Microsoft informed a company that based on its calculations, it estimates the company should have more software licenses than Microsoft’s customer record shows.

The proposed situation shows an ongoing problem, the copying and sharing of software and music over the internet is a problem which software vendors and the music industry have been dealing with for over 10 years.

The lack of software licenses that Microsoft does not have relates to the copying and sharing of software. An approach to reduce copying of software would be to enforce the update that Microsoft released in its ‘automatic’ updates. The Windows Genuine Advantage (WGA) is a program that rewards legal use of Windows XP free content and punishing resellers and users of illegal copies of XP by limiting their access to security fixes, downloads and other updates.

To calculate risk exposure the risk impact is multiplied by the risk probability.

A journal article on Proquest states that the estimated annual loss on counterfeit copies of Microsoft products is 30 billion dollars. The risk of someone downloading a copy of Microsoft software is hard to calculate but assume there is a 50% chance (which in reality is much greater) this calculates to a risk exposure of 15 billion dollars. This essentially means that any money spent bellow 15 billion dollars is a worthwhile investment in reducing the risk of the public obtaining Microsoft’s software. This means Microsoft has 15 billion dollars to avoid the risk such as changing requirements for obtaining a software license, transfer the risk by allocating the risk to other people or systems. Finally Microsoft could assume the risk by accepting the loss.

An approach to reduce copying would be to reduce the availability of downloading copied software. This is a very difficult as just as a p2p software company get sued and shutdown. New reincarnations of the old software appear which gains popularity examples include Napster, KaZaa, Morpheus and Grokster. By reducing the variety of methods available for downloading illegal software Microsoft would reduce the risk of new users joining the many people downloading illegal software.