It is ironic that the FIFA 2010 World cup computer game doesn’t run on Ubuntu.  It would have been a huge marketing coup and poetic justice if the game software was released for Ubuntu in a GPL license.

This got me thinking about open source licensing and it’s advantages for developing countries, which really got my hackles up  after reading the Seventh Annual BSA and IDC Global Software Piracy Study – that screams:  Software Theft Remains Significant Issue Around the World

The rate of global software piracy climbed to 43 percent in 2009. This increase was fueled in large part by expanding PC sales in fast-growing, high-piracy countries and increasing sales to consumers — two market segments that traditionally have higher incidents of software theft. In 2009, for every $100 worth of legitimate software sold, an additional $75 worth of unlicensed software made its way onto the market. There was some progress in 2009 — software rates actually dropped in almost half of the countries examined in this year’s study.

Given the global recession, the software piracy picture could have taken a dramatic turn for the worse. But progress is being outstripped by the overall increases in piracy globally — and highlights the need for governments, law enforcement and industry to work together to address this vital economic issue.
Below are key findings from this year’s study:

• Commercial value of software theft exceeds $50 billion: the commercial value of unlicensed software put into the market in 2009 totalled $51.4 billion.
• Progress on piracy held through the recession: the rate of PC software piracy dropped in nearly half (49%) of the 111 economies studied, remained the same in 34% and rose in 17%.
• Piracy continues to rise on a global basis: the worldwide piracy rate increased from 41% in 2008 to 43% in 2009; largely a result of exponential growth in the PC and software markets in higher piracy, fast growing markets such as Brazil, India and China.

I would not take the numbers IDC and BSA bring at face value. The IDC/BSA estimates are guesses multiplied several times. They start off by assuming that each unit of copied software represents a direct loss of sale for software vendor – patently a false assertion.

If it were true, then the demand for software would be independent of price and perfectly inelastic.

A drop in price usually results in an increase in the quantity demanded by consumers. That’s called price elasticity of demand. The demand for a product becomes inelastic when the demand doesn’t change with price. A product with no competing alternative is generally inelastic. Demand for a unique antibiotic, for example is highly inelastic. A patient will pay any price to buy the only drug that will kill their infection.

If software demand was perfectly inelastic, then everyone would pay in order to avoid the BSA enforcement tax. The rate of software piracy would be 0. Since piracy rate is non-zero, that proves that the original assertion is false. (Argument courtesy of the Wikipedia article on price elasticity of demand )

Back when I ran Bynet Software Systems – we were the first Microsoft Back Office/Windows NT distributor in Israel. I had just left Intel – where we had negotiated a deal with Microsoft that allowed every employee to make a copy of MS Office for home usage. Back in 1997 – after the Windows NT launch, the demand for NT was almost totally inelastic – Not There, Nice Try, WNT is VMS + 1 etc. We could not give the stuff away in the first year. Customers were telling us that they would never leave Novell Netware. Never. But, NT got better from release to release and the big Microsoft marketing machine got behind the product. After two years of struggle and selling retail boxes and MLP for NT, demand picked up. Realizing that there IS price elasticity of demand for software – Microsoft dropped retail packaging and moved to OEM licensing, initially distributing OEM licenses via their two tier distribution channel and later totally cutting out the channel and dealing directly with the computer vendors like HP, Dell and IBM for OEM licenses of NT, XP and 2000, 2003 etc. Vista continued with this marketing strategy and most Vista sales were not retail boxes but pre-installed hardware. After Windows 7 released – users have been upgrading en-masse, proving once again the elasticity of demand for a good product.

Microsoft (who are a major stakeholder in BSA) probably don’t have a major piracy problem with operating system sales. Let’s run some numbers. In 2008 –  Microsoft Windows Vista sales were at about a 9 million unit/quarter run rate. Microsoft June 2008 quarterly revenue was $15.8 BN. Single unit OEM pricing for a Windows operating system  is about $80 and in a volume deal – maybe $20. Let’s assume an average of $50/OEM license. This means that the operating system  accounts for about 50*3*9/15800 = 8.5% of Microsoft revenue.

The BSA Global Piracy Study states that the “median piracy rate in is down one percentage point from last year” – 1 percent of 8.5 percent is meaningless for Microsoft – in dollar terms – BSA work to reduce piracy is less meaningful than a 7 percent drop in the US Dollar rate in 2009.

Microsoft might have a problem with their cash cow – Microsoft Office. Microsoft Office 2007 retails for $450 but is available in an academic license for less than $100. Open Office 2.4 runs just fine on Windows 7 and XP and retails for $0. At those prices, sizable numbers of users are just sliding down the elasticity curve – calling into serious question the IDC/BSA statistics on software piracy.

But there is more to software piracy than providing software at a reasonable price. In poor areas of the world – assuming that the BSA efforts at combating software piracy are successful - only the very rich would have access to applications like Microsoft Office. The middle and lower class people won’t have the opportunity to become MS Office-literate because the prices would be too high. For that I only have three words -download Open Office – the free and open productivity suite.

Finally – I can only anonymously quote a senior Microsoft executive who told me a number of years ago that off the record, Microsoft didn’t mind people copying the software and using a crack because it was a good way of introducing new users to the technology and inducing them to buy the new, improved and supported release a year or two later.

In a complex global environment, pharma do not have control of computer platforms that local sites use – yet there is an expectation that file and information sharing should be easy yet there are three areas where current systems break down:

1. People forget what files had been shared and with whom they have been shared

2. People have difficulty sharing files with colleagues in a way that is accessible to everyone – firewalls, VPNs, enterprise content management, DRM, corporate data security policy, end point security, file size – these are all daunting challenges when all you want to do is share a file with a colleague in Berlin when you are working in a hospital in Washington.

3. Notifications – how do you know when new information has been added or updated? Not having timely notifications on updates can be a big source of frustration resulting in team members pinging other members over and over again with emails.

Over the past 10 years a generation of complex enterprise content management software systems have grown up – they are bloated, expensive, difficult to implement, not available to the entire multi-center team and in many cases written by English speaking software vendors who cannot conceive that there are people in the world who feel more comfortable communicating in their native tongue of French, German, Hebrew or Finnish!

We are developing (currently in beta with a Tier 1 bio-pharma in EMEA)  a Web-based, agile collaboration system with a light-weight, easy to use, simple architecture, that saves time and reduces IT and travel costs – and literally gets everyone on the same page.

The system resolves the 3 breakdowns above while recording all user activities in a detailed audit trail in order to meet internal control and FDA regulatory requirements.

The system also provides significant cost benefits in addition to improving information collaboration:

• Reduces travel costs: Using online events, integrated media and file sharing and discussions, the clinical trial team and investigators can conduct program reviews, education activities and special events.

• Eliminates proprietary IT: No proprietary software or hardware and no IT integration. No extra investments in information technologies, CRM, sales force integration and data mining.

If this interests you – drop me a line!

According to wikipedia – social media are primarily Internet-based tools for sharing and discussing information among human beings. It’s a shift from one to many publishing to many-many networking and from centralized control content generation to massive user-generated content.

I would distinguish between the social software (blogs, micro-blogs like Twitter, file sharing, messaging, groups and tagging ) with the media itself (MySpace music, Deezer, Facebook ….). I believe that there a number of important applications of social software for pharmas that fit into the current sales model – here are a couple

Pharma social-search – How about a single search page for doctors, consolidating and summarizing data related to the products a pharma sells? – evidence based studies, pharmacokinetics, practical dosage tables and new pipeline.   Provide less data but more relevant science for doctors’ needs. Let a doc choose and let the network of colleagues decide what’s most relevant.   This should work well for the regulatory affairs team since they can approve the content they  feed into the aggregator  and filter out the nasty stuff before-hand. That helps with application number two:

Off-label marketing compliance – Provide mediated blogs for  industry experts to talk about  drugs. This is like a “keep your enemy close to you strategy”. Make it a part of the search page for the doctor.  It’s easier to control a blog you maintain than to enforce what a rep may or may not say to a doctor.  More importantly – it’s a way of proving compliance to the regulator.

Market directly to pharmacists – for the same money you can reach out to the pharmacist and make sure she/he understands the indications properly and slip in some competitive marketing stuff on the high margin OTC items. Like why your homeopathic arnica gel is better than Novartis Voltarene.

Collaborative recommendation – Most social media content is very touchy-feely and it’s hard to quantify information value based on clicks on content like Facebook birthday and favorite car applications  However – for scientific articles we could take the Deezer approach where a doctor in the network creates one or more “playlists of favorite articles. These “playlists” of articles form the basis of the recommendations which look for other articles that have citation patterns (instead of item ratings) similar to the doctor’s “playlist”. This is the approach taken in the Synthese Recommender project

What is surprising is that a lot of people seem to think it’s just a question of time before pharmaceutical companies like GSK get into social media.  I claim that a fashion trend doesn’t make a business case. The buzz of social media and Twitter in 2009 reminds me of the buzz on virtual worlds in 2008.

There are 3 fundamental reasons why  consumer-side social media is not a good fit for pharmas and they all relate to how prescription drugs are sold:

Marketing: Pharmas are the last bastion of traditional door-to-door marketing using medical representatives to influence doctors to prescribe their products to end user patients. Excluding OTC (over the counter products), pharma customers are doctors not end users.

• Doctors like the attention of a face to face meeting, getting the free samples and invites to conferences from the rep
• You don’t have to verify that a virtual online persona is really a doctor before giving them a drug sample. Most doctors are not imposters in person.
• A rep can customize the message to a doctor and work hard on her quota -  aggressively marketing a drug by suggesting that a higher dosage or additional indications are possible (off label promotion).  This is not official policy and it’s normally done by industry experts who are not employed directly by the pharma but it’s still an option in a face to face meeting – for example suggesting to a dialysis center that they should stock up on EPO…
• I really didn’t want to say this, but sex sells.   Good looks are a big asset for a rep, until I write my Pheremone Facebook Application – a good looking female rep will win hands down over a blog any day of the week.

Regulatory – then there is the matter of food and drug safety and regulations against off-label marketing.  Marketing materials used by a medical representative are prepared and approved by the product manager, scientific and marketing staff and legal staff.   This highly controlled approach to content is  diametric to the wisdom of crowds and “user generated content” found in social media like Facebook or Twitter.

Doctors – doctors are far from a uniform community, specialists such as nephrologists are highly multi-disciplinary and may be interested in getting specific pharmacokinetic data whereas the pediatrician down the hall will have just enough time to take a free sample and hear about new pipeline.  Not every doctor has time to read New England Journal of Medicine in the evening after work but some doctors may be active teachers and researchers. A personal visit from a medical representative is not just the personal touch and break from a busy day of kids with runny noses – it’s also a way to customize the content to the doctor.

In summation – buzz is not enough.  It’s not a question of young doctors getting it and older doctors not getting it.  Specialists like cardiologists and endocrinologists  are as high-tech as it gets and family doctors are used to patients coming in with a (usually correct) self-diagnosis from Google.

There are many important applications of social software for a pharma. More about that in another post.

One would imagine Japan would be first in digital TV broadcasting, but actually it’s in the middle. Though trials have been running awhile in Japan’s cities, the date for nationwide cutover (when the analog signal stops) is July 24, 2011. That puts Japan behind Holland, Sweden, Finland, and the U.S., but ahead of Canada, China, etc.

Japan was an early mover in TV broadcast to mobile handsets, widely known as “OneSeg”, which began out of the digital trials. Each broadcaster is allocated 6 MHz divided into 13 “segments”, and one of the 13 segments is for mobile. So, viewers can see the same TV channel on their mobile as on the TV in their living room. The one-seg system is popular, and was later implemented by Brazil, as part of its adoption of Japan’s ISDB-T digital TV standard.

In some countries like Belgium and Italy, PAY-TV (Cable, Satellite) penetration is so high, that digital terrestrial TV (free TV) is a non-issue. But in Japan, PAY-TV penetration is less than 50%, so digital terrestrial is of importance. Digital broadcast will offer clearer picture quality than the sometimes-grainy analog broadcast, so everyone should be happy and buy digital TV sets, right? Well, not necessarily. Governments worldwide are finding that TV has come to be considered one of the “inalienable rights”. The U.S. is giving $40 coupons for converter-boxes for those (like the elderly and poor) who want to keep their analog TV sets, and Japan will go the same way – coupons, or maybe give them free.

Another challenge has been signal coverage. Covering the 80% of the population in a few urban areas was easy, but Japan is a volcanic terrain, and “filling the gaps” over those mountains requires some engineering. This gives the ruling party, the LDP, an excuse to do what it does best – earmark public spending for sparse rural areas. So suddenly, for example, you’ve got WiMAX systems going into remote prefectures with no clear business model other than the TV relay.

At the end of the day, on July 24, 2011, you’ll have digital terrestrial TV – not so exciting. But then, you’ve got the infrastructure for internet TV, interactivity, and this is where it starts to get interesting. One survey indicates that 25.2% of TV’s in Japan are already connected to the internet. More on this later.

The textbooks all talk about focus, and even though the client recognizes that their main market is  in developing countries – they are dabbling in various projects and trying to sell into other market segments.   The problem is they don’t know how to go from point A to point B and they never will.

Venture capitalists look for the WOW factor, big market and sales cycles that run quickly for new ventures seek funding.

If you are a manager in a tech company in trouble – stop for moment, fire yourself from your job and start asking VC-style questions. Maybe you do  have a big market, but you’ve lost sight of the WOW factor going into those long messy sales cycles. Look for some of these symptoms in your company:

• Managers that need outside consultants to tell them what time it is. It’s not uncommon for expensive organizational consultants to prey on companies in trouble.
• Key people (like product managers) are marking time and not taking initiatives
• Team members put off project status meetings.
• Employee discussions  generate more complaints about the company’s situation, than active decisions.
• Employees spend more time on office politics then planning and executing solutions of going from point A to point B.