Slashdot Mirror
Does Microsoft Need China?
angkor writes "Does Microsoft Need China? Interesting article from CFO.com's perspective on MS pricing strategies in the developing world: 'Put another way, Microsoft is relying on current pricing and a goodly portion of the world's tech growth to sustain its 31 percent net profit margins. But an increasing portion of global tech growth will come from Asia's burgeoning economies. And it's precisely in Asia--with China in the lead--that pressure to alter the uniform pricing structure for its software is the strongest in the world...'"
I think Microsoft has some of the right ideas, trying to develop an infrastructure which has a need for their products, but they'll need businesses to buy into it more than government.
And at that point the conference center's FUD alarm went off and people fled into the streets.A feeling of having made the same mistake before: Deja Foobar
A better question would be: "Does China need Microsoft?" No, I dont think so.
with the government pushing for Linux, how much impact will Microsoft really have on the Chinese market? That's a more relevant question.
Many of todays manufacturing jobs are moving to China. Labor is cheaper and many of the raw materials are from China in the first place, so it only makes sense (at least from a financial point of view) to move some of the manufacturing over to China.
I used to work in the conveyor belting business and every belting company in town wanted to get into china to cut costs.
If China becomes a huge source for outsourcing manufacturing then of course the question is who will supply the technology to do it?
On the other hand, if Linux is allowed to compete in a free market both here and in China, Microsoft will need to find a new strateghy anyway.
Perhaps they'll have to start innovating instead of charging large amounts for commodity components like filesystems and operating systems.
I think MicroSoft's efforts at a tiered pricing scheme are doomed. The "Broken-Windows" effort (only 3 apps can run at a time, only low resolutions, etc.) will do little to nothing to curb piracy, no matter how cheaply it is available. On the other hand, if the full version is released at a greatly reduced price, then why would anyone pay the the higher one? It's only a matter of time before people realize that spending $400 for their OS is a ripoff, and M$ is forced to lower prices in China, the U.S., and everywhere else to maintain its market share.
My guess is that they'll try to capitalize (heh) on it.
No one talks about "a chinese zipper dominating marketshare" (where today, I think japanese zippers dominate).
No one talks about "a chinese paperclip dominating marketshare".
Microsoft, China, and everyone else, wake up! The 1960's technology of scheduling tasks is not something that exciting anymore -- with the advent of BSD and Linux it became the same kind of commodity as a Phillips head screw. Sure, a Torx screwdriver has it's cute IP story, but noone thinks they can charge hundreds of dollars for one.
of Microsoft's products in China and other Asian countries is well above the rest of the world. This isn't totally bad for Microsoft however. If people, as they have in the US, become reliant on Windows/Office, the future can only be good for Microsoft. Better copy protection, registration, web applications, etc. could force users to purchase upgrades. If I were Microsoft I would be giving my product away to these industrial developing nations.
Of course they need China. Remember that Windows is about perpetuating marketshare. Without marketshare (and narrowminded IT people), Windows can't compete well. China has a huge market potential. Suppose they standardize on linux, then every company wishing to deal with the government must support linux too. At some point, economic decision such as it's cheaper to support only linux (exactly the same argument companies use to rid of Macs) will be easier to make. And this time, the TCO study actually support the argument, unlike Windows vs Mac TCO argument.
From then on, companies will see and have to open their mind that companies can survive without Microsoft (or as least as possible). It's something that scares Redmond.
The only way that Microsoft can successfully market their Windows OS in China is to stop piracy first. The only way to stop piracy is to strategically align themselves with the government of China.
Microsoft can't defeat the 90% piracy by themselves, that's insane. They have to encourage (or entice) government enforcement if they want to successful transform a nation that only knows theft into a nation that is a legal consumer.
A restrictive operating system is a pitiful attempt at making in-roads into China. Microsoft's approach is completely misguided.
China is too large a market to leave to 'alternative' operating systems.
1) Most other multi-national corporations need the emerging market of China in order to keep their growing revenue.
2) Microsoft needs the business of those multi-mational corporations in order to keep their marketshare and revenue.
3) Those multi-national corporations are opening offices and hiring employees in China.
If Microsoft doesn't have China as a market, then these new offices and new employees will be able to introduce 'alternative' operating systems within the corporate infrastructure.
This will probably be happening anyway - but Microsoft can't afford to let it happen without a fight. In fact, it is arguable that piracy in China is actually in Microsoft's best interest at this point.
Thinking of M$ as "an admired giant seeking to find a footing in the developing world" is specious.
M$ is reviled here, that's for shure. And its insistence on adherence on illegal marketing practices, and f*ck the anti-trust, is the main cause, followed closely by its buggy, security flawed software is the reasin why.
Furthermore the thought that the computing market is anywhere near a "mature market" is just plain wrong.
We haven't begun to see the innovations in UI and processing capacity that will suggest themselves when our machines are no longer deaf, dumb and blind.
This was a "rah-rah" article, but it was very short sighted.
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
The big issue is that this isn't a Microsoft ve Linux-centric discussion. No western migh-value-add company makes money selling in China. Not auto makers, not watch makers, not anyone. There are factories in China right now cranking out counterfeit Mercedes Benzes. Not very good ones, but on a Saturday night in front of the Karoake club, they are fairly impressive. When I lived there, I saw Shanghai Knights playing on monitors set up in the food court of a cinderblick shopping mall before it hit the theaters. Asian cultures are quite happy to fail to see the value in a trademark or a design or other intellectual property, especially when it comes from round eyes. Not saying they're unusually bad, but they're human, and any talk about "self-reliance" is just a fig leaf to cover their piracies. Since you can't steal Linux, it will get a lot of play there but, come on: you can buy Windows XP on a DVD install disk (with genuine fake crappy hologram labels!) for less than 6 dollars in any sidewalk bazaar there. These aren't things I heard or saw on TV; these are things I experienced first hand.
"Wow. Now THAT'S a lot of angry Indians." - Lt. Col. George Armstrong Custer
Microsoft has plenty of money, it's not going to run out any time soon.
The real issue is what China will do instead of using Microsoft software. They have to use something. That's an incredible amount of resources the Chinese government and businesses have that will go to Microsoft's competitors.
When the German government decided to shift its employees to Linux, they provided resources that greatly improved the KDE groupware infrastructure. Imagine what the whole of China could give us. Now see why it's important for Microsoft to dominate the Chinese market?
I love watching the Microsoft vs Linux battle in China unfold. The PRC government is the heavily centralized power in China. It is totalitarian and oppressive even though it doles out autonomy on a limited basis.
It is ironic that China is turning to Linux as an alternative to MS. Linux's genesis is based on a very decentralized western style meritocracy. Only the freedoms of liberal democracies could produce something like Linux.
If an alternative OS takes root in Asia, it could very easily become the defacto standard for business and commerce. This would hurt the US economy even more.
Because we're going to be sitting around pointing fingers at each other, bitchin' about IP's,while people in Asia are just using there frickin computers to get shit done.
Hey, whatever we can do to keep the lawyers off unemployment.
I'm glad I had poor schooling, if I had a proper education, this would drive me insane.
Microsoft's fundamental power comes from monopoly influence. One of the basic things that monopolies _have_ to do to maximize revenue is to differentiate pricing for various market niches-that is simply Econ 101.
Does Microsoft need China? Not in the short term. Can Microsoft retain its present position if China goes the Open Source route? I doubt very much it can--once the Chinese and the Open Source community are attack Microsoft from different directions, Microsoft will be toast.
MS needs to get their product integrated into China's schools. It's like heroin or McDonald's. If you get them early enough, they're hooked, and they'll never learn anything else. They'll struggle with viruses, backdoor trojans, and everything else, just like the rest of us.
Oh yeah, once they're hooked... and completely under MS's will, start jacking the price around... every year, change the licensing scheme to get every last yen? What's the currency in China? Certainly not the dollar or the euro. Silk?? Whatever it is... MS will do their best to eek out every last shilling from the Chinese.
-- No sig for you!
The people of Hong Kong seem to feel that the Chinese government lied to them about autonomy (e.g. here, here, here, here) as the following quote (from 2003) indicates:
"The present governing crisis in the Hong Kong "Special Administrative Region" (SAR) of China came to a head on July 1 when over a half-million of the SAR's 6 million citizens marched in protest against strict new anti-sedition laws, the "Article 23" legislation. The magnitude of the public outcry was a shock to Beijing, which has not experienced such a grassroots rebellion since China's budding democracy movement was brutally suppressed in Tiananmen Square in June 1989 by Chinese People's Liberation Army."
Why should the people of Taiwan trust any promise of the Beijing government? Considering the large amount of money being invested in the mainland by Taiwan, one should assume that the Chinese on Taiwan would welcome joining the mainlane once a reformed and freely elected government is in place in Beijing; however the native people of Taiwan who are not of Chinese heritage may never welcome a union of Taiwan with China.