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Microsoft To Invest Heavily In China 112

abb_road writes "As part of Chinese President Hu Jintao's recent visit to Redmond, Microsoft is announcing plans to invest $900 million dollars directly in software and hardware companies in China. The announced goal of this investment is to reduce software piracy and establish Windows-dominance in the region; what's not clear is if they expect the reduction to come from local business pressure or more direct government intervention." From the article: "To now, Microsoft's investment efforts have made little headway in reducing piracy. The company should be booking about $1 billion on annual sales of some 20 million PCs in China, says Paul DeGroot, an analyst at consultancy Directions on Microsoft. Instead, sales there are about $100 million, he says."
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Microsoft To Invest Heavily In China

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  • by Anonymous Coward on Friday April 28, 2006 @09:51AM (#15220382)
    How do you say "Business Software Alliance" in Chinese? Will they get to use tanks?
  • Combat piracy?? (Score:3, Insightful)

    by gasmonso ( 929871 ) on Friday April 28, 2006 @09:53AM (#15220404) Homepage

    Seeing as how China is the piracy capital of the world. I doubt Microsoft can do little to stop it. Having been in China, I can say that the piracy market is impressive. Every market you go to you'll find dvds, software, and everything else on the cheap. I think the going rate for DVDs was about $1 and thats a fully labeled DVD with sleeve. Windows XP was going for a few more $. Good luck Bill, you're gonna need it!

    http://religiousfreaks.com/ [religiousfreaks.com]
    • Re:Combat piracy?? (Score:4, Insightful)

      by suv4x4 ( 956391 ) on Friday April 28, 2006 @10:05AM (#15220501)
      Seeing as how China is the piracy capital of the world. I doubt Microsoft can do little to stop it. Having been in China, I can say that the piracy market is impressive. Every market you go to you'll find dvds, software, and everything else on the cheap.

      Exactly the case here (Bulgaria) in 1998-2000, the piracy is ripe, and actually Microsoft is indirectly encouraging piracy (do you remember they didn't even require you to enter a serial in Windows 95?) in plenty of political and technological ways.

      Then, when the market is hopelessly stuck with Windows (and to a certain degree Office) they come and harvest the crops, by launching a massive anti-piracy scheme, checks in firms for genuine software and so on niceties.

      Microsoft was getting ready to go harvest in China for quite some time now, it was a known thing to come. The huge piracy in China is actually a blessing for Microsoft, and they have a well thought plan how to take advantage of it.

      As a matter of fact, if every human on the planet was so honest that he'd never pirate Windows, we'd be much less dependent on it in first place, and Microsoft wouldn't sell so much. That's obvious.
      • Re:Combat piracy?? (Score:3, Interesting)

        by misleb ( 129952 )
        On the other hand, China is unique because they are so huge. China has the power to collectively say "Screw you. We're making our own Windows-like OS." (or maybe they'll adopt linux). Microsoft could be in for a rude awakening.

        I see your point. I totally agree that, normally, piracy works in favor of Microsoft, but I think China may be an exception. It will be intersting to see what happens.

        -matthew
        • On the other hand, China is unique because they are so huge. China has the power to collectively say "Screw you. We're making our own Windows-like OS."

          The rest of the world is also not small but they can't collectively say anything. The fact that China is one country helps a little in the process. Now if the government of a big totalitarian country decides to get pissed about it, that's totally another question...

          Thing is I don't know of the Chinese government showing signs of wanting Windows out of their c
          • Thing is I don't know of the Chinese government showing signs of wanting Windows out of their country.

            They have, however, shown signs that they are interested in defining their own standards and remain as economically independent as possible. I doubt they're too keen on seeing billions of dollars a year go to Redmond, WA with no tangible product in return. Just phantom "licenses." I'd be interested in learning just how the Chinese people and the government feel about intellectual property. I get the impress
            • They have, however, shown signs that they are interested in defining their own standards and remain as economically independent as possible.

              A ridiculous amount of processors, monitors, laptops, computers, consoles, TV-s, DVD players, CD players and mp3 players that we buy in Australia/Europe/America are produced by Chinese factories (frequently under a western brand).

              If China cuts the rest of the world, and the rest of the world cuts China & starts producing their own electronics, China would have a hug
              • A ridiculous amount of processors, monitors, laptops, computers, consoles, TV-s, DVD players, CD players and mp3 players that we buy in Australia/Europe/America are produced by Chinese factories (frequently under a western brand).

                Right, they are exporting it, not importing. With all that manufacturing power, they could easily just start making slightly different and incompatable equipment for themselves.

                If China cuts the rest of the world, and the rest of the world cuts China & starts producing their ow
      • do you remember they didn't even require you to enter a serial in Windows 95?

        Yes, they did. My copy did, at least. Maybe you're thinking of Windows 3.1 :)
      • I seriously doubt that a for-profit business like Microsoft actively encourages the piracy of their products. There was never a replacement for Microsoft's OS products on the Intel platform until Linux matured just a few years ago. Before then, if the average person wanted to use a cheap Intel machine, then they had to use Microsoft's OS. (Some would argue that there's still no choice for the average user.) That is part of the reason why monopoly charges were brought against Microsoft in the first place
      • Lenova recently payed M$ about 1.2 billion US dollars, and counting in other smaller manufacturers, M$ may have collect as much as 2 billion US dollars in the last 4 months. Do you call this HARVEST after 10 years of "encouraging piracy". I think so. There was a famous rumor about piracy and M$ in China several years ago, when a journalist asked a top M$ executive about piracy, the rich guy said "as long as they are pirating our software, it doesn't matter".
        • Microsoft have to talk up the piracy angle, the alternative is "microsoft is reducing investment in US software development by $900 million dollars", it is pretty tricky trying to sell software to people your help to put out of work.

          Investing in software for sale with in china is pointless, the typical chinese consumer is payed so little they simply can not afford to buy the software or the new microsoft hardware that they will be producing.

          US windrones will simply have to adapt to the concept of migrat

    • Re:Combat piracy?? (Score:5, Interesting)

      by $RANDOMLUSER ( 804576 ) on Friday April 28, 2006 @10:05AM (#15220502)
      I think that when you compare incomes in terms of hours-worked per bags-of-groceries, that the $1 the average Chinese is paying, that it is equivalent to the $18 the average U.S. citizen is paying.

      I'm not saying that the piracy is OK, but that the amount paid isn't so cheap as it sounds to us.

      • That $1 is cheap to them when compared to the actual cost of the goods. Sure it's not as cheap to them as it is to us, but $1 for a DVD vs $15 is a big difference to them aswell.

        http://religiousfreaks.com/ [religiousfreaks.com]
        • According to the big mac index [economist.com], a 1$ DVD is ~1 chinese big mac. A 15$ DVD is at 4 US big macs. It is not a x15 ratio but still a good x4. A resonnable price for chinese market would then be 4$...
          • Err, no. The Big Mac index compares currencies. My question was "how many hours do you have to work (similar job) to get a Big Mac.
            • The big mac index was originally an humorous attempt at creating an index that would work like an international currencies. The main argument being that the price of the burger is constantly readjusted in order that people can buy it at a reasonnable price.

              I attempted at being moderated "funny" but if you think about it, it may be a better indicator than the number of hours worked. A chinese and an american may not value the same their hours of work or free time. But a burger is a burger (this quantity o
      • Yeah, but for $30 you can get a 5 star suit. For $4 you can have a steak and lobster dinner. For $80 take a private charter boat out for a tour.

        -Rick
    • That'll likely change when they get enough critial mass from being software and media consumers to producers and then have a financial interest in the development of it, then you want to enforce the law. As someone pointed out, the US was a big book pirating country in the 19th century, publishing Dicken's works withough paying etc, but authors like Mark Twain and others pressured congress to put the brakes on such things. That is, at the time, the US was to Britain like China is to the US today.

    • When you get paid 2,000 dollars a year, a 1 dollar DVD is about all you can afford.

      MS should go to hell for dealing with such a fascist POS nation. Google, don't think I don't feel the same way about you. We really need to start regulating the means by which multi-national corporations do business with fascist regimes. Their ability to pump money into the government gives Communism the life support that it died without in the USSR.
      • Funny, I thought you guys (USA people) were fond of free trade and capitalism.
      • We really need to start regulating the means by which multi-national corporations do business...

        Just another socialist. Socialists always hate how other socialists do things, then try to explain how socialism would work better if only it was this new set of socialists in charge.

        The problem being socialism itself. Coercion always causes problems which are used to call for more coercion, ad infinitum. The above is a perfect example. Objecting to a problem caused by government intervention, the socialists call
        • How is democratic control over corporations socialism?

          It's just not laissez-faire solve everything libertarianism.

          I don't like the government that much, but at least I have some measure of control over their asses. I'm certainly not going to give up all my rights to a swindler in a suit because I think the government is bloated.
          • How is democratic control over corporations socialism?

            Main Entry: socialism
            Pronunciation: 'sO-sh&-"li-z&m
            Function: noun
            1 : any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods

            Just because the politicians are elected doesn't make it any less "socialism". Either I retain the power to dispose of my property as I see fit, and face the consequences for my actions, or I
            • MS is doing business with the ultimate socialists right now, and then allowed to come back and pander to us as if somehow it's a good thing for China. Saying that I think corporations that do business with fascists shouldn't be able to conduct business in the US as well is far from socialism, it should be in the basic set of ground rules. Hell, look what we do with Cuba, but oh wait, they don't have massive cheap slave labor and manufacturing to offer.
              • "Hell, look what we do with Cuba, but oh wait, they don't have massive cheap slave labor and manufacturing to offer."

                Exactly. If abusive big business had a desire to do their abusive big business in Cuba, they would twiddle their sock-puppets in Washington and the blockade against Cuba would be dropped in a week.

                The abusive Big Media would figure out how to spin it as a humanitarian effort for the poor Cubans.

                The fact is that China is rebuilding their infrastructure, after 60 years of demolishing it themsel
            • Re:Combat piracy?? (Score:1, Informative)

              by Anonymous Coward
              The Ludwig Von Mises institute, and aything else like it, are loony bins. their mission? To "undermine statism in all its forms." Great! No army! No civil protection! No state run colleges! No public roads or education! Sounds feasible (see Somalia).

              Worse, the institute takes a "critical view of most US government activities, foreign and domestic, throughout American history" -- including, but not limited to, WWII, Abe Lincoln, child labor laws, the women's vote, and the Civil Rights movement.

              The Southern P
              • Anyone who believes what the SPLC has written has failed to examine the site themselves.

                It's easy to repeat what others tell you. Looking for yourself is dangerous, you might inadvertently learn something.
  • Linux "salesmen" (Score:3, Insightful)

    by EraserMouseMan ( 847479 ) on Friday April 28, 2006 @09:54AM (#15220412)
    Linux needs more than activists to spread. It needs a sales force of sorts to make deals with developing nations and businesses. Linux needs business people pushing the solutions and making deals to get the product into mainstream usage.
  • What? (Score:3, Informative)

    by Whiney Mac Fanboy ( 963289 ) * <whineymacfanboy@gmail.com> on Friday April 28, 2006 @09:55AM (#15220415) Homepage Journal
    what's not clear is if they expect the reduction to come from local business pressure or more direct government intervention.

    Of course its going to be "more direct government intervention" - does the submitter think local businesses are going to pressure someone so they can pay a tax to a large foreign corporation?

  • Not sure what the law is like in China, but it would reek of antitrust violations and corruption if a foreign company teamed up with George W. Bush to announce huge cash influxes combined with an articulated goal of "establishing dominance" in that country.

    The article says "[t]he aim is to reduce piracy rates and establish Windows as the dominant operating system in the region," but its unclear whether that's the author editorializing or an goal that Microsoft has publicly and openly articulated.

    If China do
    • You must realise that the Chinese are hard-core capitalists (impressive ones at that). The government wants to make the most money, so when Bill says that he will give $900million in investment then they are very happy, the competition couldn't afford to do that (and they might not want to play ball politically anyway). Besides, if there was competion then it would probably push the price of the stuff down, which neither MS (for the direct money) or the Govt. (for the tax) wants.
    • Where do you think the money for our national debt comes from? China has over $260bil in US Treasury bonds. Japan has even more. And a LOT of this deficite spending activity has been on Bush's plate. When Clinton left office the debt was $5.6tril, and grew $20bil hist last year (compared to $400bil his first year). Right now the debt is estimated at $8.3tril. Almost 3 trillion dollars spent in 5 years... crazy.

      -Rick
  • Microsoft tried to block Kai-Fu Lee, an executive in its Chinese operations, from joining competitor Google (GOOG) last year. During court proceedings, Lee said Microsoft botched efforts in China by failing to make friends with the Chinese government early on. The software company may be making up for lost time. Some analysts say Microsoft could finally see returns in the next two years.

    And so now China is up for grabs. Who will win: "The Evil Empire" or "The Do No Evil Empire?" I wonder if the Chinese go

    • from the meeting

      Ballmer: "Mongolia, yeah, you... sign up to our way of doing things or I'll FUCKING KILL YOU, I've done it to countries before and I'll do it again...." *throws chair*
    • If Microsoft presses hard to eliminate software piracy in China, they will end up out of the race. Their products are already looked at with a jaundiced eye in government circles. Meanwhile, Chinese private businesses are very price conscious. Linux is slowly making headway, and could experience an explosion of use. The question is: will the companies offering server based applications be able to overcome the privacy concerns? If so, the economies of such solutions are likely to be irresistible and Goo
    • Listen, I don't mean to be hypercritical, but really: for every $1 billion spent, M$ is getting an ROI of $100 million!!!!!!

      Now, this is an improvement , given their previous ROI which was probably about $100 million returned for every $10 billion to $30 billion spent.

      As far as China being up for grabs, come on, hasn't anyone been reading The Economist during the last several years - China is taking everyone for their money and for a one-way ride.

      Steve Jobs' dream - WITHOUT - Steve Jobs' brain......

  • As I have said before, I have seen plenty of street vendors in my area give up selling pirated Windows in favor of Linux. This generally means that uptake of Windows is low (if even $.50 is too much to pay for a copy, then how are you going to get Windows dominance in the market?)and people are getting into Linux. Again, I cannot represent all of China (or heck, even all of Shanghai) but at least a small part of China is starting to see the light of open-source (or turning away for the darkness that is Wind
    • China is maturing. China joined the WTO in 2001 which required adoption of TRIPS' minimum standards of intellectual property protections. At the end of January 2006, the IP legal news sources carried two stories where the Chinese courts enforced a foreign trademark (Starbucks) and foreign copyrights (Chanel and others). The news wasn't the dollar awards but the injunction which is much more useful. Yes the pace is very slow, the judicial culture really didn't realize it had the independence to enforce the n
  • "It looks like you're selling out your last few moral principles, in order to make a shitload of money from an oppressive totalitarian regime.
      Would you like some assistance?"
  • "Three hours after Microsoft invests $900 million in China, approximately $900 million in pirated goods appears on the streets of China." Haven't they figured out how things work over there? No one cares. Stopping piracy in China is holding back the ocean with a broom.
  • Money talks (Score:3, Interesting)

    by RingDev ( 879105 ) on Friday April 28, 2006 @10:00AM (#15220467) Homepage Journal
    From the article on NEC being pirated: http://www.iht.com/articles/2006/04/27/business/ne c.php [iht.com]

    "After a visit to the Microsoft headquarters in Seattle on April 18, Hu said the protection of intellectual property was crucial for China's future."

    A quick visit to old Billy-boy, a squak about IP protection, and a $900m deal? Interesting.

    -Rick
  • After getting back into CNC Generals, and reading this post and the $150 laptop computer post it all comes together when you realise that it only costs $600 to hire an asian man with a laptop to 'hack the internet' for $5 a second...
  • Well... (Score:1, Funny)

    by Anonymous Coward
    M$ has to replace many broken chairs, and since China is one of the largest producers of furniture....
  • Microsoft's share price was down 10% in after hours trading last night.

    What's up with that?
    • They announced earnings for the quarter and missed expectations.
    • Microsoft's share price was down 10% in after hours trading last night.

      What's up with that?

      Their earnings are below street estimates. Market saturation and competators are begining to take hold. And China, I really doubt they would ever consider paying what we pay for M$ software.

      And there is the NSKey thing, and with CA certs inside MS could SSL in the middle to get "secrets" and this is why the Chinese government should have some big concerns. I hope people are not naive enough to think the NSA all

  • Just like the Europeans who squawked about the thieving Americans in the 1800s - so to do the American squawk about the Chinese. The Chinese will not come around until they actually have something worth protecting.

    It is amazing that when you have your own oar in the water how quickly you become a player.

    Personally I think that we are still 2-3 generations away from China being viewed as an adult at the big table. However, barring any really radical changes it is coming.
    • by mrchaotica ( 681592 ) * on Friday April 28, 2006 @10:38AM (#15220728)
      I disagree. America took several generations to become prominent because of the slower pace of the 19th Century (due to the lack of communications and transportation technology). With the tech we have now, China can progress much faster.

      For example, take the auto industry: the Japanese became big players in the US auto market about 20 years after entering it. The Koreans came a little later and did it in 10. There's speculation that, once the Chinese start selling cars here in the next year or so, that they'll be able to become as big as Toyota or Hyundai in only 5.
  • by peter303 ( 12292 ) on Friday April 28, 2006 @10:14AM (#15220566)
    In China, businesses that try to make money off of closed software with fail due to rampant piracy. Since Linux is free anyways, services based on Linux is a better model.
  • by pubjames ( 468013 ) on Friday April 28, 2006 @10:19AM (#15220608)

    Of course the Chinese are going to welcome foreign investment. But they are not naive - they will welcome Microsoft's cash and make all the right noises, and at the same time they will make sure that we carry on buying more and more of their stuff, whilst they buy fairly little of ours. This rush for western companies to establish in China has been going on for many years now, but few have achieved it. I think perhaps we are the ones being naive...
  • How can Microsoft invest heavily in china when everyone knows they are better at making windows?

    I'm so upset I could smash something!
  • Microchina? (Score:2, Interesting)

    by Khammurabi ( 962376 )

    As part of Chinese President Hu Jintao's recent visit to Redmond, Microsoft is announcing plans to invest $900 million dollars directly in software and hardware companies in China.

    Did anyone else read this and think to themselves, "$900 million is just about what it would take to move Redmond to redland?"

    1. Hire Chinese developers, check.
    2. Fire American developers, check.
    3. Save massively on overhead, check.
    4. Profit!

    The whole "China will now start to crack down on Chinese piracy" thing seems kind of a gi

  • more than piracy (Score:2, Insightful)

    Microsoft's investment in China and courting of the Chinese president is about more than opening up a new market or trying to stop piracy.

    I believe the real issue for Microsoft is risk management. The Chinese have a huge consumer market that is just starting to transition into computers (in some areas). If these people cut their teeth on MS products like Windows, Microsoft has a better chance of retaining their place in the market.

    I'm sure that Microsoft knows from several years of making inferior produ
  • I believe with the current laws in China, you have to sell your business to the "People" before you can sell your products.

    I wonder how that will work for them?
  • I like how, after reporting only making $100mil where they should be making $1bil, they announce they will invest $900mil to try and fix it.
  • Lets see eat or comply with Microsoft's EULA... decisions, decisions...
  • by Peter Trepan ( 572016 ) on Friday April 28, 2006 @11:11AM (#15221055)
    Salesman: Vista is much more advanced than Windows XP. It interfaces with hardware right on the motherboard that keeps you from copying things you're not supposed to copy, and...

    Chinese Businessman: What the price?

    Salesman: We're pricing it aggressively, with the bare bones version just under one hundred U.S. dollars.

    Chinese Businessman: One hundred dollars! What else it do?

    Salesman: It's like Windows XP, but it has Digital Rights Management, and look - the windows can be transparent.

    Chinese Businessman: Give me a brochure that say exactly what it do, and I think about it.

    Salesman: Okay, great! Here are the technical specs, and here's a pamphlet that shows you why you need the new Windows Vista.

    Chinese Businessman: Okay, goodbye!

    ******* One Month Later *******

    Chinese Businessman: Happy Panda Software is pleased to announce that "Mindows Fiesta" is now available. Home version only seventy-five cents!
  • Seriously? This article has been tagged "Evil"?

    OK, is it because it's Microsoft? I have a deep loathing of all things MS just like any other self respecting slashdotter, but evil is a bit strong.

    Or is it becuase of the mention of China? If so, then that's a bit hypocritical. Should I start talking about all the messed up stuff our own government has done [digitalelite.com]? China may be worse---I'm not denying that---but to call them evil and completely ignore all we've done over here that is nearly as bad is either seri
    • 1/2 evil + 1/2 evil = 1 evil

      All in all, I'd say that Microsoft is a lesser evil then the Current
      Chinese government (after all Microsoft is not committing genocide in
      Tibet, although it does not like competition like the Chinese Communist
      party does not like competition) but perhaps adding them together yields
      on full evil.
  • Considering that China likes to control things (like access to the www), maybe Hu was more interested in exploring the uses of DRM to keep tabs on all those millions of Chinese people getting new computers over the next decade. Vista could fit the bill (so to speak). Plus, if China's government becomes an official member of the BSA ( tho they might insist on calling it the PRoCBSA in China), they'd would be happy to receive their share of the profits from taking businesses to task after doing an "audit" t
  • MSFT has alienated as many customers on this side of the pond as they can, now they have to move into emerging markets to find customers who don't already hate them.
  • To reduce software piracy and establish Windows-dominance...Unless they sell it for a dollar or less, they won't get both. Either there will be "piracy" or there will be Linux.

    "...either his brains, or his signature, would be on the contract."
  • Take news of big 'investments' by companies like IBM, Microsoft etc with a grain of salt. They use funny money accounting to come up with these numbers. Lets say for example a $100,000 'investment' from a company like IBM. What might this mean in real terms? A $89,000 list price per CPU license for the rights to use their Domino server software and $10,000 / $250/hr staff time = 40 hours of staff time to set it up and do some minimal programming.

    What would the same 'investment' mean on the street and nearly
  • Because this "investment" by Microsoft is nothing more than a way for them to get the Chinese people hooked on Microsofts software. And the detoxification process HURTS more, the longer you stay 'hooked'.

    You've been warned.

    IIRC, the addiction reference - MSFT is one of many great McNealy-ism's.

    LoB
  • >> ...The company should be booking about $1 billion on annual sales of some 20 million PCs in China

    Why? Perhaps they all heard about Linux.
  • "Capitalist sells rope with which to hang him. Pleased at price received.

    'It's a seller's market right now. We'd be fools not to join in' the capitalist was quoted as saying."

Computers are not intelligent. They only think they are.

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