CyberTech Rambler

November 2, 2006

Microsoft consider pulling out of China: Just hot air

Filed under: Uncategorized — ctrambler @ 3:43 pm

According to the BBC, pulling out of China is not off-the-cards for Microsoft. No doubt this is a reaction to Yahoo selling out a Chinese blogger.

I cannot stress how extremely unlikely this is going to happen. There is a perception that China is somewhere no company can afford to ignore. (Add India to this list in a few years time). This is not a sound reason to stay in China, but I am afraid it is enough to deter Microsoft from leaving.

A more practical reason is Microsoft cannot afford to ignore China, or India for that matter. The market size is extremely large and a lot of companies are using Microsoft’s product to communicate to people in China. If Microsoft choose to pull out and companies cannot use its product to communicate with its business partners in China, this will be a considerable disadvantage for Microsoft market pitch.

Then there is the reaction of China to the pull out. Can be near catastrophic for Microsoft, and foreign software company in general. One possibility, widely use by a lot of government is simply to relax enforcement of Intellectual Property Law for products of companies who rub them the wrong way. It is simple to do, and there is nothing the United State or any other foreign government can do to effectively counter it. If any, it undermines the case put forward by these government.

Asian governments do not like to be irked. I am actually expecting a reaction simply from this statement from China. Of course it is a mild one and could be simply summoning Microsoft China CEO for an informal “talk” (or should I call it chastising).

Will Microsoft pull out? Barring a US blanket export restriction imposed on all US company, it is not worth discussing. What is worth discussing is how much Microsoft will bend over backwards to accommodate the Chinese government.

Vista is to be delivered to business on Nov 30. This alone means if, in the unlikely case that Microsoft is really considering pulling out of China, don’t expect it to do for at least another 2 years. It will be suicidal if they pull out before Vista got a hold in China.

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