Companies that rely on unlicensed copies of Windows are more likely to experience system failures and lose customer data, Microsoft Corp. said Tuesday, citing a company-sponsored report.

According to the research, which was conducted by the Harrison Group Inc. but paid for by Microsoft, mid-sized firms -- those with more than 24 PCs and fewer than 500 -- were 43% more likely to have had a critical system failure lasting more then 24 hours if they used unlicensed Windows.

Those businesses were also 28% more likely to lose customer data and 73% more likely to lose their own data than firms exclusively using licensed copies of Microsoft's software.

The Harrison Group reached those conclusions after interviewing IT professionals and businesspeople at nearly 1,600 companies in the U.S., the U.K., China and Brazil. Of the companies included in the survey, Harrison Group labeled 690, or 43.7%, as using fully-licensed software; 890, or 56.3%, ran some unlicensed software.

Microsoft used the report to defend Windows Genuine Advantage (WGA), its anti-piracy program that at times has come under fire from users.

In an entry to the company's WGA blog Tuesday, Alex Kochis, a Microsoft senior product manager, trumpeted the results. "Not surprisingly, companies that have more counterfeit software in their environment tend to have more IT related problems," Kochis said.

Michael Cherry, an analyst with Directions on Microsoft, agreed with Kochis, up to a point. "In principal, I kind of get the point that they're making," Cherry said. "If you're using non-genuine [Windows], there's a high likelihood that whoever put it on the media slipped other things into the code Actually, I would be surprised if there wasn't something slipped in. So I have no problems with that premise."

But Cherry remained cautious of the report. "I'm nervous about this because Microsoft paid for it," he said. "But who else, really, would study this?"

This is not the first time that Microsoft has linked unlicensed copies of Windows to negative side effects, including the potential of pirated copies containing malware, either by design or through an oversight on the part of the counterfeiter.

Even so, Microsoft has continued to tweak WGA. Last month, for example, it announced an update for Windows XP Professional users that will make the non-genuine nagging more prominent.

The full Harrison Group report can be obtained from Microsoft's site (download PDF).

This story, "Bad Things Happen to Unlicensed Windows Users" was originally published by Computerworld .