Home » Geopolitics » Microsoft’s huge underperformance on mainland China market

Microsoft’s huge underperformance on mainland China market

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Core information:

Ballmer Bares China Travails [May 27, 2011]

Rampant piracy means Microsoft Corp.’s revenue in China this year will only be about 5% of what it gets in the U.S., even though personal-computer sales in the two countries are almost equal, Chief Executive Steve Ballmertold employees in a meeting here.

Mr. Ballmer’s candid remarks provided a glimpse at the software giant’s struggle with piracy in what will soon be the world’s largest PC market. In China, copies of Microsoft’s core Office and Windows programs are still available on street corners for $2 or $3 each, a fraction of their retail price, despite efforts by the company to curb theft.

In his address to employees at the company’s new Beijing offices, Mr. Ballmer said Microsoft’s revenue per personal computer sold in China is only about a sixth of the amount it gets in India. He noted that Microsoft’s total revenue in China, population 1.3 billion, is less than what it gets in the Netherlands, a country of fewer than 17 million.

“We’re literally talking about an opportunity that is billions of dollars today” if China’s intellectual property rights protection were at the level of India’s, Mr. Ballmer said Wednesday in Beijing. … PC sales in China will be “as big as the U.S. market this year,” he said, yet “our revenue in China will be about a twentieth of our revenue in the United States.”

The statement suggests Microsoft’s revenue in China is close to $2 billion. For the fiscal year ended June 30, 2010, Microsoft reported U.S. revenue of $36.2 billion out of a world-wide total of $62.5 billion.

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