Microsoft's Ballmer: Piracy killing our China revenue

Microsoft's Ballmer: Piracy killing our China revenue

Summary: Microsoft CEO Ballmer said that China brings in less revenue than the Netherlands due to piracy.

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Microsoft CEO Steve Ballmer's tour of China has surfaced the company's piracy conundrum. According to the Wall Street Journal, Ballmer said that Microsoft will get 5 percent of the revenue from China compared to the U.S. even though both countries sell about the same amount of PCs.

ZDNet China and CNet China have been covering Ballmer's tour this week. Via Google Translate, Ballmer did address intellectual property briefly. He said that Microsoft was focusing on promoting the intellectual property movement in China and that the government was conducting "special counter-piracy activities." Ballmer also pushed quality PCs over knock-offs.

However, Ballmer didn't appear to say anything new about piracy, but the extra quantification of losses was notable. Ballmer said Microsoft appreciated the Chinese government's help on piracy. Ballmer also argued that China would benefit from better intellectual property protections because it would attract more creativity and innovative companies.

According to a handful of contacts that frequent China pirated software is plentiful. The most notable observation I've heard is that Apple appears to be selling real iPads to the Chinese via its stores. China isn't a completely knock-off free zone for Apple but the company appears to be faring a lot better than Microsoft.

Ballmer reportedly said that its revenue per PC sold in China is a sixth of what it gets in India. Chinese revenue for Microsoft is less than what it pulls in from the Netherlands.

Despite those issues, Ballmer indicated that Microsoft will continue to invest in China. In prepared remarks at an opening of a new R&D center, Ballmer said:

We're very proud of our opportunity to contribute in China. Just yesterday, we announced a new investment of up to 1.3 billion renminbi targeted at stimulating startup companies here in China, because we know the key to growth is not only our own success, innovation and prosperity, but that of our partners here in the Chinese market.

China this year will surpass the United States as the largest market in the world for personal computers, and the increasing health of innovation and intellectual property here in China will be key to the ongoing success, growth and prosperity for all.

Topics: Piracy, Banking, Enterprise Software, Legal, Microsoft, Security, China

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31 comments
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  • RE: Microsoft's Ballmer: Piracy killing our China revenue

    <sigh> .... don't get me started on China's penchant for ignoring IP rights. We constantly run into knock offs of our products.
    I doubt much will improve until some new 'low cost' producer begins knocking off Chinese IP ....
    noagenda
    • The question is, what Chinese IP?

      @noagenda

      Any talented Chinese with ambitions to develop IP must quickly realize that they're in a bad environment.
      Lester Young
      • RE: Microsoft's Ballmer: Piracy killing our China revenue

        @Lester Young
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        jackfolla
    • RE: Microsoft's Ballmer: Piracy killing our China revenue

      @noagenda <br><br>The Chinese own the USA mortgage and they have done this through vast quantities of cheap desperate labor.

      i.e. - HARD WORK and whips.

      So when you use your nice shiny piece of USA IP gadgetry, remember it was produced by someone working 100 hours a week in slave conditions.
      Alan Smithie
      • RE: Microsoft's Ballmer: Piracy killing our China revenue

        @Alan Smithie
        Hard work yes, whips NO. Whole villages will combine to send a handful of the best to the east coast to get a job and send money back. I have spoken to these people and listened to their stories.
        mick20
  • More Disinformation or ignorance?

    Question.. How much is Android or opensource is effected by piracy in china? I think we all know MS is there through the piracy route but it's not working now. Talk from the markets is Ballmer may go soon. Post Ballmer expect windows 9 or 10 to be based on the opensource model.
    The Management consultant
    • If you wish to spread rumors or lies

      @The Management consultant
      Then you should talk to the Romulans.

      They are quite adept at that.
      :|
      Tim Cook
    • Cry me a river, Ballmer

      I shed crocodile tears your greed hasn't extended to China...

      [i]whaa...whaaa...[/i]
      blind obedience
  • They don't have to sell there

    If China isn't a profitable market, maybe MS should abandon it.
    John L. Ries
    • Keep them hooked

      @John L. Ries

      Microsoft wants to get paid for its software but OTOH it doesn't want to give the Chinese a real reason to look elsewhere. Monopolies have to be carefully tended to. Play nice politics and endure and hope for a massive payout down the road as China's economy continues to grow.
      oncall
      • Didn't they do that here in the 90s?

        @oncall

        Ya know...give it away for 'free' until they grow a dependence on it? Then once you have them locked in, they can't look elsewhere?

        ~

        The Chinese always have Linux to look to, just in case... ;)
        ScorpioBlue
    • RE: Microsoft's Ballmer: Piracy killing our China revenue

      @John L. Ries -

      Why? They helped it grow.

      http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/
      HypnoToad72
  • RE: Microsoft's Ballmer: Piracy killing our China revenue

    As long as Microsoft ignors new technology from third party innovators I have no tears for them. Recent article in Information Week" Innovation Atrophy. They blame cost but I blame scared of new ideas. They like their position and don't want to give it up. Same story from banks, keep the money close ,don't invest we might get hit with a global recession. Funny thats how the Great Depression got started.
    sergon49
    • RE: Microsoft's Ballmer: Piracy killing our China revenue

      @sergon49

      No monopoly likes new ideas, they cost. Especially someone else's new ideas, they don't increase income.

      Basic economics. Capitalism abhors the free market. Capitalism loves monopolies. When capitalists talk of a free market, they mean markets controlled by them, not government regulated. Please note, current banking crisis was due to capitalists playing in a completely unregulated market. What Ballmer is running up against in China, is a free market, completely unregulated, when it comes to software. When it comes to other areas, well, thats another story...
      bargeemike
  • China has been short-sighted.

    Ballmer is correct that China stands to lose in the long run if their IP protection doesn't improve. Piracy has delivered a rudimentary, low cost, low quality IT infrastructure to a lot of Chinese, but it is likely to stagnate at that level if their IT business environment leads to a brain drain. In the long run the competitiveness of Chinese businesses would suffer.
    Lester Young
  • RE: Microsoft's Ballmer: Piracy killing our China revenue

    Ballmer is a first class dunce.

    The Chinese are big adopters of FOSS and use Linux quite extensively. Only the peasants and cheapskates are pirating Windows because they don't know any alternatives.

    Ballmer really has his head up his monkey ass.
    bitrate
    • RE: Microsoft's Ballmer: Piracy killing our China revenue

      @bitrate

      I bet there are more pirated copies of desktop Windows in China than there are desktop deployments of Linux in the entire world.

      Really, if both Windows and Linux are free why even bother with Linux?
      Heatlesssun1
      • RE: Microsoft's Ballmer: Piracy killing our China revenue

        @Heatlesssun1

        Because it uses a fraction of the resources and doesn't crash every time you look at it?
        gordonstrong
    • RE: Microsoft's Ballmer: Piracy killing our China revenue

      @bitrate - not to spam the same article, but in this case it's worth repeating: Microsoft helped China to pirate:

      http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/

      (toward the bottom of page 1 -- Microsoft actively encouraged it. So either Ballmer is angry at Gates for encouraging it, or Ballmer is putting up a hollow claim.)
      HypnoToad72
    • Utter rubbish

      @ bitrate

      The Chinese overwhelmingly use Windows, mostly pirated XP, along with IE -- often outdated, insecure versions. Indeed, the Net Applications estimate of IE's market share recently went up a notch when they re-weighted their sample to account for the increase in the number of Chinese web users.

      Linux can't even compete with Windows in markets where people have to pay relatively high prices for Windows. When they don't have to pay for Windows either, Linux hasn't got a chance. The Chinese ever prefer a 10-year-old version of Windows (XP) to the latest Linux distributions. Linux on the desktop really is a joke everywhere.
      WilErz