Legend, Microsoft sign $93m software deal
China's largest computer maker, Legend Group, signed a landmark agreement yesterday worth more than 100 million yuan (about HK$93.2 million) with Microsoft Corp to install Windows 95 in its computers.
It was the largest contract between a United States and mainland company to protect intellectual property rights, following a bilateral agreement on the issue last year, with both companies aiming to increase their share in a fiercely competitive market.
'This is the most significant business agreement Microsoft has signed in China,' Charles Stevens, its vice-president for Far East operations, said.
Microsoft regards Legend as a long-term strategic partner, as important as other major partners such as Hewlett Packard, NEC, Fujitsu and Siemens, he said.
China is the world's fastest-growing computer market and already is the world's fourth or fifth biggest market, he said.
Legend will pay Microsoft a royalty of between US$50 and $100 for each copy of Windows 95 it instals in its computers, Mr Stevens said.
Legend plans this year to install Windows 95 in 400,000 personal computers, accounting for 80 to 90 per cent of its production and excluding only low-end models.
Vice-president Li Qin said that the company aimed to expand its market share by using the best and most popular software in the world, adding that the agreement would not involve an increase in the price to the consumer.
Legend had always obeyed intellectual property laws, paying 50 million yuan in licensing fees to Microsoft and other firms in 1996, Mr Li said.
Ministry of Electronics chief engineer Yu Zhongyu said the agreement showed the fast and healthy development of China's personal computer industry and the determination of the Chinese government to protect intellectual property.
While large state companies obeyed copyright laws, there was a problem with counterfeiting with many small companies, whose output did not appear in official statistics, he said.
This problem would be gradually solved with the development of China's computer industry into large-scale production, he said.
Most Chinese computers use software that is foreign or developed by Sino-foreign joint ventures. 'It will take a certain time for China to develop its own software,' Mr Yu said. 'Most of our energy is devoted to developing application software.
'A few companies are developing systems software, not for PCs but for workstations.' Mr Stevens said that if Legend wanted to install other Microsoft products such as Windows NT or NT-Workstation, it would have to sign new agreements with his company.
'Having signed this landmark agreement, it would be very easy to sign an NT agreement or a Windows 97 agreement which would replace this one,' he said.
