Microsoft: “cancer” markets such as China to let its core business high levels of production


ten years ago, when Bill Gates visit to Beijing, a senior Chinese official asked about Microsoft’s revenue in the Chinese market. Gates reluctantly give a very low very low, low to the senior officials dare not believe, so that his translation once again confirmed that gates’s reply.

Microsoft have not been able to solve this problem. In fact, the plight of the company at present in China has exposed its deeper problems, although Microsoft’s Windows operating system and Office software is widely used, but in emerging markets, few people are willing to spend money to buy genuine software.

, analysts say, even piracy, users also prefer the original Windows system. According to the website traffic monitor StatCounter statistics, in China more than 90% of the computer running Windows 8 before the Windows operating system. Therefore, Microsoft has been not only suffer losses, even the latest version of the operating system, Windows 8’s popularity is not smooth.

Microsoft is trying to solve this problem. This year, it will Bing (Bing) search engine set to the default search engine PC makers offer discounts, also keep the cell phone and part of Windows 8 tablets used for free.

however, as the computer industry from desktop to mobile, cloud, free or low-cost software, Microsoft in China encounter these problems, typically reflected in the old and new challenges faced by the emerging markets and mature markets.

one of the authors of science and technology blog stratechery.com Ben Thompson said: “the biggest crisis facing the company is its problems in emerging markets – piracy flood in basic cannot profit from the new PC, and this problem will soon spread to other markets.”

core business damaged

the Chinese market for Microsoft, no doubt, is a headache and special issue. Now the Chinese government has increased the emphasis on the competitive ability in science and technology enterprises, foreign companies are bombarded with monopoly. Although Microsoft has for years been maintained good relations with Beijing, has suddenly become China’s antitrust regulators last month investigation target, its some offices in China by raids. But that obscures the Microsoft never really solved how to make users to buy the fact of the legitimate software in emerging markets.

although Microsoft released few regional revenue, but also how much revealed some clues to the severity of the problem.

in 2011, Microsoft CEO Steve ballmer said staff affected by piracy, although PC sales in China and the United States, even though the Dutch only 1% of China’s population, but Microsoft’s revenue in the Chinese market is less than the Netherlands.

emerging markets accounted for 56% of the world with PC, accounted for 73% of the pirated software. According to Microsoft’s briefing, the company’s fiscal 2013 revenue of $77.8 billion, including China, Brazil and Russia market revenue “more than $1 billion. In fiscal year 2013, by contrast, apple in greater China (including mainland, Hong Kong and Taiwan) on revenue of $27 billion.

for Microsoft, this is great for its core business revenue loss. “Windows and Office remains Microsoft’s core business.” Indian analysts Sameer Singh said. According to the first quarter of 2014, according to Microsoft’s global revenue of 56% and 78% of its operating profit from Windows and Office.

due to the problem at the same time, Microsoft also lose customers. Because they will buy can run on Windows of Microsoft products.

Microsoft Asia pr director Andrew Pickup, said throughout most of the market, Windows and Office account for half of total revenue. Because the customer choose Microsoft’s other products, such as Exchange and Windows Server, depends on whether they have been used in Windows and Office.

“the Microsoft ecosystem clearly reflects the relationship.” Market Research firm Jackdaw Research analyst Jan Dawson said, “so it’s revenue in the emerging market share similar is normal.”

PC bare-metal

the problem of piracy in emerging markets is tricky, partly because of the chain of each part has a problem.

for low-margin PC manufacturers, is the most expensive part of the PC operating system. And small retailers in the market if they give up to the price sensitive, like to use pirated software, customers, the price is they can’t afford.

so, Singh said that the problem first went out to PC makers, because “to convince them on each PC sales pre-loaded with Windows is difficult.” Gartner analyst Bryan Wang said, for manufacturers, like lenovo PC margins “close to the unit number”.

so the results such as IDC research manager Handoko Andi, PC sales in emerging markets in Asia, 60% of all not pre-loaded with Windows operating system, known as the “model”. In Japan, Australia and other mature markets in Asia, the figure is around 25%.

on taobao, the vast majority of PCS with Linux rather than Windows. And once the PC to the retailer’s hand, is hard to distinguish from the genuine software where is stopped, and pirated software, where I came from.

a, according to people familiar with the Microsoft in 2004 began to convince lenovo don’t reproduce “bare-metal”, but lenovo refused and the reason is that the profit margin is too low. However, according to the BSA, the Chinese government in 2006 promulgated the regulations on new PC to load the operating system on the Chinese market piracy rate falling from 92% in 2004 to 79% in 2009.

lenovo said, the company has struck a deal with Microsoft in June this year, sales in China of the PC will be pre-installed genuine Windows operating system.

mobile world of laggard

cut the price of Windows, Microsoft’s new measures was to attract PC makers. Handoko Andi say, Windows license from $150 to less than $50, this will make the land to Microsoft “never competition levels before”. However, Pickup said now to assess the effect of the measures is still premature to.

make cheaper Windows PC version of only one of Microsoft’s move to industry deeply changing. Mobile phone, tablet, cloud services and the rise of the free operating system that Microsoft into the plight of marginalized, its business model is being challenged.

although more than 90% of the PC is still running Windows, but if considering the smartphone and tablet, Windows on the intelligent equipment market share will drop to 14%. Today, more than half of the smart devices running Google’s Android mobile operating system, mobile phone and tablet PC makers can use Android free of charge. Apple has released to users free upgrade version of the operating system.

Pickup says, Microsoft has already heard the handset manufacturers complain that also reduces the mobile version of the operating system’s hardware requirements. In addition, Microsoft will also 9 inches and the size of the mobile devices from operating system license fees. All in all, these measures will be “reduce the cost of users buy mobile equipment emerging markets”.

, analysts said Microsoft’s preferential concessions is very big, but Microsoft still need more efforts to make its software and services run on other operating systems of the company.

“the greatest threat to Microsoft,” Jan Dawson said, “is a computer is from Microsoft, once the pride of the PC world to Microsoft has lag behind the mobile world shift.”

Source: Ruters