Microsoft Blaming 'Piracy' Rather Than Basic Economics For Its Struggles In China
from the econ-101-time dept
Steve Ballmer is the latest Microsoft exec to whine about how much "piracy" is costing the company in China, noting that they make so much less in that country than in the US, despite similar numbers of PCs being sold in each country. The mistake should be obvious to anyone who understands basic economics -- or anyone who's read the SSRC report on "piracy in emerging economies." That detailed study lays out, quite clearly, that the issue isn't "piracy," but business models and pricing. People in China, on average, make significantly less than people in the US, so it's no surprise that fewer people are willing to pay Microsoft's high prices. Automatically blaming the issue on "piracy" totally and completely misses the underlying reasons for the difference in revenue. It's a bit scary that someone like Ballmer doesn't seem to recognize this, because it suggests his strategy in China is not going to do much good at all.![Hide This Hide this](https://ii.techdirt.com/s/t/i/topclose.png)
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Filed Under: china, economics, piracy, steve ballmer
Companies: microsoft
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Economically they are mostly just plain capitalist as far as I can tell.
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The US is a capitalist country. Capitalist = capital = city where the government is located. We survive on the government!
Nazi Germany was a fascist country. Fascism = fasces = bundle of rods around an axe. The Nazis survived by having their lictors carry around bundles of rods.
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Capitol is the designated city in which each state's government is located.
Congratulations on failing at language skills!
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We prefer ours in a more natural state.
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We don't call it "thrown into a fire" over here...its "lightly seared"
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Congratulations on missing the intentional silliness of my post as a satire of how silly the originally post to which I was responding was.
But you're incorrect anyway.
Capitol is the building in which the legislature is housed.
cap�i�tal
1 [kap-i-tl] Show IPA
�noun
1.
the city or town that is the official seat of government in a country, state, etc.: Tokyo is the capital of japan.
...
4.
the wealth, whether in money or property, owned or employed in business by an individual, firm, corporation, etc.
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The Chinese are smart enough...
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Re: The Chinese are smart enough...
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Re: The Chinese are smart enough...
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Re: Re: The Chinese are smart enough...
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as opposed to ....anti-social!
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Windows is still the dominant OS, but I see more and more people shifting away from it, either to Linux or MacOS. But the biggest shift is happening in the Smartphone and Tablet PCs.
Android dominates the smartphones. M$ Tried to penetrate the smarphone market, but failed miserably. And now, they aren't even trying to into the tablet market, which is still pretty much wide open.
Then you have to add to the fact that the majority of users are still probably using XP (dropping quickly, but there are still a lot of them).
You also have the browser wars, where it took Microsoft three whole versions to TRY to stay on par with the competition (people claim that IE9 is very good...I never cared to try).
Microsoft was used to the comfort of the monopoly, but times are changing fast. They are not failing because of piracy, they are failing because of their own incompetence.
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Behind door number 2, I could buy some tangible hardware, like a shiny new Android tablet.
Behind door number 3, I could get kicked in the . . . nevermind.
Hmmmm. Tough choice.
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http://www.desktoplinux.com/news/NS4254330887.html
The chinese govn't has put out several statements saying they are pushing for more linux saturation,
http://www.wsws.org/articles/2000/jul2000/lin-j15.shtml
Their local computer shops ship with linux preinstalled and
The Loonsan processor that they make is linux exlusive I believe.
I'm sure there are some pirated windows systems too, but to just ignore their govnts stated goals and obvious progress that they are actively working towards of getting as many pcs off microsoft software in a legal way seems a bit dishonest.
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Think about it. If your entire national infrastructure is using Windows, what kinds of things could the US Government and Microsoft do together? Suddenly shut things down? Sabotage your nuclear program? Or subtly spy on you over a long period of time?
Seems like the US ought to be subsidizing the use of Windows in China.
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FTFY ;)
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If microsoft has some evidence that the Chinese govt's official statements on the matter of trying to become technologically independent through legal means by not using microsoft's stuff and the progress they have made towards that end are just a lie, or they aren't really doing it at all they should show it, not just pretend the only possible explanation is piracy.
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But wouldn't you agree that around $250 for JUST an operating system is a bit of a stretch? MacOS X + iLife + iWork costs $130. That's almost half of the price, and you get more bang for your buck.
So no, piracy is not the problem here.
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Re: Software cost?
With that said, I am quite sure Win OS piracy is rampant in China, for it's gaming value alone. Gaming was my primary reason for purchasing Windows, I'm am quite satisfied with it in any case.
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The average household income in China is around $10,000 US while the average household income in the US is around $85,000.
If Microsoft used the same ratio for pricing as the ratio between incomes then Windows 7 in China would be around $10 US or 65 RMB.
Also, drop the snotty, asshole attitude; especially when you have no idea what you're talking about.
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You also gotta think that if you want to set up a network, you need the fancy dancy non crippled version and probably an expensive server license. Then you need to buy the email server and office software and all that crap. It gets expensive and it's all stuff that is available at no cost from other sources with just a bit of extra effort.
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Look, we can complain about some very relevant cases where business models break down (music, news, publishing), but this probably isn't one of them. One quick stop in a Beijing market will prove that whatever MSFT prices at, the pirates will undercut it by at least half. It doesn't matter if it's a cheap $20 messenger bag, a pair of DG sunglasses or a copy of Windows. There is virtually zero variable cost to another copy of Win7 and so the pirates have all the room in the world to work with.
In fact, there is no possible business model that can compete with what is clearly a marketplace that does not value IP in the least.
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(Not that microsoft should have to but: )
There are definately business models you can use to adapt to an market environment where copyright isn't a factor. They obviously still value software, or they wouldn't use it. You just sell services related to the software such as customization, installation and setup, certification, consulting, training, custom software for hire, etc.
Instead of building updates and trying to sell them to people, you could have companies who require updates and new features or software pay you to build them. (for example)
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In fact, there is no possible business model that can compete with what is clearly a marketplace that does not value IP in the least.
So... the business model of selling copies of software has broken down in China. Time to find a new one, or just complain about the old?
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What was that about piracy being the problem again?
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So how ripped off do people feel outside China?
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This is only one of many problems that Ballmer doesn't seem to recognize or have a good strategy.
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Embattled CEO
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Re: Embattled CEO
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Re: Embattled CEO
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symptoms and causes
"i came down with a runny nose and now it's gone and given me a cold!"
silly people. treat the cause, not the symptom.
m3mnoch.
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They don't have money for the software?
Of course the problem is piracy. duh.
what a stupid and worthless article...
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1. See my post above where I explain how overpriced Windows is in China.
2. Lookup the price of computer hardware in China as compared to the US.
3. Repeatedly jab a q-tip into your ear until voices stop.
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what a stupid and worthless comment.
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Allow me to explain with math:
$500 worth of computer parts + Linux = $500
$500 worth of computer parts + Windows = ~$800
But then again, $500 is way too much to spend on a computer if you are short on cash. I got myself a (very basic and outdated) computer for less than $70. Somebody who spends $70 on a computer is not going to spend four times more in an OS.
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Re: Embattled CEO
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It isn't piracy
And Ballmer isn't a great CEO - which others have noted.
But the real issue is this: when you make a bad product, treat your customers poorly, don't adapt to different markets/consumers/customers in a way that the free market expects, you're bound to suffer.
That's the bottom line.
Make a better product, react to the market faster, & don't disrespect your customer base (and assume they're all criminals) and you might win some business back - even if its in a new form.
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Re: It isn't piracy
No, people cry piracy when there stuff is pirated.
No need to try and make this complicated.
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you are taking statistics out of context. you have to look at the income of those purchasing computers, not just the average income of all people in china.
if you are buying a computer, you can afford some software for it.
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Your comment of "if you are buying a computer, you can afford some software for it." is just naive. Computer hw can easily be dirt cheap.
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M$ whining about China
Even so, I side with the Chinese on this. If M$ couched it in terms of trying to offer a better product/jobs in China/something, the Chinese (PR China), who I have found to be fair minded, might try to comply - but unlike the US, heavy-handed "rights" that make no sense won't fly there.
AND, let's get off the "communism = evil" nonsense, ala Joe McCarthy, "dictatorships = evil" not social systems.
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Ballmer IS the problem
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Re: Ballmer IS the problem
What do you mean, falls over dead?
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At the inner provinces of China, where people earns roughly US$100 a year, there aren't much place selling software (you're not going to buy software if it costs many years of your income and you can just ask your neighbour burn discs for you, right? Those shops selling software can't make a living there). Buying software license is not easy even if you want to do that.
There aren't any "lost" if you're not going to "gain" anything from them in the beginning......
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