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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 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
The low price growth in China is finally starting to slow, but profit margins are continuing to rise. Companies like SINA Corp have profit increases of nearly 350% for this year alone. China is an inevitable sector of growth in the world economy, which may change a lot of global commerce in the coming years. However, those who have got in early have benefitted greatly. Recent stock analysis on companies like SINA are still looking to much brighter futures, which can only increase profit for Microsoft.
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artlu.net
In Communist China, Microsoft needs YOU.
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...
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.
In a word: no.
What they need is to rethink their current strategy and figure out how to make it more efficient in their current market.
If they rely on a new populous for their future plans...well, I hate to be the bringer of bad news, but eventually they're going to run out of new blood...unless ET visits us, but, I doubt a lifeform capable of extra-solar travel is going to be interested in licesensing MS software.
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.
What would M$ do without China to produce all of the CDs on which windows is distributed.
Because like everyone knows, Open Source = Communism :-)
I hear there's rumors on the Slashdots
I would avoid China, and instead give Microsoft paper plates and a sippy cup.
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.
Probably not the first question I'd ask, probably more like, what the hell am I going to buy today?
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.
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.
Comment removed based on user account deletion
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.
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.
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.
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.
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?
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.
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.
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.
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!
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.
Microsoft definitely needs china. In fact it should include some in every Windows package so you have something to drink your tea from while you are waiting for the bloody thing to install!
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.