By Star Chang, posted Oct 25, 2012 at 10:34 AM, 541 views,

Microsoft Wants Surface Tablet to Become the Killer in China Piracy Fight

Microsoft is the world’s largest market for PC’s operating system and yet with high piracy rates in China, the software company is seeing only a fraction of the revenue it could collect. That might change with the launch of its Surface tablet, which goes on sale online in China at the same time as a handful of other countries. Microsoft chose Shanghai as its first global site for what it called a “pre-launch” of Windows 8 on Tuesday. The tablet will be sold tomorrow in China through Suning Appliance retail stores and as well as Microsoft’s online China store. There is no delay on the release and this reflects how important China is to Microsoft …

The Surface is a rare piece of Microsoft hardware, and will run the company’s new Windows 8 operating system (Windows RT). Also working in its favor is the price. A 32-gigabyte model of the Surface will sell in China for 3,688 yuan (US$589), about 800 yuan cheaper than a similar model of iPad sold by Apple. Microsoft, the world’s biggest software maker, has long struggled to monetise China. Its biggest problem has been piracy. Since opening its first Beijing office 20 years ago, Microsoft has found it hard to gain traction among Chinese consumers unwilling to pay full price for software. According to a Business Software Alliance report in May, the piracy rate in China reached 77 percent last year, which worth nearly US$9 billion.

Microsoft has prodding the government to get pirated software off its computers and replace it with legitimate copies. Although progress is being made, it is not necessarily benefiting the software giant. State-owned enterprises have offices and subsidiaries spread across the country, slowing down the process, while those who do replace their pirated software tend to opt for a much cheaper local variant called Kingsoft WPS. Microsoft’s other businesses have also not fared so well in China. Since its launch in 2009, Microsoft’s search engine Bing is still in beta mode and a sales ban on video game consoles in China means its popular Xbox cannot be sold legally in the country.

In its favour now is a fast-growing collection of mobile software applications — which most of the people are calling it ‘apps’ — Microsoft believes it has prepared the ground to win over skeptics. Microsoft has persuaded Chinese developers such as Tencent (instant messenger company), Sina (social network service) and PPTV (online TV service) to develop Windows 8 versions of their popular apps that will run on the Surface in advance of the launch. That means that while globally the Surface will have fewer apps than Google’s Play store and the Apple’s App Store, the Windows App Store in China will have the second-highest number of apps globally when Windows 8 is launched, according to the words from Microsoft’s China executive.

Microsoft faces an uphill battle in tablets. Sales of Apple’s iPad accounted for 72 percent of tablets sold in the second quarter. Lenovo garnered about 8.4 percent and Samsung 3.6 percent. Apple has just announced a smaller version of its iPad, adding to the already crowded field of choices. Chinese consumers like foreign brands but they are still price sensitive. Microsoft’s dominance is in software and while the introduction of Surface is good for the Chinese market. But it needs to be even cheaper and provides more compatibility on mobile apps if it wants to attract more Chinese consumer.

SOURCE: REUTERS, china.org.cn, it168.com