Microsoft Strips for China

By LouAnn Lofton (TMF Bling)
February 28, 2003

Microsoft (Nasdaq: MSFT) is takin' it all off for China. But before you picture Bill Gates cavorting on the Great Wall in his birthday suit, it's only Windows that's stripping down. (Whew!)

As part of the software giant's Government Security Program (GSP) announced last month, China has signed on to access Windows' underlying code. The populous country (and potential lucrative software market) joins Russia, the U.K., and NATO in the new initiative.

Microsoft said it's in talks with over 30 other countries to expand the program, which gives governments free access to the code behind Windows 2000, Windows XP, Windows Server 2003, and Windows CE.NET for review.

Gates joked that the deal has "zero dollars" of revenue associated with it, since it's (duh) free. But obviously, it's another important move in China for Microsoft.

The company pledged last year to invest $750 million in China over three years to help develop one of the world's fastest-growing computer and technology markets. And in addition to the GSP announcement, Microsoft signed deals in the last few days with China Unicom, the Industrial and Commercial Bank of China, and PetroChina Co. Ltd. It didn't reveal how much those deals are worth, only saying it's in the millions.

Both China and Microsoft likely share trust concerns here. It's no secret that China's a hotbed of software piracy. In fact, Microsoft executives have said that for every legit copy of Windows sold in China, nine pirated copies are produced. On the other hand, China is understandably skeptical of Windows' security, and will need some convincing before it decides the software is secure enough to protect sensitive information.

Foolish Disclosure: LouAnn Lofton owns shares of Microsoft.

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