Microsoft to spend $1b to stimulate R&D
Microsoft, the software giant, said it will spend $1 billion on research and development (R&D) in China over the next three years, which is to ensure its long-term investment after the company’s anti-piracy policy that made many users in the country angry.
According to Zhang Yaqin, chairman of China Research and Development for Microsoft, the spending is mainly focused on staffing and resources for R&D, not including the $300 million spent on its new research centre in Beijing.
The investment plan was thought up by Simon Leung, the new chairman of the firm’s China operation, who was the former executive at Motorola Inc. This appointment and investment came when Windows Genuine Advantage (WGA) program, which turns a user’s screen black if installed software fails a validation test, has enraged many Chinese uses.
A Chinese lawyer even put forward a complaint with the Chinese government’s suggestion that Microsoft should be fined $1 billion for hacking into the computer systems of millions of users who have bought genuine software.
Leung said Microsoft would foster its cooperation with the Chinese government in the future and deny any challenges in the country.
Although China has brought Microsoft the world’s second largest PC market and helped them gain a dominant market share in China, but due to the problem of piracy of Microsoft’s system, it stems them form generating more revenue in future. The use of pirated software still remains high among individual consumers though the firm has convinced government organizations and PC vendors to use genuine software in recent years.
Microsoft has intensified its battle against piracy this year and has complained about it to the Chinese government. This has led to the detention of Hong Lei, who is the author of an enhanced pirated version of Microsoft Windows XP. The company also reduced its price of Office 2007 software from 699 to 199 yuan during National Day holiday as its promotional plan. However, the price is still too high for many Chinese consumers.
Microsoft will establish an executive management committee for China. Its membership includes Leung and Zhang, with Eugenio Beaufrand as well who is COO of Microsoft China, and the company’s vice-president Liu Fengming, who is responsible for legal issues. Zhang said it is the most comprehensive organization outside the US. It is to better coordinate its resources in China.
In 1995, Microsoft opened its first R&D centre in China. Now, the country is home to its largest R&D workforce outside the US. It has 1,500 full-time research employees and 1,500 working on project basis. According to what Microsoft said earlier, over the next three years, it would double its full-time employees to 3,000.
Microsoft invested approximately $280 million in its R&D activities in China last year. It is said that such investments have helped the company win the support from the Chinese government and stimulate its sales in the Chinese market.
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