Microsoft to promote cloud computing in China

The American giant is looking to 'cloud computing' to help bring growth, says its Greater China chief, Ralph Haupter

PUBLISHED : Saturday, 29 June, 2013, 12:00am
UPDATED : Saturday, 29 June, 2013, 5:35am

Microsoft is betting that its focus on "cloud computing" services and smart mobile devices will spur more growth for the company in China.

The software giant has stepped up promotion of its cloud service, Windows Azure, and Office 365, as well as smartphones that run its Windows Phone 8 platform and media tablets with its touch-ready Windows 8 operating system. The company is also selling its first branded computing device, the Surface tablet.

Microsoft launched Windows Azure on the mainland this month to provide businesses with computing, storage, database, integration, connectivity and support for open-source software over the internet.

Last month, Microsoft's chief executive, Steve Ballmer, suggested the firm's revenue from the China market, comprising the mainland, Hong Kong and Taiwan, will surpass that from the United States in the near future.

Charlie Dai, an analyst with Forrester Research, predicted that Microsoft, along with its new network of partners, was poised to write "a new chapter" in the adoption of cloud services on the mainland. "Microsoft will be the leader of this disruption," Dai said, pointing to what he said was Beijing's "strong need to invest in cloud computing to drive economic growth".

Cloud computing enables companies and consumers to buy, lease, sell or distribute over the internet, as well as private networks, a vast range of "on demand" software, business systems, data and other digital resources, including storage. Such resources are hosted in so-called data centres.

Microsoft's expansion efforts in cloud services and smart devices is also expected to lead the firm into other new endeavours in China, including a stronger retail presence. Ralph Haupter, the chairman and chief executive at Microsoft Greater China, disclosed early this month that the company plans to expand its network of branded retail stores into Hong Kong and the mainland.

Speaking with the South China Morning Post, Haupter said the software giant was boosting operations in China under its "Go Big" strategy, as well as a shift into becoming a competitive devices and services provider.


What are the initiatives Microsoft is pursuing?

"We started our new investment phase 12 months ago, when we said we wanted to hire 1,000 more people to be involved in our operations across the mainland, Hong Kong and Taiwan. In particular, the investment in people on the mainland would allow us to increase out footprint in more provinces. Right now, we have more than 20 offices in 15 provinces and large cities. We're looking to get another 1,000 people into the company in the next [financial] year [to June 30, 2014].

"We also want to increase our partner ecosystem here. In the past 12 months, we added more than 5,000 partners, including value-added resellers and hardware manufacturers. The number of companies under our Microsoft partner network has now reached almost 15,000.

"Our aim is to work with more OEMs [original equipment manufacturers], especially in smartphones and media tablets that run on the Windows 8 operating system. Lenovo is already a key hardware partner for us in this market.

"The others include Dell, Samsung Electronics, Acer, Asus, Hewlett-Packard, Sony, Toshiba, Haier and Great Wall.

"We expect to see more investments to support our product lines. Our company has the biggest global research and development spending in the industry, at about US$9.5 billion annually. China has a substantial role, which is why our R&D investment here is the biggest outside the US. There is the perception that China is only doing domestic R&D, but product development here is actually for the global market.

"Another important investment is on cloud services for the business and consumer segments. We want to be very thoughtful in addressing the potential of cloud services in China and the way we bring these products to market.

"On the mainland, we are the first multinational company to bring in public cloud services on a commercial basis on the mainland. We have a very ambitious positioning on how to address this market.

"I feel very good about our capabilities and how the organisation is working. We want to get more people in front of our customers, and help our partners tell their customers our story."


Which cloud technology deployment projects have you started recently?

"In Hong Kong, we are providing Office 365 to thousands of small businesses and consumers though our superb collaboration with Hong Kong Broadband.

"However, there is still a ways to go before we can get the mainland big telecommunications network operators - China Mobile, China Unicom and China Telecom - involved in delivering our portfolio of cloud offerings. We will see how these operators will embrace cloud developments, which the government has embraced.

"We have partnered with data-centre services provider 21Vianet to start offering Windows Azure earlier this month on the mainland, and with Microsoft's experience running more than 200 cloud services for more than a billion customers worldwide, we expect it to be the best in China.

"We're also involved in … deals that are part of the mainland's 'Smart City' projects, which are simply about helping the cities build up their information technology infrastructure to deliver solutions that are relevant to citizens. These projects, in which about 90 cities are included, play to our strengths. Microsoft and its partners offer a portfolio of technologies and services that can meet these cities' specific requirements.

"In April, for example, we agreed to form a long-term strategic partnership with the Hainan government to help transform the province into an international tourist destination and centre for software development. Information technology and intelligent applications are playing an increasingly important role in developing more sustainable industries, including tourism. We have a strong understanding on how to help small and medium-sized businesses become more productive.

"State-owned enterprises also need to find better ways to grow and compete on a global basis. The government is also working to develop its IT infrastructure. I'm convinced that if we do this right, we'll have an excellent opportunity to help accelerate the competitiveness and innovation capabilities of the mainland."


How has Microsoft pushed its agenda in terms of smart devices?

"Obviously, China is the place to be since it is the world's biggest market for smart devices. So we had the global launch of Windows 8 in Shanghai last October, and in April we sold the first Surface tablet in Beijing.

"Moving forward, we're very encouraged about how Window 8 will run on tablets and smartphones in different sizes and form factors. Whatever device you use, all your information will appear exactly the same in all of them."

"Samsung is investing a lot of money on marketing and a lot of people are scratching their heads on why they need to do that. The value of Microsoft's brand is perceived extremely high by comparison, so we're focusing less on marketing and more on providing the right types of solutions to consumers, businesses and government.

"We feel very excited about the worldwide response to the new Xbox One, when we unveiled the game console last month. We're looking forward to bringing it to many markets this November. We're working hard to address the legal requirements so we can also introduce it to consumers on the mainland."


Has there been progress in the protection of the company's intellectual property rights on the mainland?

"I think that mainland China remains the biggest market for counterfeits in the world. Recent industry data show that 77 per cent of the software sold on the mainland is pirated. But the government recognises this issue and has directed campaigns against counterfeits. We find it extremely encouraging."