VZCZCXRO1615
PP RUEHTRO
DE RUEHAS #0190 0501757
ZNR UUUUU ZZH
P 191757Z FEB 08
FM AMEMBASSY ALGIERS
TO RUEHC/SECSTATE WASHDC PRIORITY 5286
INFO RUEHFR/AMEMBASSY PARIS 2555
RUEHEG/AMEMBASSY CAIRO 0997
RUEHMD/AMEMBASSY MADRID 8809
RUEHRB/AMEMBASSY RABAT 2173
RUEHTU/AMEMBASSY TUNIS 7025
RUEHTRO/AMEMBASSY TRIPOLI
RUEHNK/AMEMBASSY NOUAKCHOTT 6228
RUEHNM/AMEMBASSY NIAMEY 1474
RUEHBP/AMEMBASSY BAMAKO 0423
RUEHCL/AMCONSUL CASABLANCA 3261
RHMFISS/HQ USEUCOM VAIHINGEN GE

UNCLAS ALGIERS 000190 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS TO USTR - PBURKHEAD 
COMMERCE FOR NMASON 
 
E.O. 12958: N/A 
TAGS: ECON BEXP KIPR ETRD AG
SUBJECT: MICROSOFT'S IPR WOES 
 
REF: 07 ALGIERS 1581 
 
THIS CABLE CONTAINS COMPANY PROPRIETARY INFORMATION NOT TO BE 
SHARED OUTSIDE USG. 
 
¶1. (SBU) SUMMARY: During a February 19 meeting, Microsoft 
Algeria Director General Samir Said outlined Microsoft's 
priorities for Algeria and underscored the negative impact 
weak intellectual property rights (IPR) protection is having 
on Microsoft's financial bottom line and growth potential. 
Said estimated that Microsoft is losings tens of millions of 
dollars each year to software piracy in Algeria and argued 
that the Algerian government has not demonstrated the 
political will to enforce IPR.  Said stated that, in addition 
to antipiracy efforts, Microsoft's main priorites are to 
continue working with the Algerian government (its largest 
customer in Algeria), to recruit qualified employees, and to 
revive partnerships with Algerian ICT companies.  END SUMMARY. 
 
¶2. (SBU) Microsoft Algeria DG Samir Said lamented that the 
Algerian government is not taking stronger action to prevent 
software piracy and argued that the situation had worsened 
during 2007.  According to a Business Software Alliance 
Survey, the rate of software piracy increased slightly from 
2006 to 2007, from 84 percent to 85 percent. Said stated that 
"losses are huge" and asserted that Microsoft is losings tens 
of millions of dollars each year.  Said estimated that a 10 
percent reduction in software piracy -- from the current 
estimate of 85 percent to 75 percent -- would yield an 
additional 25 million USD in annual profits. 
 
¶3. (SBU) Said emphasized that Algeria is an important market 
for Microsoft and that there is clear potential here if the 
Algerian government provides greater support for IPR 
protection.  While he noted that there is a trend towards 
purchasing licensed software in government ministries, 
licenses have only been purchased as part of new system 
purchases and many ministries continue to use unlicensed 
software on previously purchased computers.  Said stated that 
he is not seeing any will to enforce IPR protection in terms 
of software licensing.  He told us that none of the estimated 
50 to 60 thousand home personal computers sold as part of the 
Algerian government's "Ousratic" initiative to expand home 
PC-ownership were sold with Microsoft-licensed software. 
Although Microsoft informed the Minister of Communications 
Technology of this breach, Said said that the government has 
not taken any action to enforce compliance.  During the 
October visit of Microsoft CEO Steve Ballmer (reftel), the 
Algerian government promised to address enforcement, but Said 
stated he had seen no change since then.  He added that he 
often hears the argument that Microsoft must give a "good 
price," but in the end licensed software will always be more 
expensive than the pirated version. 
 
¶4. (SBU) Said stated that, in addition to antipiracy efforts, 
Microsoft Algeria's main priorities are to continue working 
with the Algerian government, recruit qualified employees, 
and revive partnerships with Algerian ICT companies.  Between 
ministries and state-owned enterprises, the government 
remains Microsoft's largest customer in Algeria and Microsoft 
will continue to work with it despite IPR concerns.  Said 
echoed an oft-heard complaint in saying that he is unable to 
find qualified employees among recent graduates.  Although 
there are nearly 2500 graduates with degrees in ICT, 
according to Said, there are few who have the skills required 
to be competitive in the job market.  Microsoft Algeria is 
also interested in partnering with Algerian ICT companies to 
help promote local software development; however, Said noted 
that this goal is dependent upon improved IPR protection. 
 
¶5. (SBU) COMMENT: Serious antipiracy efforts in Algeria are 
critical not only for Microsoft but for Algeria's economy 
writ large.  Although the Algerian government has stated its 
intent to develop the local ICT sector, rising rates of 
software piracy will do little to encourage the necessary 
investment or technology transfer.  The Embassy's Special 301 
Review (septel) will address the Algerian government's 
overall IPR protection efforts. 
FORD