Microsoft ban could prove 'Window' of opportunity

More business opportunities will be available to home-made operating systems after China banned Microsoft Corp's Windows 8 in new government purchases, analysts said on Wednesday.

A big question mark remains, however, because local providers may not be ready to take over the multi-billion-yuan market from overseas giants.

"The ban is a golden opportunity for Chinese software companies to gain ground but it also challenges their product and technology levels," said Zhang Yumu, vice-president of online security company Beijing Rising Information Technology Co Ltd.

Zhang's remarks came after the Central Government Procurement Center on Tuesday excluded Microsoft's flagship OS from the government's energy saving products purchase list.

According to the website of Central Government Procurement Center, this batch of energy saving procurement products should be in accordance with seven criteria which applies in information product category, including desktop computers, tablets, notebook computers, integrated computers and varies printers.

China Business News cited an analyst saying that this ban should not be interpreted as a total prohibition. The appendix of the document released by Central Government Procurement Center indicates that this is a limited move apparently confined to just 10 laptops, 10 desktops, five tablets and five integrated computers.

Wide use of overseas software in governments, military projects and crucial industries such as energy has been raising security concerns for the Chinese government since last year.

Even so, Windows 8 had less than three percent of the market share in China as of April, according to Internet data company cnzz.com.

The website's statistics included OS installation on smartphones and tablets so the adoption rate of Windows 8 on personal computers is set to be significantly lower. PCs are the major government procurement item in China.

It is unclear how the ban will impact Microsoft's China business but the sudden announcement was an obvious gesture that foreign-made software is not welcomed in government offices.

Microsoft described the new regulation as "extremely unexpected" on Tuesday afternoon.

"We have been working proactively with the Central Government Procurement Center and other government agencies through the evaluation process to make sure that our products and services meet all government requirements," the world's largest software company told China Daily in an e-mailed statement.

"We are also working closely with relevant departments to evaluate Windows 8 for government purchase in the future."

Industry regulators have been openly calling for made-in-China systems for many years.The latest public support came from the Ministry of Industry and Information Technology Spokesman Zhangfeng. He pledged in mid-May that the ministry will put "increasing focus" in helping Chinese companies develop Linux-based OS in a bid to lower safety risks.

"The issue of security of foreign software products is not an unnecessary self-inflicted one," said Liu Yufeng, executive deputy general manager of Guangzhou-based ZWCAD Software Co, which develops computer-aided design and manufacturing products.

"Software backdoor may pose risks to the government, national defense, the military industry and other businesses," Liu said.

Impact to tech stocks

Although the government has not spelled out the exact reason behind the ban, analysts speculate high cost and compatibility are two primary causes. The retail price of Windows 8 in China is 888 yuan ($142) and its predecessor Windows 7 costs about 400 yuan ($64.4).

Another reason could be that many Chinese government's websites may not be compatible with Windows 8, according to China Business News.

As experts pointed out, the Window 8 ban may provide a rare opportunity. In terms of easy of use and compatibility, domestically developed Linux-based Ubuntu Kylin OS and Neokylin Linux Secure OS can be the alternatives.

Security Times report citing an anonymous industry source said Linux operating systems could be the main substitute of Windows 8, besides Windows 7 or XP.

After the announcement was made public, mainland's information service stocks surged in the Tuesday afternoon trading, with seven stocks hitting the 10 percent daily limit.

Firms that saw the surge in stock price include China National Software & Service Company and Beijing Join-cheer Software Company. China Standard Software Co's Neokylin Linux Secure OS is among the alternatives, and the company is CNSSC's 50 percent subsidiary.

China Business News quoting Sinolink Securities' research report said that there are about 125 million users of Windows XP across China, and the operating system dominantes government and State-owned enterprises with around 70 percent market share.

"Not a single company listed in Chinese A share market has the capability to develop a competent OS to rival Microsoft," China Business News quoted an analyst in a Shanghai securities company.