A colleague of mine recently attended a meeting between the Ministry of Education and representatives for a new initiative sponsored by Microsoft. On the face of it, the offer on the table was compelling: Microsoft Windows and Office licenses for sale at about 700 vatu each for educational institutions. Huge investment in flagship schools in Vanuatu, with hundreds of new PCs in total running all the latest software at prices never seen before. How could anyone refuse?
Microsoft is not the only company to come to the sudden realisation that there are about 5 billion people out there who don’t buy their product. Many major IT corporations have taken a look at the mature European and North American markets and decided to begin developing markets elsewhere in the world.
It’s a great opportunity for them. Junior and intermediate managers trying to make a name for themselves are leading the exploration. Rather than navigate the shark-infested waters of corporate HQ, they’re establishing new territories, trying out new tactics and creating new opportunities for themselves and their customers.
This is not a bad thing in and of itself. But it does need to be understood.
Jason Hiner at Tech Republic has written an article entitled “How Microsoft beat Linux in China and what it means for freedom, justice, and the price of software.” He contends that Microsoft’s ‘victory’ over Linux in China is total.
But what kind of a victory are we talking about here? Well, they gave away access to their crown jewels, the source code:
“In 2003, Microsoft began a program that allowed select partners to view the source code of Windows, and even make some modifications. China was one of 60 countries invited to join the program.”
They cut prices drastically:
“Microsoft got serious about competing on price by offering the Chinese government its Windows and Office software for an estimated $7-$10 per seat (in comparison to $100-$200 per seat in the U.S., Europe, and other countries).”
And they caved completely on piracy and so-called Intellectual Property enforcement:
“Microsoft’s initial strategy was to work to get intellectual property laws enforced in China, but that was an unmitigated disaster. Microsoft realized that it was powerless to stop widespread piracy in China, so it simply threw up the white flag.”
So what exactly did Microsoft win, again? This article is rife with untested assumptions. Let’s establish a bit of context here before going too far.