Microsoft: Piracy Makes China An Irrelevant Market

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ballmerhands.jpg Microsoft (MSFT) CEO Steve Ballmer is still lashing out at Chinese software pirates.

In August Microsoft rolled out a new anti-piracy program called "Windows Genuine Advantage." Critics in China call it the "Black Screen of Death": The desktops on pirated versions of Windows turn all black, and no matter what a user does, they'll revert to all-black every hour until Windows is validated.

Angry Chinese Windows users, long accustomed to not paying for software, are up in arms and accusing Microsoft of "hacking" and violating Chinese criminal law. Chinese government officials have told official state news agency Xinhua the black-out policy remains "open to question."

Meanwhile, Microsoft is responding by stating the truth about China: Software piracy is so bad the country is irrelevant as a market anyway:

"China's not really very important to our business right now," Steve said in Australia last week. "I'd like it to be but it's not because of the high rate of piracy of intellectual property. We need some IP reform in China for it to be important to our financial results."

Will China force Microsoft to back down from its black-out policy, and have Steve continue to call the country an irrelevant market and a den of thieves at every opportunity? Possible, but we think not.



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10 Comments

Bob said:
The question you should be asking is will our new Government finally take a stand and make IP reform in China a requirement for continued open access to our market? Given how much of our debt China now holds, the unfortunate answer is probably no.
JoeInsider said:
I worked in China for 4 years and never met anyone with a valid MSFT license. In fact, you could pick up CDs of MSFT software for $1-$3 USD in the same alleys you can buy fake North Face jackets and Gucci purses. I was part of a US Foreign Commercial Service tour of pirated technology with Bill Gates in Beijing back in 1994--when Bill saw his pirated CD's in the boxes along the famous alleys of Beijing (right down the street from the US Embassy), he just smirked. The tough part is that eventually those 100,000 plus IT PhDs that graduate from Chinese universities every month will eventually put their energy towards open source and will make Microsoft irrelevant. If you can't beat em, join em.
msftsucks said:
microsoft was doing this in purpose, if microsfot had not allowed it from the day one, nobody in china will use any product from this microsoft. this should be sued by anti-trust/monopoly, since effectively, microsoft is selling software with zero price to kick out other players.


2ndly, it is microsoft who set the price unrealistically, they are asking exact same price(oh, even more expensive) do you expect poor chinese people could afford to pay the same price
as us? they are earning 5~10% money as us yet their food,housing,transportation and others are way more expensive than us. the only thing cheaper than us is the human labor. microsoft should adjust its price to 10% of us' price, i think then, most ppl in china would not do the piracy.
wto said:
Chinese piracy/counterfeiting extends to almost all Western products - from software to pharmaceuticals to brand name clothing to filmed/recorded entertainment. It's outrageous that Chinese users are now so accustomed to enjoying obviously pirated goods that they believe they have the "right" to benefit from theft.
Pav Ookles said:
so what does this say about microsoft's results? ask yourself, why now? why put your foot down now? what has changed? perhaps Microsoft if feeling the pinch of slowing revenue growth. so they look at China as rightfully proclaim, that sue to massive IP theft, the market is irrelevant to thier financial results. so why not try to force the issue. MAKE china sit up and listen.

Sure, the hackers will simply issue a patch, but i thikn Micorsoft will likely come back with more mods to keep the problem front and center.

Even if this type of action encourages China to go it alone with its own OS or with open source, it will takes years if not decades for that effort to make any real impact. people and businesses, even the chinese, simply will not switch from Microsoft because the swithching costs are soo high. much easier to make some effort to pay Microsoft at least something.

so i say, good for you MSFT, although i am curious why you chose now.

Luis (URL) said:
Totally Agree about China's level of piracy. Its amazing the lack of respect for loyalties. No brand are safe there it seems.

Still its funny how Steve Ballmer made an amazing comment months back, saying that piracy its the cause for low Vista sales! (He was not referring only to China). Yeah right Steve! Gimme more MS Kool-Aid please.

Also get this, if you have to have piracy and Linux, MS its not really that mad about piracy as long as it affects Linux expansion -big ouch! Even if no one will confess this inside MS offices.

I guess Chinese folks enjoy Vista-free way better than Vista-payed and finally it looks like there will be no Mojave experiment in Beijing any time soon, me thinks.

Dear Microsoft, VISTA rocks and its pretty... when it works. Please don't do this again to us.

Kindly a user
ajolie1 said:
Bob - wtf are you talking about? this is exactly the reason why we should be pushing for reform so that the US gets some fricken revenue for its product - that is export revenue. As it stands, EVERYTHING is made in China and what the US does make, the Chinese steal. Granted, we don't have much leverage now, but neither do the Chinese when it comes to using an OS. On the other hand, it could force some enterprising Chinese entrepreneur to create its own linux based OS that's good enough for the masses. It doesn't mean that we have to close our markets, but maybe we tax all the junk from China that Americans don't really need.
Ben Fremer (URL) said:
Awesome.

Sadly, piracy rates are like 80% in both China & India.

Tsk. Tsk.
Phil said:
bet msftsucks relies on Windows.

hey msftsucks, they DID divide the price by large factor already. XP Student Edition for China, 199Y = 30USD

Come on, fork over a relative pittance for the enabler of your daily routine, bitchin at foreign devils on a Windows machine.
Michael Downs (URL) said:
My PC auto-update notified me that MSFT wanted to install software. After seeing this post, I decided to check out was about to be auto-installed. It was the "Windows Genuine Advantage" verification kit.

While I feel for MSFT shareholders and agree that China should step up enforcement, MSFT is not doing themselves any favors by:
1. Dismissing China's potential
2. Deploying surreptitious installs
3. Charging about 5% of the average worker's annual income for the software.

What they will succeed in doing is driving millions of people in the world's fastest growing economy to linux / google docs. A more constructive approach might be to continually ad new features after a version has shipped making them available for download only to people who have validated copies.

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