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April 17, 2006

Microsoft and Lenovo renew vows

Posted by David Hunter at 8:48 PM ET.

As mentioned earlier today, Lenovo and Microsoft had a joint announcement:

Senior executives from Lenovo Group Ltd. and Microsoft Corp. met today to reaffirm their joint efforts for market development and to formally sign a global agreement that expands and deepens the strategic cooperation between the two companies.

The two companies will work together to promote the use and benefits of validly licensed Microsoft® software products through new and innovative joint sales, marketing and training programs in China and around the world.

In November 2005, Lenovo took the initiative to launch a value-added software program in China, becoming the first PC manufacturer to pre-install genuine Microsoft Windows® operating systems in all its product lines for the China market.

Lenovo intends to pre-install genuine Microsoft software on PCs manufactured by Lenovo that are sold in more than 65 countries and regions around the world, allowing customers to enjoy the Windows capabilities they expect, and take advantage of ongoing system improvements that let them do more with their PCs. By promoting the consumer benefits of genuine software, Lenovo expects to purchase Microsoft Windows software valued at approximately $1.2 billion (U.S.) over the next 12 months.

Some relevant factoids from the AP:

In an interview Monday with The Associated Press …, Lenovo Chairman Yang Yuanquing said 70 percent of the computers Lenovo sells in China are now loaded with licensed Windows copies, up from 10 percent six months ago.

Lenovo expects to buy $1.2 billion worth of Microsoft software in the next 12 months, including about $200 million for the Chinese market.

So while there are more Lenovo factory installs for the Chinese market, the bulk of the bucks are for other geographies and certainly include the business-as-usual Microsoft installs for the IBM PC business which Lenovo acquired last year. The net is don’t automatically add $1.2B to the Microsoft gross.

Update:
At John Dvorak’s blog, Eideard notices a Shanghai Daily article which indicates that Lenovo is paying Microsoft $37 per copy of Windows. That doesn’t seem out of line with the very rough estimate I made the other day for Founder, another Chinese OEM. As always it depends on the version mix and how many PCs will have Windows instead of an alternative.



Filed under Coopetition, Financial, General Business, Governmental Relations, Legal, Lenovo, Licensing, Microsoft, Piracy, Public Relations

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3 Responses to “Microsoft and Lenovo renew vows”

  1. Looking for the money in Vista -- Microsoft News Tracker Says:

    [...] The piracy reduction effort is a long hard slog, but Microsoft keeps working at it and in the difficult area of relationships with developing countries made progress in just the last few weeks with China ([1], [2], [3]). Specific to Vista, Ina Fried reported at CNET that without authentication of a genuine license, Vista won’t display the fancy new Aero Glass graphical user experience, arguably the biggest new feature. So there’s hope there and perhaps a gain of a few percent in Windows revenues from all of the anti-piracy efforts including Vista features. [...]

  2. Microsoft’s China anti-piracy deals paying off? -- Microsoft News Tracker Says:

    [...] The big jump came as the country’s major homegrown vendors, including Lenovo Group Ltd., Founder Group, Tsinghua Tongfang, and TCL Corp., signed a recent series of landmark deals agreeing to load legal copies of Windows onto most or all of their PCs sold in China. We mentioned these agreements previously ([1], [2], [3]) and except for Lenovo, they didn’t start until April of this year, so perhaps even better news is yet to come. Economic statistics in Communist China have a history of mutability in response to government policy considerations, but the OEMs listed have already paid for a large number of licenses so why wouldn’t they be putting them on machines? Filed under Coopetition, Legal, Governmental Relations, General Business, Licensing, Piracy, Founder, Microsoft, Lenovo   [Permalink] [...]

  3. Microsoft and Lenovo re-plight their troth -- Microsoft News Tracker Says:

    [...] Microsoft did its bit for the Chinese government publicity tour to the USA by once again publicizing its OEM deal with Lenovo even though the details for the upcoming year haven’t really been worked out. The nominal figure is reputed to be “as much as” $1.3B which would be up slightly from last year’s $1.2B and, of course, it includes other markets besides China. The upside for Microsoft, besides helping out a pal, is that the mutual backscratching with the Chinese government keeps them focused on piracy reduction. Filed under Coopetition, Legal, Governmental Relations, General Business, Piracy, Microsoft, Lenovo [...]

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