Rampant piracy means Microsoft Corp.'s revenue in China this year will only be about 5% of what it gets in the U.S., even though personal-computer sales in the two countries are almost equal, Chief Executive Steve Ballmer told employees in a meeting here.
Mr. Ballmer's candid remarks provided a glimpse at the software giant's struggle with piracy in what will soon be the world's largest PC market. In China, copies of Microsoft's core Office and Windows programs are still available on street corners for $2 or $3 each, a fraction of their retail price, despite efforts by the company to curb theft.
In his address to employees at the company's new Beijing offices, Mr. Ballmer said Microsoft's revenue per personal computer sold in China is only about a sixth of the amount it gets in India. He noted that Microsoft's total revenue in China, population 1.3 billion, is less than what it gets in the Netherlands, a country of fewer than 17 million.
I don't understand how software piracy could be achieved against Microsoft.
Microsoft requires user to register their software on the internet. Their software requires the user's computer to send information to their Licensing Department. It validates if the software is legal. If the software is legal then it will continue to operate.
If China's software is illegal, then don't validate it when the software phones home.