Microsoft Unveils Plans for China Joint Venture

December 18th, 2015 by Mark Daly in Industry News No Comments »

Microsoft Corp. disclosed new details of a plan to work with a Chinese partner to accelerate adoption of the Windows 10 operating system introduced last summer.

The company late Wednesday said it will set up a jointly owned entity with China Electronics Technology Group Corp., or CETC, a state-owned company that provides technology for Chinese military and civilian use. The venture will extend a relationship announced with CETC in September, Microsoft said.

That venture, tentatively called C&M Information Technologies, will be based in Beijing and will license, deploy, manage and provide technical support for Windows 10 for government agencies and government-owned institutions, said Yusuf Mehdi, a corporate vice president in Microsoft’s Window and devices group, in a blog post released to coincide with a news conference in Beijing.

The software company has been cutting deals with a range of partners, including Chinese search-engine giant Baidu Inc., in the wake of headwinds facing Microsoft and many U.S. technology vendors in the country.

Microsoft’s software is widely used in China, but often on a pirated basis that brings no revenue to the company. More recently, Microsoft has faced a government probe over how it distributes software and a ban by a government procurement center that prevented agencies from buying PCs loaded with Windows 8 software.

Microsoft’s problems have been exacerbated by security fears affecting many U.S. hardware and software companies selling in China, stemming largely from assertions by former U.S. National Security Agency contractor Edward Snowden that foreign-made products have been used for spying.

The initial relationship with CETC, announced during a visit by Chinese President Xi Jinping to Seattle, was described as an effort to maintain a “localized” version of Windows 10 for clients in Chinese government and state-owned enterprises operating critical infrastructure.

Mr. Mehdi, in the blog post, said the new venture will have exclusive rights to license a specific configuration, or image, of Windows 10 developed for Chinese customers, which includes capabilities such as government-selected antivirus software.

The venture, among other things, also will collect feedback from government customers for future versions of the Windows 10 software image, Microsoft said.

Mr. Mehdi said Microsoft has no plans to weaken the security of Windows 10, and will retain ownership of the technology, while continuing a policy of allowing customers and partners to develop additional components to plug into the software.

The venture is subject to regulatory approval in China, Microsoft said.

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