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Microsoft mulls cheaper OS version in China
By Zhu Boru (China Business Weekly)
Updated: 2004-07-08 14:45 Microsoft, the global
software giant, is likely to consider providing cheaper versions of its Windows
operating system (OS) software in China following similar moves in Thailand and
Malaysia.
During his two-day visit to China last week, Bill Gates, chairman and chief
software architect of Microsoft, said: "The prices are...somewhat based on the
market conditions and changes of currencies."
Microsoft has already offered Windows Starter, a version specially designed
for beginner computer users, "in a couple of government, low-cost, first time
user PC (personal computer) programmes" said Gates, referring to Thailand and
Malaysia.
"We have that technology. I don't know...how many first time users of PC
programmes in China will be appropriate...or any proposal like that," he said.
Windows Starter is positioned between Windows CE, the lowest-end version, and
the higher-end Windows Home, designed for home users and is very cheap, said
Gates.
The product is believed to be able to help Microsoft to curb the spread of
Linux, a free open-source OS software that is becoming increasingly popular in
Asia.
The shipments of PC Linux in Asia reached 448,124 copies in 2003, compared
with 142,131 copies in the United States, according to research firm Gartner
Inc.
Microsoft is flexible in modifying the various versions of Windows to satisfy
the needs of different governments, Gates said earlier during his visit to
Malaysia. He was commenting on whether Microsoft would promote the simplified,
cheaper version of Windows XP in India and China.
At a Linux summit held one day before Gates' visit, the Ministry of
Information Industry (MII) vowed to further promote the unified Linux
development platform, launched in May, for better co-ordination among Linux
developers.
International IT giants including IBM, Oracle, Dell and Hewlett-Packward have
joined the alliance to promote Linux.
Changes for China
China might be the only country that is able to challenge standards such as
Windows OS, Steve Ballmer, Microsoft's chief executive officer, has remarked on
several occasions.
"Microsoft finds that it has to integrate its business into the China market,
and some adaptations are necessary," said Jiang Qiping, general-secretary of the
Information Research Centre at the Chinese Academy of Social Sciences.
And Linux is not the only trouble that Microsoft is facing.
With China expected to roll out its anti-monopoly laws soon, there is high
speculation Microsoft will be sued for its Windows monopoly, according to
industry sources.
Windows commands 95 per cent of China's computer desktop OS market, a report
presented to the General Administration of Industry and Commerce indicates.
But despite the absolutely dominant share, Microsoft's estimated annual sales
revenue was 1.633 billion yuan (US$196.74 million) in China last year, the
world's second largest PC market, according to statistics released by the China
Software Industry Association.
Microsoft, the world's largest software maker, is ranked only No 12 in China
in terms of software revenues in the country, according to the MII.
Whereas, its annual global revenues stand at US$35 billion at present. "The
disproportionate revenue is closely related to the nation's prevailing software
piracy," said Jiang.
Industry sources estimate Microsoft China suffers losses of between US$200
million to US$300 million each year from pirated software products, which are
typically sold at US$1 each. The authentic Windows XP Professional sells at
about US$300.
"Microsoft is aware that it will lose more business opportunities if it only
minds its own business regardless of the local needs,"Jiang noted.
Like many countries, China wants to foster its own software industry. For
Microsoft, efforts to help Chinese software vendors grow will bring more
government support in attacking software piracy, he said.
Gates said that "by providing Windows tools, training and curriculum, we make
sure that China is not only going in a direction" that helps China's software
industry grow using Windows, but also becomes a base of software exports to the
world.
Microsoft has already invested more than 5 billion yuan (US$602 million) of a
total 6.2 billion yuan (US$746 million) promised in China's IT education and
training, hardware production lines and software outsourcing.
According to Gates, Microsoft has doubled its spending on research and
development (R&D) in the past four years to US$6.8 billion,a majority of
which goes to China.
The software giant has three R&D institutions in China, including
Microsoft Research Asia, the Advanced Technology Centre for Asia and Microsoft
Technical Engineering Centre. Microsoft Research Asia is the second-largest of
the three.
"I have a very ambitious goal...that every Chinese student will have a Tablet
computer with broadband and automatic speech recognition...10 years later," said
Gates.
The Tablet PC has a touch-sensitive flat screen on which characters can be
written with a special pen interface, eliminating the need for a keyboard.
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