Here's my take on the effect of piracy. The more free stuff that are available to people the more attractive it looks from the outside. Hence it have more early adopters. These early adopters will talk about the system to their friends and spark further chain reactions. Now not all of those people who will buy the system will pirate the software. What you have to see is that while piracy itself hurts the market, it also serves as marketing for the best features of your product. And software being soft, the manufacturers don't really lose money when they are "stolen." There are lots of examples of popular successful platforms that may have been helped by piracy Windows, PS1, PS2, Wii, DS. Piracy increases the popularity of systems, if the system is good (or in the case of windows does what the users needs it to) it will reach more people and eventually branch out to the non-pirates and everybody will be happy. It's a double edged sword, it helps and hurts.
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