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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 predict that in 20 years, a Chinese OS is dominating market share in eastern countries. There's no way that a workforce of that size, with increasing technological skill, won't be able to compete with a floundering US economy. China is not about to bind itself to a major western corporation, at least not in a way that involves shipping product IN to the country, rather than the traditional OUT.
But I'm only a history major...
I think the answer to that question is an undisputed "no", and that's why the reversed was asked.
As you stated, China doesn't need Microsoft, as they have shown again and again that they are able to produce/reverse engineer (depending on your point of view) something a comparable or better (as in more suited to their needs) product than the west.
Thus the original question, "Does Microsoft Need China?" is the true discussion point. IE: Asking the reverse: "Can Microsoft continue to grow the marketshare at the rate expected by its executives and investors if it loses the billion and a half potential consumers found in China". I think the answer is probably "Yes, they can, but not under their current business model", so the longer answer to the original question is:
"No, Microsoft doesn't need China, but they need to come up with a refreshed business model that reflects this".
All business models have cycles, and Microsoft's has lasted a lot longer that it should have.
Norman Cook's Ode to Sl
The question is not if MS *needs* PRC, but how does it get the maximum amount of money of it.
Because of the piracy and other situation, the optimum pricing strategy in China might well be different from of other countries.
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Microsoft knows that the market in the developing countries in Asia is not in the home segment but in the corporate and government segment.
The home segment will continue to pirate software as there is little enforcement of law, if they exist, and primarily because it is so much cheaper to buy pirated copies.
For example here in India the cost of a pirated copy of windows is 1/10th of the cost of a legit copy. Nobody cares about support anyways.
The government offices are the next target. In Asia and specially in countries like communist China the biggest employer is the government. So you can easily guess that more people=more desktops=more sales. But Microsoft is frustrated that it cannot use it's traditional tactics of getting people to resist change by not switching from windows as in most cases people are starting out from scratch and if they latch on to Linux as a desktop OS they will resist changing from that as that is what they have been used to. An example is how the Chinese goverment is developing it's own version of Linux to counter dependence on Microsoft.
It will turn out to be an interesting fight.
Does China need Microsoft?
Assume for a moment that China *doesn't* need Microsoft, and that Red Flag Linux takes off.
Will China respect the GPL?
The living have better things to do than to continue hating the dead.
Hmm...Here's an interesting (maybe) thought. If China begins to use Linux as an alternative to windows, will they contribute their changes back to the community? China has no real incentives for doing so other than to keep on a standard. Other arguments suggest that China does not want to be dependant on a US corporation, so I can imagine a "Western" standard is no better. If China does not contribute back its changes is there any way to enforce the GPL? Somehow I don't think the WTO will be interested in defending the GPL. My guess is that the WTO is not a big fan of the GPL as it threatens IP and profitability of software trade.
I tried for 5 years to come up with a clever sig...only to realize that I am not clever.
Why would China need Microsoft in the first place?
Microsoft produces nothing that has any advantage outside the typical American top-heavy company that is full of office drones and PHBs, and has all actual work being done somewhere else (say, in China). Lack of this kind of organization is one of the reasons why China's economy can sustain its growth.
Piracy provides enough Microsoft products in China for home users and companies where they are not important for the job being done (therefore those users aren't going to buy them at full price anyway), and the economy as a whole would be better off with Microsoft not playing any active role in it, so why bother?
Contrary to the popular belief, there indeed is no God.
M$ knows that outsourcing of IT projects will not go away. As such, getting into china ahead of Open-Source offerings will help to strengthen their hold in the higher level IT market.
This strategy has worked with India as they pump out so much M$ crap that it scares me.
For Microsoft in China. It's in China (I'm talking about 1.2 billion people here) best interest to string Microsoft along, for as long as possible. Give them just enough hope to keep coming to the negotiating table.
Kind of the same way North Korea and Iran does, but this one uses operating systems instead of nukes.
They have the biggest market by far; and going on the tenets of Capitalism, as espoused by George Bush AND John Kerry, means that WE will have to adapt to THEM, not the other way around.
Unfortunately M$ has already screwed itself into increasing marginalization by its rapacious business practices. They are f*cked.
There's no way that China's business and end-user communities are going to shell out the kinds of money for Windows when Linux is free and government supported.
In the end, Linux will be damn near free and multi-lingual, and Chinese will be a major deal, or it too will go the way of CPM.
I've always considered M$ to be an abberration. As we expand globally, despite the pains it is causing us, here at the top, M$ will dissapear because the rest of the world CAN'T AFFORD IT.
M$ rode in on "Nobody ever got fired for buying IBM", back when IBM was selling to the extremely wealthy, and grew to their present status, legally and otherwise, when that changed to "Nobody ever got fired for saving the company's paper budget." (PCs were originally bought from companies' paper budgets!)
Mow they have to face the fact that they are victims of the very technological changes they wrought.
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
sound reasonable to me. taiwan has far more legitimacy than PRC, no matter what the relative populations are.
pr0n - keeping monitor glass spotless since 1981.
It depends on who is going to develop Linux in China (or other developing countries). If the govt officially hire some programmer to do that with the entire country using the same binary, then the contribution may not release back to the community and thus a violation of GPL and blahblah...
On the other hand, if the development process is done by academics, hackers, multiple number of companies, they will have to share the new development with their fellow programmers.
One of the main concern in terms of FOSS development is how to merge these contribs back to the main tree. Language/culture factors make them (to a certain extend, Japanese as well) shy/relunctant to participate in the main site dominated by English speaking people.
Even at this moment, my observation is the Chinese hackers are fairly active in the embedded development front (ARM on new chips, ucLinux etc). It is not that surprising considering electronics device is a rapid growing industry over there (c.f. India is more on the entreprise software side)...
I was working on some embedded project recently. The only working toolset is available from China (jtag/uclinux toolchain for a not very mainstream Samsung ARM chip). They do share code in forum, but, not in a conveinent way. Usually, some "big shrimp" (elite hacker) will release something that have worked on when replying one of the dicussion thread. It makes life hell searching for the useful info.
Remember that China is not signatory to the international copyright agreements. There is absolutely nothing compelling them to play nice in this regard, or any other.
They may *choose* to do so because it behooves them, but they simply cannot be bullied.
China has historically referred to itself as 'The Middle Kingdom', implying that they're at the centre of the earth. For any other nation, this might be seen as hubris. For China, it's axiomatic.
Crumb's Corollary: Never bring a knife to a bun fight.