IT Outsourced  

How to commit a crime

  • Step 1 – find unsuspecting young adult enrolled in an institution of higher education.
  • Step 2 – have said youth travel to various box stores and purchase Microsoft Office, Student/Teacher edition at various locations.
  • Step 3 – Install product on all computers.

There are a lot of ways you can rationalize crime; Bill Gates is rich, so he has enough money. My business wouldn’t survive if I had to pay full price for licensing. Whatever your reasons, software licensing is becoming complicated and ignorance is not a defense.

When I first started in IT, it quickly became evident that some of your competitors were ‘bending the rules’ with regards to licensing. It was very lucrative to use the same copy of windows, and the same copy of office to set up a small business. The savings for the company amounted to thousands of dollars in some cases. It was very difficult to point fingers because many companies were bending the rules to some degree.

Times have changed, and the consequences for software piracy have caught up with us. A typical small office with 10 computers running illegal copies of Microsoft Windows and Office is ‘stealing’ over $3,000 from Microsoft. This is a significant amount of money and well worth Microsoft spending the time to pursue and recover. There are multiple strategies in place.

An early tactic was the development of ‘home’ versus ‘business’ licenses. I have seen a number of times where clients, unhappy with the pricing I provided, sent someone down to a ‘box store’ to buy X numbers of computers.

“Uncle Bob’s nephew works at Acme Box store, and got me a great deal on five computers. He is really good on computers, and is setting them up but having a few problems. I hope you’re not angry that we didn’t buy from you but it was so much cheaper we decided to go this route. Are you still willing to come and help out?”

Box stores often sell ‘home’ or ‘retail’ versions of products. You can save around $100 per workstation just in licensing costs alone. Unfortunately, many software vendors require a business version of Windows in order to function properly. Since business versions were not generally available at the retail level, many people had to deal with computer companies who were easier for Microsoft to regulate and pursue for software piracy. As well, any support issues were difficult if you did not have a valid license.

Next was ‘activation’ where the software required you to activate the license. Generally you were limited in the number of activations and also the frequency of activations. When I wipe and reload Windows XP on a workstation, occasionally I will fail the automated activation, and it requires me to manually activate with a phone call. Quite a few vendors require activation to enable full functionality on the software.

The latest trend is cloud based application services. Generally you require a full time internet connection and the product is ‘cloud based’ with just enough local files to allow for good performance.

Below is an example of licensing options for a small 10 workstation business, requiring Microsoft Office (Word, Excel and Outlook) – this is an overly simplified table and you should really consult with a professional.

Office 365

Cloud based office, 10 subscriptions at $159/yr

$1590 annual licensing costs

Office OEM

Designed for sale with a new computer - $250 onetime purchase. Estimated computer life is 3 years.


$833, amortized over 3 years.

Office – Volume Licensing

Volume licensing is for life of the product, and can be transferred to another computer. I use 5 years as an estimated life, @ $500 per license, one time purchase

$1000 amortized over 5 years.

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About the Author

Mark Smed started as a self-employed consultant, integrating computers into small business in 1989.  The range of work expanded into installing networks and consulting with businesses on the fast paced changes in technology.  As his career progressed he taught Network Administration at a small business college and continued to build his base of clients. 

Today, Mark works for Northern Computer Inc. (http://www.northerncomputer.ca) as a consultant, specialist and technician.  His client base continues to grow and many of his clients have worked with him for over 10 years now.  In 2001, Mark joined the Network Professional Association (http://www.npa.org) and now sits on the board of directors and is responsible for publishing the Network Professional Journal for the association.

Mark can be reached at [email protected].

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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