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Microsoft The Almighty Buck Businesses IT

Does Microsoft Need China? 226

Posted by michael from the great-wall dept.
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...'"
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Does Microsoft Need China? More

Does Microsoft Need China?

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  • It's Not Just The Price (Score:5, Insightful)

    by ackthpt ( 218170 ) * on Tuesday September 07, 2004 @02:56PM (#10180216) Homepage Journal
    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.

    • Re:It's Not Just The Price (Score:4, Funny)

      by strictfoo ( 805322 ) <strictfoo-signup&yahoo,com> on Tuesday September 07, 2004 @02:58PM (#10180241) Journal
      Microsoft has difficulty making inroads with the PRC goverment is because he central plan is not the have China beholden to foreign interests

      I think it's Microsoft's silly belief that Taiwan is a country.

      • Re:It's Not Just The Price (Score:3, Funny)

        by Anonymous Coward
        Yeah, everyone knows that it's One China, and it's merely a matter of education that prevents that 1.6 billion people on the mainland from realizing that the One True Government is sitting off on that little island.

        Once the masses are informed, they'll happily be reunited under Taiwanese rule.

    • "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?"

      Because they might actually need to interact with the rest of the world at some point?

      I'm not saying its impossible to come up with their own solution, but it may not necessarily make sense.

      • Re:It's Not Just The Price (Score:3, Insightful)

        by Anonymous Coward
        Because they might actually need to interact with the rest of the world at some point?

        If you're big enough, the rest of the world will happily come interact with you (as all the US companies are eager to prove through outsourcing relationships).

      • Because they might actually need to interact with the rest of the world at some point?

        Right, like they can't make their own mplementations of IP/HTTP/SMTP/CSS/etc.

        -matthew

    • "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?"

      Because the Chinese market is not big enough to justify the cost? 80+% of the population are tied up in agriculture, which makes the none-agriculture population comparable to the US... but given the significantly lower living standards, its not very fesible to "develop something that works for China", at least in the near future, and in the prof
      • With all due respect, you should get out of your cosy, well known environment and take a trip to Beijing. You'll see the same kind of yuppies there as in America. 15 years ago everyone was riding a bicycle but now they commute in cars and taxis. China is sending people into space, and they are building more modern nuclear plants than anywhere in the US.

        Even if we are talking about products that affect the top 1% earners in China this still represents well over 10 million people who can easily spend $1000 a

    • Software piracy... (Score:3, Insightful)

      by vwjeff ( 709903 )
      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.

      • Re:Software piracy... (Score:2, Insightful)

        by archen ( 447353 )
        My thoughts as well. MS doesn't need China for money, it needs it in order to maintain control. In a country that manufacters the majority of computers, with a gigantic portion of the Earths population, would you want them starting to all collaborate on a compeditors product, like say... Linux? Linux and open source are hard enough for MS to battle, even though it's done by people in their free time, and a handful of corperations. You put the weight of the Chinese people behind it and MS will simply not
    • Wouldn't it be nice if the United States actually had a policy of not having us beholden to foreign interests?
    • The central government has invested strongly in developing a native CPU and education in computer sciences.

      Not just hardware. China has been developing their version of Linux for years dubbed Red Flag Linux. China simply does not want to trust any foreign or commercial software for security reasons in most of its government offices.

    • And with all of the outsourcing to "cheaper" parts of the world, how is MS going to come up with that 31% USD profit margin? And they say outsourcing is good.

  • Growth is Slowing... (Score:2, Informative)

    by artlu ( 265391 )
    The low price growth in China is finally starting to slow, but profit margins are continuing to rise. Companies like SINA Corp [slashdot.org] 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 [groupshares.com] on companies like SINA are still looking to much brighter futures, which can only increase profit for Microsoft.
    • haha, you have no clue on the Chinese market... are you aware the difference between A shares and B shares? are you aware of the upwards of 70-80% of the loans the Chinese banks made were faulty? Sina didn't drop to $1/share for no reason...

  • In Soviet Russia... (Score:2, Funny)

    by Anonymous Coward
    In Communist China, Microsoft needs YOU.

  • Rather... Does China need Microsoft? (Score:5, Interesting)

    by addie ( 470476 ) on Tuesday September 07, 2004 @03:00PM (#10180279)
    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...
    • Yes. And China tends to look towards the long term. The question is, what direction will their software enterprise take? Will they go the FOSS road, or keep their stuff proprietary.

      My guess is that they'll try to capitalize (heh) on it.

    • And besides (Score:4, Funny)

      by spellraiser ( 764337 ) on Tuesday September 07, 2004 @03:06PM (#10180371) Journal
      China is a communist country, right? They'd never go for Microsoft; they're strictly open source.

      Because like everyone knows, Open Source = Communism [marok.org] :-)

    • Re:Rather... Does China need Microsoft? (Score:4, Interesting)

      by Strudelkugel ( 594414 ) on Tuesday September 07, 2004 @03:35PM (#10180820)

      I predict within the same 20 year time span, there will be massive civil unrest, possibly a civil war in China. The country just isn't that stable, according to Chinese visitors I know and things I have read here and there.

      Scary stuff. hopefully I am wrong.

      China has yet to develop the necessary social infrastructure to have an economy has large as that in the US. Whether they can do it is an open question.

      • I predict within the same 20 year time span, there will be massive civil unrest, possibly a civil war in US. The country just isn't that stable, based on the US visitors I know and things I have read HERE and there.

        Scary stuff. hopefully I am wrong.

        US has yet to develop the necessary social tolerance to keep the economy it has. Whether they will continue to be the stable dominating power is an open question.

        now you see how stupid it is to predict 20 yrs? i can make anything sound logical and acceptable.
      • Doubly frightening when you consider that China is establishing itself as the economic and political hub of Asia and Oceania. The only country in the world that truly has a leash on Kim Jong Il right now is China. So if they go down, they will take a lot with them.

        On the other hand, as other posters have noted, 20 years is a long, long way away.
    • The big issue is that this isn't a Microsoft ve Linux-centric discussion. No western migh-value-add company makes money selling in China. Not auto makers, not watch makers, not anyone. There are factories in China right now cranking out counterfeit Mercedes Benzes. Not very good ones, but on a Saturday night in front of the Karoake club, they are fairly impressive. When I lived there, I saw Shanghai Knights playing on monitors set up in the food court of a cinderblick shopping mall before it hit the th
    • True given the population size of China they'll be able to compete, but when will they start competing? The US economy won't stay in a rut forever and when Microsoft starts getting pushed back, you can expect some shoving.

      Theorically, yes you're right it does follow standard historical patterns (lots of people, government support, good tech). But on the other hand, its not gonna happen (TONS of bootleg copies of Windows, government is Communist so different rules in the political arena, and the fact that t

  • "Does Microsoft Need China?" (Score:5, Insightful)

    by JeanBaptiste ( 537955 ) on Tuesday September 07, 2004 @03:00PM (#10180285)
    A better question would be: "Does China need Microsoft?" No, I dont think so.

    • Re:"Does Microsoft Need China?" (Score:5, Interesting)

      by Mateito ( 746185 ) on Tuesday September 07, 2004 @03:09PM (#10180427) Homepage
      A better question would be: "Does China need Microsoft?"

      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.

    • Which begs the question:

      Who really needs Microsoft?

  • Does China want Microsoft? (Score:3, Insightful)

    by evangellydonut ( 203778 ) on Tuesday September 07, 2004 @03:00PM (#10180289)
    with the government pushing for Linux, how much impact will Microsoft really have on the Chinese market? That's a more relevant question.

    • Re:Does China want Microsoft? (Score:5, Interesting)

      by razmaspaz ( 568034 ) on Tuesday September 07, 2004 @03:33PM (#10180796)
      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.
      • 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 F
      • 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.

  • They will need China (Score:3, Insightful)

    by wackysootroom ( 243310 ) on Tuesday September 07, 2004 @03:01PM (#10180303) Homepage
    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?

    • Re: (Score:2, Interesting)

      by account_deleted ( 4530225 )
      Comment removed based on user account deletion

      • You sure have a point there, but it does not work this way.

        You make it sound like a conspiracy of sorts.

        Once China is dependant on revenue from outside for its (toys/software programming/you name it), then it is difficult to act erratically, and deprive itself of the revenue.

        See, capital is very selfish and wary. Once it sees instability, it runs away to safer havens.

        Look at the USofA's relationship with Pakistan and India for example, when it comes to invading Afghanistan, a dictator like Prevez Mu

    • 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 nea

  • Depends on IP laws. (Score:3, Insightful)

    by Anonymous Coward on Tuesday September 07, 2004 @03:01PM (#10180308)
    Microsoft may not need China if they can monopolize SW intellectual property in the West. If they can pull that off, they can happily increase revenues by doubling the prices of software domestically.

    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.

  • "Does Microsoft Need China?" (Score:4, Funny)

    by nuclear305 ( 674185 ) * on Tuesday September 07, 2004 @03:02PM (#10180327)
    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 don't know that Micrsoft necessarily needs China buying their product, but if MS can't sell their products in China there eventually will be some stiff competition coming from the big country.

  • Doomed! (Score:5, Insightful)

    by BalorTFL ( 766196 ) on Tuesday September 07, 2004 @03:03PM (#10180343)
    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.
    • I overheard a "sales person" at Besy Buy a few days ago. He was pitching a PC to some 20-ish student who also wanted office applications for school. The Best Buy guy said he should buy Works (or something like it) and said it has Powerpoint, Word, Excel, all that stuff for $150. I was just going to walk over and suggest he download OpenOffice.org for Free when the Best Buy guy said - "and if you have a couple buddies to split it, it's only $50". So I guess this BB guy promotes piracy of MS products :-) Or p

  • Of course they need China... (Score:5, Funny)

    by IronMagnus ( 777535 ) on Tuesday September 07, 2004 @03:04PM (#10180346)
    What would M$ do without China to produce all of the CDs on which windows is distributed.
  • I would avoid China, and instead give Microsoft paper plates and a sippy cup.

  • Mirror, Mirror on the wall (Score:5, Funny)

    by MikeMacK ( 788889 ) on Tuesday September 07, 2004 @03:10PM (#10180434)
    If you looked in the mirror one morning and discovered you were Bill Gates, how would you regard China?

    Probably not the first question I'd ask, probably more like, what the hell am I going to buy today?

  • It's not the Need but (Score:4, Interesting)

    by Mr Europe ( 657225 ) on Tuesday September 07, 2004 @03:14PM (#10180504)
    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.
    • Or it may be the same as what is was in the US. Pretend to be upset about the rampant piracy, but implicitly support it with generous upgrade policies, until everyone else who is competing with them is out of business because they can't compete with the free product. Then, when they have cleared the field, they implement a real DRM system that puts an end to the piracy, and eliminate their upgrade policy so that every year everyone is forced to buy their upgrades at full price. Since they have locked themse

  • Wrong Approach (Score:4, Insightful)

    by d2_m_viant ( 811261 ) on Tuesday September 07, 2004 @03:15PM (#10180534)
    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.

    • Re:Wrong Approach (Score:3, Insightful)

      by rainman_bc ( 735332 )
      Not so certain I agree with you. I say it would be wiser for Microsoft to turn a blind eye to the piracy for now -> make inroads in the market there, and THEN drop the piracy hammer. It's 100% better to have people use your OS illegally, rather than your competitor legally.

  • It's the government (Score:5, Interesting)

    by Pranjal ( 624521 ) on Tuesday September 07, 2004 @03:24PM (#10180658)
    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.
    • I agree. The governments in the east are quite smart and they know just how to get the best deal. On the other hand, one of the strategies that might work is for MS to fund a company in China, have it run by the chinese and make them develop their own version of Windows. Kinda like how AT&T spun a gazillion companies.

      This might ensure that they have a foothold in the trends of a growing economy while at the same time have a diversified risk, in terms of what the market there is like and what pricing p

    • 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.

      As a home user, you don't get much support from MS anyway. If you got the OS with the computer, MS will redirect you to the manufacturer.

    • In Asia and specially in countries like communist China the biggest employer is the government.

      This is true in many Western countries, too.

      The United States government employs roughly 2.7 million people [opm.gov], though that includes about 800 thousand in the postal service and 700 thousand in the military...

  • Yes, they need China (Score:5, Insightful)

    by bokmann ( 323771 ) on Tuesday September 07, 2004 @03:24PM (#10180659) Homepage
    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.
    • The parent of this post is correct. If the new emerging countries adopt something other than the default then they will have enough clout to sway the countries who want to exchange files with them.

      This might also be the way to get XML to become the glue that binds it all togather. I would assume that the emerging countries would use OOo and then if M$O would read and right XML files too...

  • Does China need Microsoft?

  • The other question... (Score:3, Interesting)

    by dpilot ( 134227 ) on Tuesday September 07, 2004 @03:31PM (#10180766) Homepage Journal
    Assume for a moment that China *doesn't* need Microsoft, and that Red Flag Linux takes off.

    Will China respect the GPL?

    • Re:The other question... (Score:4, Interesting)

      by alexborges ( 313924 ) on Tuesday September 07, 2004 @04:24PM (#10181510)
      Wonderful question with an obvious answer:

      No. Not a chance in hell.

      The chinnesse gvmnt will need their ugly spyware to remain out of the hands of smart chinnesse citizens.

      So, what are we going to do about it?

      I think we cannot do much. But it might be leveraged by Microsoft to single out linux as something that the Pinkos use to opress the chinnesse people, which will be true, although slightly out of context.

  • Hmm. This article is not entirely dealing in fact. (Score:3, Insightful)

    by crovira ( 10242 ) on Tuesday September 07, 2004 @03:44PM (#10180947) Homepage
    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.

  • It's not about the revenue (Score:5, Insightful)

    by JimDabell ( 42870 ) on Tuesday September 07, 2004 @03:51PM (#10181077) Homepage

    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?

  • There is a more important question: (Score:3, Interesting)

    by Alex Belits ( 437 ) * on Tuesday September 07, 2004 @04:08PM (#10181302) Homepage
    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?
  • 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.
  • Just like teenage sex, everyone is sure that computers will be better (and probably safer) "next time".

    The Chinese are not anywhere near as locked into MS as the western world. For them, this IS "next time". They can learn from our mistakes. If we had it to do all over again, there are many things we would build differently -- the streets of Boston, for example.

    The whole concept of large-scale open source development is very much in line with Asian concept of group participation. Of course, there is
  • I've heard on NPR radio that even if Chinese economy sustains the current growth rate for the next 50 years, and Japanese economy gets 0% net growth, the Chinese economy will still be 1/2 of the size of Japanese economy. So while China has extremely large population, the rapid growth of its economy is often overestimated. It's easy to grow from zero if you measure growth in percents of GDP. As soon as they get to better levels economy-wise, it will be more and more difficult for them to grow.

  • MS needs Asia (Score:3, Insightful)

    by baggins2002 ( 654972 ) on Tuesday September 07, 2004 @04:18PM (#10181430) Journal
    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.

  • Monopoly pricing (Score:3, Insightful)

    by randall_burns ( 108052 ) <randall_burns AT hotmail DOT com> on Tuesday September 07, 2004 @04:24PM (#10181517)
    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.

  • It's all about out-sourcing (Score:3, Interesting)

    by JPyObjC Dude ( 772176 ) on Tuesday September 07, 2004 @04:25PM (#10181536)
    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.

  • Microsoft needs to get to China's schools. (Score:3, Insightful)

    by bs_02_06_02 ( 670476 ) on Tuesday September 07, 2004 @04:41PM (#10181755)
    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.
  • You have to look at it in perspective of Economics and market share.

    If China at some point becomes a wide open (technically speaking) market with the ability for people buy anything they want and use any software, then yes MS needs China. If China remains pretty closed, then they are closed to other software as well. MS doesn't need China.

    The question boils down to profits and market share. American shareholders like it when a company proves it can grow it's profits and at least maintain or increase it

  • Tea (Score:3, Funny)

    by Roger W Moore ( 538166 ) on Tuesday September 07, 2004 @06:58PM (#10183327) Journal
    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!
  • One of the natural powers which accrue to a monopoly is the power to price discriminate. That is to say they charge each person in each the country the maximum that they are willing/able to pay. The same holds true, although to a somewhat lesser degree, in an oligopoly where a few firms have control of the entire market. The same type of pricing structure occurs with airlines and drug companies. They only charge the guy in Africa $2 for his AIDS medication because that is that entire he can afford to pay an

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