Prices drop to fight software pirates

BEIJING – After years of relying on legal and political muscle to fight rampant piracy in China, big software companies have started wielding a new weapon: lower prices. And the early results are encouraging.Software companies including Microsoft Corp. and Autodesk Inc. have seen unit sales jump since lowering prices to lure users away from pirated copies, executives said in interviews.For instance, Autodesk, which makes AutoCAD and other design software, saw its number of licenses in China more than double to an estimated 300 000 as of July after it slashed local software prices last year, said Patrick Williams, Autodesk’s senior vice president for the Asia-Pacific region.The U.S. company’s prices in China are now about half the level in the U.S., compared with about 20% to 30% lower before last year’s reduction. Autodesk sells its flagship AutoCAD 2011 software on its U.S. website starting at $3,975.The notion that lower prices could attract more customers might seem obvious, but for many in the software industry in China it represents a big change of heart.Microsoft, for example, long kept retail prices for their software here close to levels in the U.S. – even though average incomes in China are a fraction of those in America – arguing there was no point trying to compete with pirated versions that sold for only a dollar or two.The companies are starting to recognize, though, that at least some consumers in China are willing to pay for legitimate products at the right price. They also recognize that focusing on legal action to fight piracy has had limited effectiveness.Microsoft last year started selling a stand-alone version of Windows 7 Home Basic, an entry-level version of its latest operating system, to consumers in China for 399 yuan, or about $59. That’s less than a third of the $199.99 starting price for Windows 7 in the U.S.Lower consumer prices have “definitely” boosted Microsoft’s unit sales in China, said Simon Leung, Microsoft’s chief executive for greater China, though he declined to provide details. He said the lower pricing helps discourage piracy, though it doesn’t eliminate the problem.”When you have a lower price your margin gets squeezed,” he said. But “we have so much room to improve, so the volume will make it up.”(Wall Street Journal)