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...'"

Comments

It's Not Just The Price

[ackthpt]

One of the most compelling reasons Microsoft has difficulty making inroads with the PRC goverment is because he central plan is not the have China beholden to foreign interests. The central government has invested strongly in developing a native CPU and education in computer sciences. Why make something for the rest of the world work for China, when they could develop something that works for China and not care what the rest of the world does?

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.

Connors responded that the total cost of ownership of Microsoft Windows and Office products which account for 80 percent of its revenue is in fact less than that of cheaper, open-source software, because Microsoft can offer the entire weight of the 'eco-system' that supports its products. This eco-system can be described as the support, customization, integration services, and software that evolve around the Windows product. Connors cited studies that have endorsed this view from Forrester Research and Merrill Lynch

And at that point the conference center's FUD alarm went off and people fled into the streets.

"Does Microsoft Need China?"

[JeanBaptiste]

A better question would be: "Does China need Microsoft?" No, I dont think so.

Doomed!

[BalorTFL]

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.

Wrong Approach

[d2_m_viant]

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.

Yes, they need China

[bokmann]

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.

It's not about the revenue

[JimDabell]

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?