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The Intersection of Microsoft, Linux, and China 206

at_$tephen writes "Fortune magazine has an article stressing the Chinese market's importance to Microsoft's long term strategy, and touching on Linux's involvement in the Chinese market. In the early days of Microsoft rampant piracy helped establish it as the de facto standard in PCs despite good alternatives. History may be unfolding again here, with the exception that having the Chinese government as an ally has huge additional benefits. Or perhaps Gates has met his match with the Chinese government. 'In another boost for Microsoft, the government last year required local PC manufacturers to load legal software on their computers. Lenovo, the market leader, had been shipping as few as 10% of its PCs that way, and even US PC makers in China were selling many machines "naked." Another mandate requires gradual legalization of the millions of computers in state-owned enterprises. In all, Gates says, the number of new machines shipped with legal software nationwide has risen from about 20% to more than 40% in the past 18 months.'"
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The Intersection of Microsoft, Linux, and China

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  • by Anonymous Coward on Tuesday July 10, 2007 @11:32AM (#19813823)

    The Intersection of Microsoft, Linux, and China
    Ok, so a penguin, a panda & an animated paperclip walk into a bar ...
  • Good (Score:4, Insightful)

    by sucker_muts ( 776572 ) <> on Tuesday July 10, 2007 @11:33AM (#19813837) Homepage Journal
    This is very good! The more businesses are forced to actually pay for all those MS loaded machines, the easier they might consider using linux.

    Go Microsoft!

    (This is why I wish copyright protection on software would be 100% succesful: Too many people just download software and keep using it that way, if this would be impossible a fraction of those would pay but many more will start searching alternatives...)

    • RTFA (Score:5, Informative)

      by spellraiser ( 764337 ) on Tuesday July 10, 2007 @11:49AM (#19814049) Journal

      If you read the article, you will see that forcing businesses to pay is what Microsoft started off by doing, quite unsuccessfully. Their usual heavy-handed strategy of suing businesses for pirating their software failed miserably, as the Chinese courts were not sympathetic towards Microsoft.

      So, they finally changed their tactics, dropping prices dramatically. That's why they're finally making some headway in China. Oh, and some very active government lobbying seems to have played a big part as well. Microsoft seems to be best buddies with the Chinese government now, making deals with them, selling them software in huge quantities ...

      Gotta love free enterprise. Corporations don't care where the money comes from; this is proved time and again by Western corporations sucking up to the Chinese government.

      • Microsoft seems to be best buddies with the Chinese government now, making deals with them, selling them software in huge quantities ...

        OEM exports for the Windows PC generates employment and income in China.

        To mark its entry into the WTO, Microsoft was the first foreign company admitted into China's software trade association.

        Microsoft Research Asia [] has been based in Beijing since 1998.

        Microcoft has purchased a small stake in one of China's largest TV makers and signed an agreement with Shanghai Media

      • Gotta love free enterprise. Corporations don't care where the money comes from; this is proved time and again by Western corporations sucking up to the Chinese government.

        Neither to private individuals, apparently, given that they continue to suck up to corporations that suck up to the Chinese government... in exchange for cheaper products.

  • WGA (Score:5, Insightful)

    by Jaaay ( 1124197 ) on Tuesday July 10, 2007 @11:35AM (#19813871)
    may be a horrible thing but it probably has something to do with this. That and Chinese getting richer. With 98/2k/etc you could used a burn copy of any MS stuff and it'd all work perfectly with Windows Update and everything else. Now with XP after WGA and especially Vista you can still crack stuff but it becomes more of a hassle if you care about what's on your HDD and want updates and whatever else. So I think these are the reasons the piracy is going down instead of Chinese people suddenly caring about their certificates of authenticity and 3 men holograms :)
  • by erroneus ( 253617 ) on Tuesday July 10, 2007 @11:39AM (#19813917) Homepage
    It has been precisely the lax means and methods in Microsoft's anti-piracy efforts of the past that helped it to grow so quickly. illegitimate software was even counted in Microsoft's statements describing its market penetration and saturation.

    Presently, Microsoft's copy protection has not only been shown to inconvenience legitimate users who upgrade their hardware and the like, but also makes illegitimate software distribution a great deal less convenient. And this is, obviously, to the detriment of Microsoft's present and future market penetration and saturation. Where once "alternatives" were a threat and even a previous reality [read OS/2], people are looking at alternatives once again in the form of Linux and MacOSX. These solutions do not offer the resistance that Windows offers and I think we can see clearly how Microsoft has managed to over-zealously shoot themselves in the foot.

    By far the easiest solution for Microsoft would be to remove their copy protection schemes and just kind of look the other way for a while until their saturation once against builds the addictive dependency on Microsoft software that it is presently losing. It may mean some sort of decline in stock values or a leveling-out of revenues, but they would regain something far more important -- market saturation and monopoly control.
    • by mpapet ( 761907 )
      Don't worry, they are.

      **Every** software/media company that is headed to #1 in consumer and small-business categories makes their software a hassle to copy, but that's all.

      If you had a half-way decent firewall on a win32 box, you might be surprised how many times windows and the applications running on win32 phoned home. Phoning home is a step or two away from disabling software on demand, so the capability is definitely there and has been for quite some time.

      They just want to maintain their monopoly at th
    • If they look the other way too often, then govs. start to notice. In particular, MS is cracking down hard in the USA (via their bs group). How many politicians here can defend MS's practice, if we can all point to china and say that they are getting away with this?
      • That's easy, "we are the good guys and we don't steal like the bad guys." In the US, we have always maintained the "white hat" wearing attitude. Everything we do is for the good of the world and humanity. Everyone else is just evil. (yes, most of us really DO think that way.)

        So if someone were to point to China saying "look what they are getting away with" the US perspective on it is "...because they are the bad guys!"
        • yes, most of us really DO think that way.

          By US, you mean Americans, yes? And you are refering to current time, not the [456]0's? Because at this time, I suspect that outside of America, we are considered quite poorly. I noticed a distinct downgrade in Germans towards us when I was there a year ago. And I would have to guess that it is universal.

          • Yes, I speak from a United States of America central perspective... and yes, current time. While there are a lot of us not entirely "Proud to be an American" there are still quite a few who believe our ideals are reality in action.
          • by node159 ( 636992 )
            You perceived quite correctly. The US has quite successfully managed to cover itself with a lot of shit as of late. A pity really, but having a stupid puppet at the helm doesn't really help.
    • It has been precisely the lax means and methods in Microsoft's anti-piracy efforts of the past that helped it to grow so quickly.

      Perhaps, but how is that different than all of those dot bomb startups who planned to loose money on each sale to gain market share, but make it up on volume?
  • Why not just load the machines with a linux or bsd distro? That would meet the "non-naked" PC requirement. If the machines were destin for the Chinese market, then wouldn't Red Flag linux be the default distro?
    • Re: (Score:3, Interesting)

      by badfish99 ( 826052 )
      The only barrier to manufacturers shipping a "naked" PC would be a legal one imposed by the government. And the interested party that is asking the Chinese government to impose such a restriction is Microsoft. So you can be sure that, if there is any such law imposed, the law will say "must include a legal copy of Microsoft Windows", and not just "must include an operating system".
      • by init100 ( 915886 )

        So you can be sure that, if there is any such law imposed, the law will say "must include a legal copy of Microsoft Windows", and not just "must include an operating system".

        Don't be so sure about that. Microsoft may be lobbying for such a law, but the United States is still their adversary. Making a law that says that you must buy an american operating system if you buy a computer would not seem like a sensible thing to do.

        In western Europe, such laws would be strongly frowned upon, as we have no tradition of forcing people to use a specific product.

    • Because, in this article, it appears that the phrase "legal software" actually means "Microsoft software."
  • $3 Windows? (Score:3, Insightful)

    by Tablizer ( 95088 ) on Tuesday July 10, 2007 @11:41AM (#19813935) Journal
    You can get the real thing, and you get the same price." Indeed, in China's back alleys, Linux often costs more than Windows because it requires more disks. And Microsoft's own prices have dropped so low it now sells a $3 package of Windows and Office to students.

    I do think its unfair that they get a "cost of living adjustment" for software and medicine, yet we have to compete for techie jobs on our own cost of living. They get the best of both worlds. This is another reason why free trade is not fair. They get almost 1st-world wages but only have to pay 3rd-world prices for these items. Tell me this is what Adam Smith and David Ricardo had in mind.
    • by Flying pig ( 925874 ) on Tuesday July 10, 2007 @11:55AM (#19814143)
      Skilled people have the option to go, not only where the money is good but also where the cost of living is lower. Much of the US used to have a lower cost of living than the UK, plus higher wages, but I didn't notice you complaining when all our best scientists emigrated.

      However, there are downsides. Life in China by all account is not a lot of fun for most people. Access to things we take for granted is limited to the usual third world elite. It is not free trade is your problem, but the lack of democracy and knowledge about the rest of the world that China's people suffer from, and, I think, the acquiescence of the US population in their country being run by large businesses with monopolistic practices. If you had free trade, you would be able to buy those $3 Windows copies and the cheap medicines in the US. But you don't.

      The difference between Adam Smith and Marx is basically that Smith lived in a world of tiny companies and thought capitalism was benign, while Marx lived in a world of growing capitalist monopolies and saw that it was not. What is happening in China is a repeat of the British industrial revolution - poor workers making an elite rich while being kept in a state of ignorance. Just as in the UK, some of those workers are more highly paid (the ones in the cities). How long before they start to get difficult? I really think that over the next thirty years we will find out whether in fact it was Smith or Marx who was right (my money is on Marx, as an economist you understand) and the laboratory will be China.

      • Re: (Score:3, Insightful)

        Whatever Marx was, right did not enter into it:

        He believed that the economy was like a cake, and it can be shared equally or otherwise. Its not - its like a fire - if you take out all the hot coals, and share them round, it goes out!

        He beileved it was necessary to own something to control it: A hire car will still go where the driver steers it, and any fool can adjust the volume on his neighbour's stereo.

        He believed the state youod onw the "four factors of production" - one of these is people - owning pe

        • Indeed (Score:5, Insightful)

          by Flying pig ( 925874 ) on Tuesday July 10, 2007 @04:18PM (#19817551)
          Si monumentum requiris, circumspice. That's Wren not Marx, but it applies.

          Of course Marx wasn't right about everything and, as I made I thought clear, I wasn't talking about his political philosophy. Marx perceived that the effect of unrestricted capitalism was that ultimately all wealth would end up in the hands of a very few rich people. And that is incorrect how? He never suggested that the economy was static; Marx wasn't stupid.

          It never fails to amaze Europeans that many Americans confuse consumer goods with wealth. Many American workers have few vacations and work long hours. They find it hard to save. They may have relatively large houses and cars, but in many ways they are still bonded workers. They cannot just leave their jobs and survive without very unpleasant consequences. To an Athenian or a Roman citizen, (or to an obnoxious Brit with no mortgage and money in the bank) that's slavery. And that's without considering the inner city subclass and the illegal migrants. In the US, a form of slavery is still very much in fashion, but people are in denial about it. Unfortunately we have allowed it to be exported to this country, with bonded laborers, many Chinese or Eastern Europeans, being controlled by gangs and the Government making sympathetic noises and doing precisely nothing.

          Adam Smith believed that everybody would benefit from the invisible hand of the market - well, except a load of foreigners and poor people who did not count. Marx believed that the rich and greedy would, in the end, impoverish everybody else relatively speaking. Look at the US. Look at the reduction in status and opportunity for most of the middle classes, compared with the 50s and 60s.

          In the late 50s my father bought his first house on one and a half times his salary. That house now costs more than ten times the average UK middle class salary. In those days there were few gadgets, but look at those gadgets now. They are basically small and cheap ways of delivering cheap content at high prices; iPods, mobile phones.

          You're being screwed by monopolists while being told you're in a free market. And if you don't like Marx, read two prophetic books by three great US science fiction writers: The Space Merchants, by Pohl & Kornbluth, and Player Piano, by Kurt Vonnegut.

          • "You're being screwed by monopolists while being told you're in a free market."

            That's where your wrong. You are only screwed by monopolists if you buy their product. Judging from what you are asserting those products would be iPods, mobile phones(and services?), and I'm guessing Operating Systems?

            While I agree monopoly is bad, there is only one way to fight them as a private citizen with limited resources: DON'T BUY THEIR SHIT. Those products are luxury items, THAT YOU DO NOT NEED TO LIVE.

            And about yo
      • Actually, Adam Smith lived in a world where tiny companies were benign (in fact, highly productive), and big companies were not. The worst of the lot were government-sanctioned monopolies -- often achieved through bribes. The key thing is that capitalism is not the same as a free market.

        Interestingly, Marx's era had worse things than your typical corporate monopoly. It was the age of imperialism, when the drive to expand meant invading other countries to satisfy the resource and market needs of corporations
    • by Darby ( 84953 )
      This is another reason why free trade is not fair.

      That statement might be true, but that has nothing to do with any of the reasons for it.
      That's because you're not really talking about free trade. You're talking about very much unfree trade. If there were anything even close to free trade, then we would be paying $2.00 for a pair of Nikes.

      So while you have a handy catch phrase it's totally inapplicable in this situation. Well, unless you redefine "free trade" to mean "what politicians and business 'leader
    • by fermion ( 181285 )
      The only problem is that you can't really blame it on MS. MS has a had a policy of effectively giving away software to students and teachers, and in fact, through recent changes in licensing, to employess of certain corporations. One might think that such dumping might get them into legal trouble, or cause the price of the software to fall, but it does not. The reason is that such transactions are not considered gifts, but part of the licensing agreement. In exchange for the school paying huge amount of
  • History may be unfolding again here, with the exception that having the Chinese government as an ally has huge additional benefits.

    There was a saying — in the beginning of our Republic — that a good idea can stand on its own, while a bad one needs government help. I can't find the founding father's quote at the moment...

    Although recent generations have abandoned that concept (witness Social Security, and Municipal WiFi for examples), to rely on the help of Chinese government is a new low...

  • The Intersection of Microsoft, Linux, and China
    Oh fuck. Another car analogy?
  • by Schraegstrichpunkt ( 931443 ) on Tuesday July 10, 2007 @11:45AM (#19813997) Homepage

    The characterization of computers without pre-loaded software as "naked" and mandating that software be bundled with PCs by the retailer is nothing more than an attempt to create a barrier-to-entry into the market. Now, instead of creating your own operating system and just selling it, you have to negotiate with PC retailers (who probably have exclusive contracts with Microsoft) in order to be on the same footing as the more-established players.

    That Linux and FreeDOS exist is a convenient workaround to the bundling requirements, but it doesn't negate the anti-competitive nature of Microsoft's "no software implies pirated software" BS.

    I can buy a television without subscribing to cable TV service offered by Best Buy, why should a computer (for which there more options) be any different?

    • I actually applaud the Chinese governemnt for this action and I think that it is a great benefit to Linux actually.

      See the basic issue is that although the naked pc law is somewhat anticompetitive, it is not as anticompetitive as software piracy. In short, this is actually going to help increase the prevalence of Linux on off-the-shelf PC's (and it already exists on a certain percentage of PC's off-the-shelf). In short, now everyone that wants a PC for a pirated copy of WIndows has to buy one with Linux o
      • In short, this is actually going to help increase the prevalence of Linux on off-the-shelf PC's (and it already exists on a certain percentage of PC's off-the-shelf). In short, now everyone that wants a PC for a pirated copy of WIndows has to buy one with Linux on it first.

        Manufacturers who install Linux just to meet pre-installation requirements generally provide systems that A.) are too poorly configured to be usable and B.) are not supported. This just makes Linux look bad. A lot of the machines pre-loa

    • by g2devi ( 898503 )
      It's actually worse when you consider site licenses and MSDN Universal should cover these naked PCs, so you're paying more than once for the same software.
  • The requirement to load legal software is fine as long as this is not the imposition of another Microsoft tax, which means load MS or you cannot sell the computer. So bare computers are being sold. So what? Microsoft shouldn't have any influence on whether this occurs or not. China has a good number of linux users and several of their own distributions. They are all legal. But, unless Microsoft drop their prices significantly for that market they are going to find it hard going to convert the masses.
    • Significantly drop prices?!?

      I work as a contract IT worker/developer in North America. If *I* quote on a job, I have to factor in relevant license costs. If someone in China or India quotes, *they* have to factor in costs as well.

      If their costs are 1/100 of mine... simply because Microsoft is "giving them a break" (and, note, Microsoft development WAS in North America), Microsoft is giving offshore workers a bonus.

      Why should it cost me so much more? It makes me less competitive.
      • Isn't that what capitalism is all about? You can charge the price that the market can bear, and the Chinese home market probably can't afford much. The prices charged for MS software in the UK are ridiculous (£=$) but they still seem to sell it. You have been paid for the work that you have done at a price that you agreed. You are not losing money by this move but you will find it increasing difficult to compete in the world. Welcome to globalisation. Microsoft have recouped their investment on
        • In THAT case, you are against the shutdown of After all, its "just globalization".

          I would LOVE to import 7 dollar Windows into North America, and sell them for 20 dollars. That would certainly level the playing field -- we are just talking globalization, right?
          • Well, I have no complaint against for providing music. I do not agree with their abuse of copyright. But that is a separate argument although I am yet to be convinced that Russian law was being broken. If a US company and a Russian company are selling similar products (legally!) I will buy the cheaper of the two, all other things being equal. I have nothing against Russian companies (I lived there for 3 years), Chinese companies or even American companies. Because of globalisation, we have

            • Since Vista took 5 years, and (somewhere around) 1 to 2 billion US dollars...

              We can figure out if dumping is being done. The maximum market penetration of the product is under 1 billion copies. It takes 1 to 2 dollars to produce - so the maximum that can be made on Vista at that sales point is 5 billion dollars.

              It wouldn't even cover the engineering expense until its life is half over... And I don't believe 1 billion copies -- I would estimate a few hundred million at best. If we say 200M valid purchases, a
              • So I expect to see all Americans up in arms against the blatant abuse of trade practises by Microsoft, but I won't be trying to hold my breath until it happens...... It seems that it is alright to shout and complain that things are unfair unless, of course, it is an American company that is doing it. Microsoft is getting alongside the Chinese government by ignoring that government's abuses and the way it ignores those rights that Americans say are sacrosanct, the article acknowledges the 'moral problems'
  • here's a solution (Score:2, Interesting)

    by jack455 ( 748443 )
    HP has a Linux-based Quickplay OS for some of their laptops, on a seperate partition, that it can boot for quick access to multimedia functions. This is a legal OS. I belive Toshiba has a similar feature. These would be fine or Desktops as well. Major OEM's that don't want to preinstall Windows should provide a Linux version that can offer basic functions. Or a full implementation, the solution I would prefer.

    When Chinese users want to install Windows, or another OS, they could choose to leave this on it's
  • hmm. (Score:4, Informative)

    by apodyopsis ( 1048476 ) on Tuesday July 10, 2007 @12:05PM (#19814261)
    when I was in China I frequently had market sellers attempting to sell me dodgy DVDs and CDs for 2 or 3 Yuan.

    But I don't think they had windows on them...... yikes!

    Seriously though, even in the large multinational Shenzhen office I was in the IT support guy installed windows of a shiny gold disc - it was just how things were done there. The serial number was written on the top in black pen. I guess product activation and WGA make it more difficult for this to work so they crawl back to the conference table and talk.

    BTW. Many of the top executives from another multinational always impressed me by running Yellow Dog on a USB stick - I'm not even sure their laptops even had software on - but the USB sticks were on their key rings. I always thought that was a neat security idea. I have never seen that done anywhere else.
    • by aj50 ( 789101 )
      I did work experience at a large company in the UK, part of my job was doing fresh windows installs onto computers for other staff. I was installing from a backup disk with slipstreamed patches and the serial number for the site licence scribbled down on a piece of paper.
  • I realize most people who buy *naked* computers end up installing illegal software-- but microsoft makes it sound illegal.
  • by i am kman ( 972584 ) on Tuesday July 10, 2007 @12:10PM (#19814331)
    Ok, I get that /. readers hate Microsoft, but this is really a story about doing business in China more than how evil Microsoft is. The article really stresses how much Microsoft was hated when they tried the strong-arm tactics of selling (even more than in America) until they invested heavily in the country and opened a research center to change their image.

    That really applies to all businesses trying to do business in China - particularly sales. It's actually quite an interesting story of business culture clashes and a good lesson on how standard US and EU business practices don't really work well in China.
    • by cwgmpls ( 853876 )

      until they invested heavily in the country and opened a research center to change their image.

      And starting dumping their product into the market at a loss to prevent competitors from moving in. And convinced the government to enact monopolistic laws like requiring "legal" (ie Microsoft) software to be loaded onto each new machine produced.

      Sure, Microsoft is trying to do business in China, but they are borrowing a few pages from their anticompetitive playbook in the U.S. in the process.

  • As the story states, Microsoft is selling XP/Office bundles for $3 in emerging markets, in what is a clearly a defensive strategy to keep Linux from gaining a foothold in those markets.

    This is going to be a popular product -- Microsoft products at Open Source prices -- however, it certainly can't be a sustainable strategy for Microsoft. Microsoft is using its enormous profits in other areas to essentially give Windows and Office for free to the third world. It won't be long before these $3 windows bundle

    • See... but this is likely based on the notion that these markets will develop... so something that can only be sold for $3 today can be sold for $10 tomorrow. And, if you are talking about selling to China, you are looking at a market that is four times the size of the US market. There will likely be little demand for cheap Chinese version of Windows in the US... The idea is that the cost is in the development, not the distribution. DVDs and packaging are cheap. By selling for cheap, they still get p
      • by cwgmpls ( 853876 )

        The idea is that the cost is in the development, not the distribution.

        That is true, but my question is, how can this succeed in the long term?

        At some point in the future, computer users in the developing world will far outnumber computer users in developed nations. Eventually, the majority of MS's user base will be running cut-rate versions of Windows. Whether MS sells them for $3, $10, or $20, they will still be far below the normal retail price in the US. At some point I think US customers will reb

        • by Shados ( 741919 )
          Save for support, software development is pretty close to fix cost... that you sell it to 4 billion people, or you sell it to 5000, its the same... So technically speaking, if Microsoft had the choice between selling Windows to every single human being on earth at 3$, or to sell it to a fraction of the western world at 400$, they'd probably pick the former =)
  • If I am a computer nudist, can't I just buy a 'barebones' PC? Can't I sell 'Barebones' PCs that are missing input devices or RAM? A lot of people will be willing to put in their own stick of RAM if they can save $$ on MS OSes P.S. $$ must be a worth saving. If not, I wouldn't be bothered by dirt cheap MS software. I'll just buy laptops from Chinese retailers and get it shipped here (or is that not allowed? eBay seems to allow it though) Cheers!
  • The Chinese market (Score:3, Interesting)

    by PingXao ( 153057 ) on Tuesday July 10, 2007 @03:50PM (#19817211)
    Markets in China are supremely important to all US business interests. The foundation of capitalism is businesses must grow. As barriers to growth pop up both here and in other markets, new opportunities must be found. There are 1 billion people in China. So it's not just Microsoft who sees the importance of markets in China. It's every company that ever had a widget to sell. It has become a great concern to the US government, too. Business interests and growing markets drives US policy these days, like it or not (see Iraqi petroleum). These concerns trump everything else. 50 years ago there would have been a hue and cry over such massive trade deals with Communists *gasp*. You don't hear that today.

    China could change its form of government tomorrow to a representative democracy with free elections at all levels in every area, but if they tried to close down their borders with respect to trade the US would find a reason to go to war with them. The way it stands today that's not about to happen.
  • I don't care which side of the copyright/patent/intellectual-property fence you're on, please Please PLEASE stop saying "rampant piracy".

  • So is it a brightly-lit intersection?

  • Recent trip to China (Score:2, Interesting)

    by kramulous ( 977841 )
    On a recent trip to China, I could not help but notice the number of people using Kubuntu. It was everywhere, far more prevalent than all the linux distros that I see here in Australia.

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