RealTime IT News

Microsoft Fights to Keep China Business

Microsoft is fighting to hold onto a multi-million dollar deal with the municipal government of Beijing.

On Nov. 17, Microsoft beat domestic software developers to snag a $3.6 million, three-year software licensing deal with the Beijing municipal government. The deal would have provided unlimited licenses of Windows and Microsoft Office, Xinhua reported.

But the deal also drew the ire of local software vendors, as well as government officials who said that Beijing ignored a January 1, 2003, Chinese procurement law. When a local product is available, it's supposed to receive preference over foreign products.

On Nov. 30, Beijing canceled the order.

A Microsoft spokesperson confirmed the reports to internetnews.com. "We're still in talks with Beijing," he said.

In a written statement, Microsoft applauded Beijing's efforts to move all of its users onto licensed software and said it would hang in there during negotiations. At issue is how the Government Procurement Law defines foreign companies. According to Xinhua, Beijing's purchase was made through Microsoft's local reseller, Beijing Centre Electronic Technology.

"We will actively support and accelerate the commercial negotiations with the municipal government and are committed to continuing our support of the development of the Chinese software industry and economy," the statement read.

As foreign governments evaluate moving to open source software, Microsoft is fighting the threat on several fronts. Its aggressive "Get the Facts on Windows and Linux" campaign publishes white papers analyzing total cost of ownership for the two.

In November, Microsoft CEO Steve Ballmer warned a group of Asian leaders that open source software could be subject to trademark and patent litigation. Ballmer was addressing the Government Leaders Forum in Singapore.

During the same address, he touted Redmond's partnerships with the Chinese government to help increase access to technology and technology skills by distributing an IT skills curriculum on DVDs. Microsoft is supporting the establishment of three computer labs in China's 31 provinces, with networked PCs and high-speed Internet access to serve both teachers and students.

At the same time, it's introducing lower-cost, stripped-down versions of Windows for sale in Asian markets where household incomes are low and piracy is rampant.