Microsoft Piracy Assault Moves to Cloud 微软盗版攻击转向云服务
A month after launching a new assault on piracy by China’s big state-owned enterprises (SOEs), Microsoft (Nasdaq: MSFT) is boosting that offensive with announcement of a new deal to provide cloud-based access to some of its most popular software to the Shanghai city government. This latest move to boost its China revenue looks like a smart one to me, as it provides a more “carrot-like” attractive incentive to China’s big SOEs to stop using pirated versions of its most popular products like its Microsoft Office suite. Microsoft’s previous initiative, first reported back in September, used a more “stick-like” approach, trying to shame big SOEs into stopping their use of pirated products by exposing them in a careful campaign of media leaks and pressure from Beijing.
Let’s look at this newest campaign, which seems a bit more prudent than the previous one because it relies on more positive incentives and thus could be more readily embraced by face-conscious Chinese companies. This latest deal will see the Shanghai city government use legal copies of Microsoft Office and Windows Azure accessed via cloud-based services provided by a company called 21Vianet (Nasdaq: VNET). (company announcement; English article)
Investors weren’t too impressed by the news, bidding up 21Vianet shares by just 1 percent after the news came out; but perhaps that’s because Microsoft was careful to emphasize that customers for these cloud-based services could still choose to get those services from facilities located outside China, and not just from domestically-based cloud centers.
This new initiative comes just a month after media reported that Microsoft was pressuring Beijing to stop several major SOEs, including oil giant PetroChina (HKEx: 857; Shanghai: 601857; NYSE: PTR), from using pirated copies of its products. (previous post) The reports estimated that 40 percent of the copies of Microsoft Office being used at PetroChina’s state-owned parent were pirated. I have no doubt that news of the campaign was also strategically leaked by the US software giant to the media to turn up the pressure on those companies to use legal software.
This new campaign appears to take a more gentle approach by using economic incentives to get big Chinese pirated software users to change their ways. Cloud-based use of software could appeal to many of these Chinese SOEs because fees are much more gradual and based on usage time. By comparison, legal use of traditional PC-based software requires a huge one-time start-up cost, since an entity like PetroChina or the city of Shanghai must pay millions of dollars to buy thousands of legal copies of Office or other products to install on computers of all their employees at the same time.
By signing up for these kind of remotely-based software services, big SOEs and government offices can also show they are helping to promote the development of cloud-based services, which is a top priority for Beijing under its latest 5 year plan. Look for more of these kinds of announcements to come from Microsoft as part of its anti-piracy campaign, which should ultimately benefit the entire software industry.
Bottom line: Microsoft’s new software deal with the city of Shanghai looks like a smart move in its new anti-piracy campaign, drawing on positive reinforcement to wean big SOEs off piracy.
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