How Piracy Opens Doors for Windows: Microsoft Corp. estimates it lost about $14 billion last year to software piracy ? and those may prove to be the most lucrative sales never made. [...]
The proliferation of pirated copies nevertheless establishes Microsoft products ? particularly Windows and Office ? as the software standard. As economies mature and flourish and people and companies begin buying legitimate versions, they usually buy Microsoft because most others already use it. It's called the network effect.
"The first dose is free," said Hal Varian, a professor of information management at UC Berkeley, facetiously comparing Microsoft's anti-piracy policy to street-corner marketing of illicit drugs. "Once you start using a product, you keep using it."
Even as the Internet makes global piracy easier than ever, Microsoft's revenue and profit have risen steadily. It earned $12 billion on $41.4 billion in revenue in calendar '05.
