The Change Mariner

Microsoft's Cultural Revolution

Newsweek:

But there are signs of change: from cars to couture, more Western companies are starting to crack the Chinese code. The outlook is improving for Microsoft as well, owing in part to a 180-degree shift in strategy. On several recent occasions, Ballmer has conceded that China is perhaps the one nation "absolutely big enough" to seriously challenge global computer standards like Windows. Between the lines, it's now clear that Microsoft is no longer trying to change China; China is changing Microsoft.

For the software giant, the problem with doing business in China comes down mainly to one thing: piracy. Touts line the street outside a new $80 million Microsoft research center in Beijing, steering customers through alleys to run-down apartments where bootleg Microsoft Office and Word are peddled for about $1, at least $199 less than the global retail price. Ninety percent of Microsoft products used in China are pirated, and for years the company battled back with its signature mix of bullying and intimidation. But in China, the government has been sympathetic to the pirates and openly hostile to the Microsoft monopoly, and has officially embraced Linux, the free rival to Windows. Cheap software has been critical to China's economic boom, and Beijing saw no upside to forcing citizens with an average annual income of $1,000 to spend much of it on Windows.

Microsoft's new China strategy attempts to create a constituency for full-price software, starting with the political and business elite. This means improving customer support for big Chinese companies, helping Beijing develop a domestic software industry trained on and tied to Microsoft products, sharing more technology than it normally would and easing up on buyers of pirated software (but not on pirates).

Posted by Timothy Fredel at June 13, 2004 12:16 AM | TrackBack
Related Categories: Country - China | Industry - Software | Quadrant - Economic | Theme - 'Open Source Everywhere'

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