Ballmer Decries Huge China Sales Hole
Microsoft Corp.’s revenue in China this year will 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 said in remarks that offer new details on the software giant’s struggle with piracy. Speaking to Microsoft staff here, Mr. Ballmer rejected the argument, common in China, that many Chinese consumers use pirated software because authentic versions are too expensive. “I’m not saying everybody in China could afford to buy a PC… but if you can, you could afford the software,” he said.
The Microsoft chief is under pressure to improve the company’s financial performance and revive its flagging stock. Microsoft, which lost its crown as the most valuable tech company to Apple Inc. last year, is now in danger of slipping behind International Business Machines Corp. On Wednesday, hedge fund manager and Microsoft investor David Einhorn said it was time for a new CEO at the software giant. As the PC market matures, Microsoft has struggled to keep pace with rivals in the tablet and cellphone markets. On Wednesday, Mr. Ballmer hinted that Microsoft will disclose its plans for software for tablet devices soon. He took a swipe at rival Google Inc., saying it “has taken a failed approach so far” to tablets, while also acknowledging that Apple’s strategy with the iPad has been successful. Mr. Ballmer also acknowledged some telecom carriers are concerned about a potential drain on their business from Skype, which Microsoft this month said it plans to acquire for $8.5 billion—although he also rejected those concerns as unwarranted.
Mr. Ballmer’s remarks on China shed fresh light on the damage Microsoft believes piracy is causing it in the world’s No. 2 economy. The company has long complained about the problem—which has also been an increasingly central subject in U.S.-China trade talks—but Microsoft has provided little detail on the impact. China’s government has acknowledged problems with piracy but says it is taking steps to improve the situation. The CEO said Microsoft’s revenue per personal computer sold in China is only about a sixth of the amount it gets in India and that its total revenue in China is less than what it gets in the Netherlands, a country of less than 17 million people.