installing it on the same computer, so no worries if you are one of those people (like me) that formats your hard drive and starts over every few months. And, Microsoft does give you the leeway to install it on two computers (presumably one is your desktop and one your laptop). As far as copy protection techniques go, this seems completely fair. Short of some easy way to eliminate Microsoft's checking technique, it is likely going to cut piracy rates to nearly nothing.

The only part that I believe users have a valid gripe about is the issue that Microsoft and other software vendors have fed us for years: The current cost of software is based on current piracy rates. If this is true, with these new techniques, should the cost of the software be cut to a quarter the original cost? We should now be able to buy the Windows XP upgrade for twenty-five bucks and Office XP upgrade for seventy-five, right? After all, the reason they cost so much was because most of the copies out there were illegal? How about just cutting in half, Bill? What do you say?

So, in lieu of the fact we can no longer pirate Microsoft's prize software, what do you believe will happen next:

a. Microsoft will lower prices.
b. Microsoft will raise prices.
c. Microsoft will agree to keep prices at the current level until 2023.

Those of you that picked "B" are the big winners. At the end of May the price of the now fully copy protected Microsoft Office suite will be raised ten percent. And that, my friends, is the real reason for consumers to be upset. The Borg has duped us yet again.

No worries. I actually believe that Microsoft is shooting themselves in the foot this time. I suspect most people that have pirated copies of Microsoft Office do not have hundreds sitting around to start down the legal path. After all, these days a full computer costs only a few hundred, so spending even more on a piece of software might seem slightly ridiculous.

What will these suddenly ex-pirates do? Probably use something else. Star Office, which is Microsoft Office compatible, is absolutely free (and I must say is a very impressive product.) In addition, Corel and Lotus both have excellent Office suites available for a fraction the price of Microsoft Office. Why spend hundreds when you can have nearly the same thing at a fraction the cost? Back when you could make a copy for your buddies there was no need to install Corel, Lotus, or Star Office. That perspective is now changing.

While Microsoft will assuredly make considerably more money in the short run, they now entertain the risk of losing their market dominance. Obviously Bill Gates is a much better businessman than I, so I suspect the drones at Microsoft have factored this into their equation somehow. Nonetheless, you will not see a tear shed from me when Star Office becomes the market leader. In fact, I am using it right now to type this, and am not missing the Microsoft products one bit.