HP, Microsoft to open duelling software labs in China

Microsoft Corp. and Hewlett-Packard Co. (HP) on Thursday separately announced agreements with the Chinese government to set up software development labs in the country: Microsoft for Windows, HP for Linux.

Microsoft will invest about US$10 million over a two-year period in software development labs where staff will work with Chinese and international companies on applications that use Microsoft’s operating systems, Microsoft said in a statement.

HP will invest about US$23 million over a three-year period to establish a lab for the development, testing and certification of Linux software, HP said in a separate statement.

Both Microsoft and HP have signed agreements under a special program led by the Chinese Ministry of Information Industry called the National Software/Integrated Circuit Public Service Platform. The funds will go toward software, hardware, support and training, according to the Microsoft and HP statements.

The labs will be set up under the leadership of the Chinese government and help develop the Chinese software industry, a representative of the Ministry of Information Industry said in both statements. For Microsoft and HP the arrangements are important to maintain good relations with the government of the world’s most populous nation and an important emerging market.

The timing of the agreement is telling because just recently Microsoft executives told investors that one place they were worried about Linux as competition was in emerging markets and in governments, said Rob Helm, director of research at Directions on Microsoft Inc. in Kirkland, Washington.

Also, Microsoft is convinced that when the emerging markets establish their own software industries, piracy rates will fall, Helm said. China has one of the highest software piracy rates in the world, according to the Business Software Alliance, a group representing the commercial software industry.

“Once emerging markets get legal on software, Microsoft wants to make sure they get legal on Microsoft software,” Helm said.

Microsoft Senior Vice President Kevin Johnson said in his company’s statement that one of the goals is to help China develop its software industry. HP Chairman and Chief Executive Officer Carly Fiorina, in her company’s statement, said HP is committed to advocating and fulfilling the promise of open source.

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