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Signing in
Charging China
Made in China: Tanya, Catherine, Fabian and Ådne
Company facts
• Founded in Albuquerque, New Mexico 1975, by Bill Gates and Paul Allen
• Headquarters in Redmond, Washington
• 2012: 94. 000 employees worldwide and a turnover of USD 74.3 billion
• Three branches:– Computer software– Online services– Video games
Company facts
• Microsoft Windows came on the market in 1984
• Initial public offering in 1986
• The rise in the stock value was estimated to
make around 4 billionaires and 12 thousand
millionaires from the Microsoft employees
• Introduced Microsoft Office in 1990 and Explorer
in 1995
China: The Early Years
• Founded in Beijing, 1992
• Close to market monopoly due
to piracy
• Original market strategy: The
same as in the West #failing
• Suing companies that were
using counterfeited products
#losing
• Government used Windows, but
changed to Linux when Microsoft
wanted to earn revenue
• Realized that a new approach
was needed…
Rebooting
Culture and Business
“The mountains are high and
the emperor is far away”
– Traditional Chinese saying
“If the U.S. parent company is
twelve time zones away, the
executives need to get on the
ground in China to engage local
support of the enterprise and
bridge the often vast cultural
differences.
– Rose Lee Askin, Senior VP at RBS
Solutions.
The New Approach (2001)
• New approach:
– Lower prices to gain market share from the Windows counterfeits
– Gave the Microsoft managers an introductory tour of China
– Hired Henry Kissinger to open doors and advise on Chinese
business culture
– Wanted to develop an own Chinese software industry, opened the
Research center in Beijing 1998 – Turning point and windfall for
the Microsoft image
• Chinese government afraid of US gathering intelligence
through Windows
– Windows went to extreme lengths and gave the source code to
governments using Windows
– Hu Jintao’s laptop and missile guided systems
Changing Image
• Microsoft’s China investing:
– Inviting officials to help decide in which local software
and outsourcing companies it should invest
– So far Microsoft has spent around USD 500 million
• Cooperation with the Ministry of Education
– Financing 100 rural computer-classrooms
• Made Shanghai global center for costumer services
• “We start changing the perception that
Microsoft is the company coming just to do
antipiracy and sue people. We changed the
company's image. (…) If a foreign company's
strategy matches with the government's
development agenda, the government will
support you, even if they don't like you.”
– Tim Chen, China Microsoft revolutionary
• “You are a friend to the Chinese people, and I am a
friend of Microsoft”
• “Every morning I go to my office and use your software”
– Hu Jintao, Microsoft HQ, 2006
• Tolerating piracy turned out to be Microsoft's best
long-term strategy
• Windows was used on an estimated 90% of China's
120 million PCs in 2007 (CNNMoney July 2007)
• Microsoft's prices have dropped so low it now sells a
$3 package of Windows and Office to students – the
same as the pirated price
Smartphone market
• China is predicted
to be the largest
smartphone
market in the
world by the end
of 2012 (IDC).
• Starting exclusive
work with
Nokia
Future predictions
Smartphone OS
2012 2016 CAGR 12’-16’
Android 68.3% 63.8% 18.8%
iOS 18.8% 19.1% 18.8%
BlackBerry OS 4.7% 4.1% 14.6%
Windows Phone 2.6% 11.4% 71.3%
Linux 2.0% 1.5% 10.5%
Others 3.6% 0.1% - 100%
Total 100% 100% 18.3%
Source: IDC
"We were a naive American company”
• It took Microsoft 15 years and billions of
dollars of lost revenue to learn how to do
business in China
• “You've got to just keep trying and trying and
trying. (…) now we have a wonderful position
in China, and we're going to see great growth
every year for the next five years.”
– Bill Gates
– Bill Gates
Signing off