Por Peggy Brooker
Número 32
Recently in the news, Microsoft decided
to give up their coveted source code and share it with certain countries
and organizations. I will address three reasons for this reversal
of thinking (1) need for new talent (2) survival in the marketplace
and (3) political maneuvering. These reasons will show how important
Microsoft is for the development of new media technologies.
My first point of need for new talent
addresses what all companies have in order to stay competitive in
the constantly changing field of technology. In May, 2002, Microsoft
announced it would spend the next two years looking for talent in
Asian countries (with a focus on China) and donating money to educational
institutions. There are four areas of technologies that Microsoft
is focusing on: speech recognition and synthesis, digital pen, panoramic
pictures, and multimedia compression for wireless communications
networks. (Tham, 2002). By taking this aggressive step, Microsoft
can obtain employees for Microsoft China in Beijing, and form relations
with the Chinese people.
Another consideration from our class
reading of "Pride Before the Fall," by John Heilemann,
it was suggested that the antitrust trial had reduced Microsoft's
ability to hire the brightest and best available talent. Asian countries,
especially China, open up the employment pool so Microsoft will
have the talent to help discover the innovative products of the
future.
Microsoft has also developed business
relations with Chinese companies such as Shanghai Alliance Investment,
Beijing Centergate Technology and Stone Group to develop applications
for the Asia-Pacific region. (Tham, 2002) This move will help entrenched
the Microsoft good-neighbor feeling in the business community of
China.
On face value it seemed a simple,
positive business move on Microsoft's part. Form positive relations
in a foreign country with the people and businesses to help sell
Microsoft products. But Microsoft had an even bigger plan in mind
when they announced in June, 2002, that a deal had been signed with
the Chinese government.
We just signed a deal with the
State Council, the country's chief governing body," President
of Microsoft China Jun Tang said. "They all use Microsoft
products. (Kanellos, 2002)
These moves give Microsoft a significant
advantage in providing new and innovative technologies because they
will have the talent and business connections to help capture the
Asian market.
Until recently, China was considered
insignificant in the field of technology. Now China is quite impressive
in its competency to capture and excel information in this area.
"Over the next 10 years, China
will become a ferociously formidable competitor for companies that
run the entire length of the technology food chain." California
Venture Capitalist Michael Moritz said. (San Antonio Express-News,
2002)
Another reason to understand why
Microsoft invested in Chinese talent and businesses brings me to
my second point of survival in the marketplace. Microsoft received
bad press from the book "Flying Against the Wind: Microsoft,
IBM and Me," by Juliet Wu former Microsoft China General Manager.
Wu's best seller book of two years ago told of Microsoft charging
higher prices and a lack of commitment to investing in China. (Kanellos,
2002)
The biggest rival for Microsoft
in Asia is a company called Red Flag. In 2001, a contract for 2,000
desktop operating systems was given to this company by the municipal
government of Beijing for their Linux operating system. Linux is
an open source software that appeals to governments because it allows
for enhanced security.
Frankly, the contract value is
small, but the impact is quite big," CEO of Red Flag Liu
Bo said. Bo also said "Microsoft thinks, Were No. 1. You
have to buy our products. (Kanellos, 2002)
Other governments in addition to
China have also purchased Red Flag's Linux. What is the advantage
besides a lower price?
The government would probably
like to embrace more open solutions. They probably view Linux
as a more open solution because you can see the source code,"
Director of the Software and Solutions Group at Intel in Shanghai
Wen-Hann said. (Kanellos, 2002)
Remembering that the prior mentioned
accounts happened in the summer of 2002, I will now focus on Microsoft's
announcement in January 2003 to "share" their source code
to the Windows' operating system. The following is an explanation
of the source code as provided by experts in the field.
Microsoft says they are providing
the source code so their clients can be confident about the security
of Windows. To a government, that would mean areas of defense would
be a high priority to obtain the most secure established form of
platform.
Many governments will be able to
address limited information-technology budgets and security issues
with the open source code. An advantage of the open source vs. Microsoft
without open source is suspicious parties may see exactly what's
going on in the software it produces. (Shankland, 2003)
"Governments will be able to
obtain the source code online, have an engineering-level understanding
of Windows architecture, the ability to build more secure environments,
and access to cryptogphaphic code and development tools," Microsoft's
Senior Vice President and Chief China Strategist Craig Mundie said.
(Thibodeau, 2003)
Microsoft's open source code will
help systems integrators. For example, Compaq Global Services and
Advane Inc. are eligible for the program through Systems Integrator
Source Licensing Program (SISlP). (Olavsrud, 2002)
"We will be able to provide
quicker time to resolution for our support and systems integration
services, as well as improve our capabilities globally to offer
a better experience and satisfaction for implementing Windows-based
technology mission-critical solution," Vice President, Enterprise
Ready Microsoft, Compaq Global Services Rick Fricchione said. (Olavsrud,
2002)
The source code will not provide
a government the ability to alter the source code. "This isn't
about developing or supporting customized version of Windows,"
Mundie said. "its about helping build comfort and trust with
our key customers on how Windows is deployed, how security is running
and how other software is running on top of Windows." (Thibodeau,
2003)
All these explanations are positive
but Microsoft in also using the source code as a means to survive
in the marketplace. Red Flag is a fierce competitor and has moved
in on the market not just in Asia, but also countries such as Peru,
Germany, and Finland.
In February, 2003, Microsoft announced
it has not shown a profit in China for the past 10 years. According
to the International Intellectual Property Alliance, 92 percent
of business software applications sold in China in 2001, were pirated,
costing an estimated $1.14 billion in lost revenue to United States
manufacturers. (Hastings, 2003)
Microsoft plans to keep its efforts
going because of the shear size of China's 1.3 billion population.
Even though there is a small percentage of personal computers in
China compared to its population, their economy is growing at a
rapid pace and sales are expected to increase this year making them
a viable, lucrative world market.
This is a long-term opportunity
of substantial magnitude and strategic importance," Craig
Mundie, a Microsoft Senior Vice President and Chief China Strategist
told Forbes. "Are we happy if we only make this money over
10 or 20 years? Ultimately, yes. (Hastings, 2003)
With piracy a problem of such magnitude,
it stands to reason that one of Microsoft's strategies of providing
the source code is to diminish piracy and increase profits. A reasonable
Microsoft strategy would be to entice Chinese customers and their
government while not alienating them by demanding the piracy issue
be addressed. An over zealous attempt to stop piracy could send
possible customers to competitors such as Red Flag.
My final point deals with the political
ramifications of providing the source code. On February 28th, Bill
Gates met with Chinese President Jiang Zemin to discuss future working
relations.
"I wanted to get his view on
how China is developing the best way for Microsoft to be a very
strong partner here in China," Gates said. (Bodeen, 2003)
The significance of the meeting
is that Gates wants the China market for Microsoft. He realizes
the immense potential for profit and with his superior technical
and business mind, will orchestrate every move to accomplish this
goal.
No longer is Gates the wounded dog
over the United States antitrust trial decision. He is jumping borders
and even "going to bed with the enemy." China is not our
ally and Gates is using all the political diplomacy he has to move
his company ahead of the competition.
There is much speculation in the
news as to how Iraq has now obtained the technology they needed
to command an attack. In a lecture by
Raymond Leonard, Instructor, History
and Anthropology, Central Missouri State University, he indicated
that France and China were responsible for providing this knowledge.
I offer these thoughts as speculation
to Gates' (Microsoft's) positioning in China. Has Gates bitterness
over the antitrust case affected his loyalties? Is this an attempt
to increase the bottom line or to show the United States he does
not need them?
Several significant business events
have happened since Microsoft has given access to the source code.
On February 27th, Microsoft signed a deal with state owned China
United Telecom whereby they would provide software to help develop
new, data-focused services for its 207 million subscribers. (Batson,
2003)
This move gives Microsoft a secure
footing in China's mobile phone market. China United Telecom claims
to operate the world largest code divisions multiple access (CDMA)
standard mobile network, whose 8 million current subscriber base
is forecast to reach 20 million by the end of 2003. (Baston, 2003)
On February 28th, CDC Software (a
software unit of Chinadotcom Corporation) has named Microsoft as
a "Golden Solution Partner" in China. This award adds
more credibility to Microsoft and enhances their capabilities to
capture China's market.
The award is the recognition of
our produce development process by an industry player." Managing
Director of CDC Software Alsen Hsien said. "It further demonstrates
our continuous commitment to provide high-quality services and
products to our clients and our capabilities of developing software
products based on Microsoft technology and .NET platform. (Financial
News, 2003)
In conclusion, Microsoft's ability
to obtain the best talent in China have been increased by the methods
I described of combining contributions to educational institutes
and forming alliances with businesses.
Microsoft has been eliminating and/or
decreasing competition by offering the source code to the Windows
platform. There are benefits to governments, system integrators,
and most of all, to Microsoft's future in the Asian and European
markets.
Does Bill Gates' political maneuvering
with Zemin brings questions of allegiance to the United States,
or is it strictly business? Already, Microsoft is making headway
with receiving the China Telecom deal and the CDC Software award.
By providing the source code, it
will enhance Gates' (Microsoft's) ability to have the best people,
the best most innovative products to survive in the marketplace,
and possibly gain the majority share of the international market
through savvy business and political skills. Microsoft is already
a big player in the development of new media technologies. If they
capture the China market, they will be a major player in this field.
References:
Batson, A. (2003). Microsoft To
Sign Pact with China United Telecom. Business News. Retrieved
March 1, 2003 from LexisNexis News database http://cyrano.cmsu.edu:2069/universe/document
Bodeen, C. (2003). Microsoft Agrees to Allow China to See Windows
Source Code. Business News. Retrieved March 1, 2003 from
LexisNexis News database http://cyrano.cmsu.edu:2069/universe/document
Financial News (2003). CDC Software Named a Microsoft Golden Solution
Partner in China. Retrieved March 1, 2003 from LexisNexis News database
http://cyrano.cmsu.edu:2069/universe/document
Hastings, K. (2003). Microsoft
Admits to 10 Years of Losses in China. South China Morning Post.
Retrieved March 1, 2003 from LexisNexis News database http://cyrano.cmsu.edu:2069/universe/document
Kanellos, M. (2002). Microsoft
Gets Diplomatic in China. C/Net News.Com. Retrieved March
1, 2003 from http://news.com.com/2101-1001-932927.html
Olavsrud, T. (2002). Microsoft
Opens Source Code Further. Internet News. Retrieved March
1, 2003 from http://www.inernetnews.com/dev-news/print.php/10_978421
San Antonio Express-News (2002).
China's Silicon Valley. Retrieved March 1, 2003 from LexisNexis
News database
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Shankland, S. (2003). Governments
to see Windows Code. ZDNet India. Retrieved March 1, 2003
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Tham, I. (2002). Microsoft
Looks to China for Researchers. C/Net News.Com. Retrieved
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Thibodeau, P. (2003). Microsoft
Opens Source Code to Governments. ComputerWorld. Retrieved
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Peggy Brooker
Central Missouri State University |