Microsoft’s golden era in China coming to an end

Microsoft’s golden era in China coming to an end

Staff Reporter

2014-05-24

Chinese authorities announced on May 16 that Windows 8 will be banned from government computers.

Microsoft will not only lose government purchase orders, but will also lose the central enterprise purchases and OEM market–the three major revenue sources for Microsoft in China, according to Guangzhou-based 21st Century Business Herald.

This means that Microsoft’s golden era in the Chinese market is coming to an end, the paper said.

In the context of China’s accession to the World Trade Organization in 2001, Microsoft began changing its strategy in China, making conciliatory moves where it had previously been confrontational. Such a strategy eventually won the support of the government, collaborative partners, as well as customers.

Microsoft took over government procurement, the central enterprises and the OEM market in China one by one.

China has become Microsoft’s most important regional market in the world, but now, it has to say goodbye to all of it.

Independent IT analyst Sun Yongjie stated that the Central Government Procurement Center refused to purchase Windows 8 for three reasons.

Firstly, the user experience for Windows 8 was not good.

Secondly, due to trade friction between China and the United States, in which government procurement has been a major bargaining chip for China.

The third reason is that the Central Government Procurement Center hopes Microsoft will lower the price of Windows 8, as complaints about the high price have not only come from average customers, but also from OEM manufacturers, as well as government and trade buyers.

Product experience has always been a problem with Windows 8. Microsoft announced on April 8 that it would stop technical support for Windows XP despite the fact that it still accounts for 25.4% of the world PC market, and more than half of the Chinese market.

Innovation is lacking in Windows 8 and Windows 7, and users are not keen on upgrading their operating system, according to the paper.

Sun also said that the government has other choices if it does not want to buy Windows 8, such as using Windows7 or XP, especially because the latter is considered one of the Microsoft’s best operating systems.

The newspaper stated that Microsoft’s dilemma has to do with its inability to adapt to user habits.

In the past, the PC was an office product, but nowadays given the additional applications of the internet, such as videos and games, tablet and smartphones are more suitable to customers’ needs. The tablet and smartphone market are dominated by Android and iOS, however, and Microsoft has tried to combine the experience of a traditional PC and tablet in its Windows 8, but this has not gone down well with customers, the paper said.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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