Microsoft Signs China Pacts With Legend, Other Firms (Update3)
Bloomberg News
Mar 9 1999 11:17PM ET
Microsoft Signs China Pacts With Legend, Other Firms (Update3)
(Updates in fifth and sixth paragraphs to add reference to AMD and
C-Cube; rewrites first paragraph) Shenzhen, China, March 10
(Bloomberg) -- Microsoft Corp. signed agreements with at least nine
companies operating in China, a move that may help its new operating
system gain the market dominance there that it failed to win in the
U.S. Starting in the second half of the year, companies including
Legend Holdings Ltd. and the China unit of Taiwan's Acer Inc. will
design and produce electronic devices that will connect to a standard
television and will use computer-like input devices such as keyboards
and joysticks. Legend plans to produce a set-top box to allow access
to the Internet using a television and the Windows CE software, a
slimmed-down version of Microsoft's standard operating system used in
hand-held computers, consumer electronics and television set-top boxes too small to run the full operating system. ''By delivering this
technology in low-cost and easy-to-use format, we hope to increase
access to educational software, and ultimately the Internet, for
China's consumers,'' said Bill Gates, Microsoft's chief executive. In
an English-language press release, Microsoft identified its other new
partners as Haier Group Co. Ltd., the parent of Qingdao Haier
Refrigerator Co.; Stone Jinbin Co., which is associated with Stone
Electronic Technology; Philips Consumer Electronics; BBK Electronics
Co.; ESS; Integrated Technologies Express Co.; and Yuxing Electronics
(Group) Co.
A Chinese-language statement made available at the same press
conference also identified U.S.-listed firms Advanced Micro Devices,
Inc. and C-Cube Microsystems Inc. as partners in the Microsoft
venture, known as the ''Venus Project''. There was no immediate
explanation for the inconsistency. The agreements came a day after
Microsoft formed an alliance with Hong Kong Telecommunications Ltd.,
Hong Kong's dominant telephone company, to deliver movies and
interactive video games to personal computers.
Legend, Founder and Stone, as the major manufacturers of computers,
software and office equipment for the Chinese market, stand to benefit
the most, though analysts said more details about the agreements need
to be known before the effect on these companies' bottom lines can be
assessed.
''We don't know how much the Windows software will promote these
companies,'' said Vijay Harjani, an analyst at CS First Boston Inc. in
Hong Kong. Stone Electronic's Hong Kong-traded shares fell 1.5 percent
to 65 HK cents in early trade, after rising 32 percent in the previous
three days. Legend shares, which rose 7.4 percent yesterday, fell 0.8
percent to HK$3.23. Founder shares, which rose 5.9 percent yesterday,
fell 2.8 percent to HK$1.05.
Though both Legend and Stone are expected to report double- digit
declines in 1998 profits, investors bought on optimism about the pace
of recovery in 1999, Harjani said.
For Stone, which manufactures cash registers and other specialized
machinery, ''this will help change its profile,'' he said. Harjani
expects Stone's net profit to rise 83 percent this year, but the new
alliances mean the increase ''could be even sharper.''
Legend packages its own software for the China market and may be
talking to Microsoft about other projects, he said.
The agreement to introduce Windows CE in China may help Microsoft
achieve the dominant market position for its set-top software that is
eluding it elsewhere.
Tele-Communications Inc., the second-largest cable operator in the
U.S., reportedly scaled back its order of Windows CE- installed
set-top boxes from 5 million to 1 million, the first of which are
scheduled to ship by the end of this year. Meanwhile, 14 of the U.S.'s
largest cable operators have ordered set-top boxes which use the
competing PowerTV operating system produced by Scientific-Atlanta Inc.
In the hand-held device market, Windows CE faces a strong rival in
3Com Corp., which manufactures the system used in the PalmPilot
''personal digital assistant'' and other products.
Still, Windows CE is expected to generate US$125 million in sales for
Microsoft this year. ''If the PDA market picks up in China, as it has
in the U.S. and Europe, it would make sense to flush the market before
3Com gets in,'' Harjani said. |
