The US software market in 2000 is expected to surpass even the automotive industry to become the largest contributor to the economy, according to a study released Wednesday by software industry group the Business Software Alliance (BSA).
Heads of some of the more prominent BSA member companies -- including Microsoft Chairman and CEO Bill Gates, Lotus President and CEO Jeff Papows, and Novell Chairman and CEO Eric Schmidt -- spoke at a press conference here Wednesday to announce the study's findings and push a number of policy-related agendas that the software makers share. Gates had previewed these findings on Tuesday at Congress' Joint Economic Committee (JEC) hearings on information technology here.
This study, called "Forecasting a Robust Future: An Economic Study of the U.S. Software Industry," said in 1998 the US software industry saw 18 percent growth and employed 806,900 people, who make an average of $68,900 a year.
Setting the stage with these figures, the executives then went on to detail what they see as potential threats to the vitality of this industry which, according to them, is becoming increasingly essential to the overall US economy. Some major issues facing all of these executives are software piracy, export controls on strong encryption software, and "frivolous" class-action lawsuits related to year-2000 glitches.
In 1998, software piracy took away an estimated $11 billion in potential revenue, taking with it $991 million in potential tax revenue for the US government, said Carol Bartz, chairperson and CEO of Autodesk.
Elaborating on those statistics, Gates said that most piracy in the United States is now happening at the consumer level, and that large US businesses for the most part understand and respect a software maker's intellectual property.
The government's current control on encryption export is affecting more than just the software vendors who make encryption products, according to Lotus' Papows. These restrictions affect even companies such as Lotus who make messaging and personal productivity applications, with which users want to be able to use strong encryption.
Bill Larson, Chairman and CEO of Network Associates, the industry's largest provider of security software, spoke more passionately about encryption, stating that the United States is now lagging in this key technology area because of current policy.
"US companies are competitively constrained by the lack of ability to export strong encryption. Customers are not waiting [for the government to loosen this restriction], they are going to foreign vendors," Larson said.
However, relief may be in site -- Larson said that on Wednesday the Security and Freedom Through Encryption (SAFE) Act, which would lift restrictions on encryption export, passed out of a sub-committee and will now be considered by the full House of Representatives.
Many of the executives present scoffed at the comment often made in defense of the government's policy that says the encryption industry is five to ten years ahead of the rest of the industry, so therefore the restrictions are appropriate. Larson said that US software makers may be ahead in certain areas, such as tying encryption into directory services, but that there are 750 foreign companies offering 128-bit encryption today, while no US companies are allowed to.
On the topic of the year-2000 glitch, the executives stressed the importance of outlawing frivolous lawsuits. For example, Intuit President and CEO Bill Harris said his company is already dealing with two such suits, which he characterized as frivolous because the year 2000 has not yet arrived, so no one has suffered any harm.
When asked why he thought software companies should be exempt from such litigation, since it is their software that does not recognise dates after December 31, 1999, Harris said that the industry does need to take responsibility, but only for legitimate complaints.
Harris summarised the group's stance by outlining "Net-friendly" policies that it hopes the government will adopt: help enable electronic communication; avoid restricting Internet businesses with regulations that apply to "brick and mortar" business; and playing the role of enabler, not competitor by delivering the same services that private sector companies offer.