Cracking the China code: Microsoft vs. Apple

“In 2011 Microsoft’s CEO bemoaned that revenue in China was about 5% of what it obtained in the US,” Horace Dediu writes for Asymco. “Yesterday Apple’s CEO suggested that revenue from China will overtake the US in the near future.”

“The contrast is even more stark when one considers the time and effort each company has made in China,” Dediu writes. “Microsoft has been investing and promoting itself in China for decades while Apple barely had any presence 3 years ago.”

Dediu writes, “China and the US have a roughly equal number of PCs but the mobile users in China exceed the US by a factor of three to one. The pool of users is so great that Apple obtained its growth even with reaching only 30% mobile network distribution coverage… But more fundamentally, Microsoft’s software licensing business model is severely limited in China because what it offers is not what is valued.”

Much more in the full article here.

MacDailyNews Take: It’s all over but the shouting.

Rest in pieces, Microsoft.

Related articles:
Tim Cook: China will overtake U.S. as Apple’s biggest market – January 11, 2013
Microsoft’s Bill Gates: ‘We’ve been f—-ed by China’ – September 6, 2005

13 Comments

  1. I love this line: Microsoft’s software licensing business model is severely limited in China because what it offers is not what is valued. The Chinese, like people around the world, know what they want/need, but MS tries to tell everyone that what they offer in their packages is just what people need. MS never seems to figure out that people don’t want or need bloatware and draconian licensing terms.

      1. With jailbreaking so prevalent in the US, I wonder how long it is before the Chinese stop paying for apps? There already is an iPhone 5 knock off that runs Android and I think there will be many more. Morality is a lost trait in the US and has not yet started to grasp hold in China. Everything in China seems to be about saving face rather than valuing principles.

        1. I honestly dont know anyone at the moment that jailbreaks their phone. One person had done it, and showed it to me, I didnt like that changes and it ran noticeably slower to boot. The guy now has the latest model iphone and no longer jailbreaks, as he got a phone company that subsidies the iphone, whereas he had to jailbreak to use it on the current phone company plan he had a contract under…

          1. Want to find out how many people jailbreak? Just post something on this site pointing out that those who jailbreak mostly do it to steal apps and the dozens of horrific responses will pour in. I only know of one who did it and I won’t associate with anyone who likely would. I believe that software should be paid for and support developers.

  2. The difference is Apple’s app store.

    … but it would be unwise to assume that this affords Apple an unbeatable advantage. First, it’s subject to corrupt Chinese regulation. The day may come when the party decides it is better to hamstring western app developers, or to force Apple to give up its profits, or undergo Party censorship, etc.

    Apple’s other strength, impressive integrated product design, does not give it much leverage in China at all. This article gives inadequate attention to the issue of piracy, which already is undermining the iPhone and handing Android significant market share.

    MS has ham-handedly combated for decades, and Apple must soon learn it is a much graver concern than it now believes. Apple simply has no legal leverage to stop piracy in China. The rule of law doesn’t work where corruption is rampant.

    Sadly, in developing nations where the only work available is one step above slave labor, the market for ripoff copycat goods is the only one they know. It is part of the culture, and Apple alone will be powerless to change that. …especially if it continues to assemble the vast majority of its products China, in the land of rampant IP theft.

    Finally: beware the rise of Asian competitors. If Apple thinks Samsung is a pain in the ass, just wait to see what other two-faced corporations will take advantage of Apple in the upcoming years. Western companies are very shortsighted to place all their manufacturing capacity in the hands of others.

  3. Ultimately, it’s the hardware – something people could feel and touch with their hands. And the logo that they could see and show off… I’ve been going to China once every few months since 1993 with each visit lasting 2~3 weeks so I think I can say I have some idea of what the Chinese seek. But then, I don’t because China is just too huge of a country for most mortals to fathom…

    It’s difficult enough to understand America and its complexities. China is that times 4.3 or something like that. And it’s funny and pathetic to read comments like “slave labor” and “third world” being applied to what’s going on in China because people saying that stuff don’t have one iota of a clue of what things are really like there. Ignorance is bliss and also very dangerous. But perhaps it’s too late. Most of America is too ignorant and nothing can be done about it now.

    Apple is/was very lucky in terms of how it’s viewed in China. Microsoft is/was rather unlucky. The great majority of the people in China don’t understand intangibles like software, IP, content, copyright, trademark and things like that. And they *WON’T* for a long time to come. That’s the reality. Apple understands this reality and will take advantage of it to the last drop. And the people over there who *DO* get it realize that it’s about the integration.

    Apple’s mindshare advantage in China is profound. It’s way deeper than why people buy Apple gear here in the US or elsewhere. It’s easy to laugh at a kid selling off his kidney to buy an iPhone and an iPad. But there is a certain type of meaning behind that. Seriously, would a kid sell off his/her kidney to install the latest version of Windows on a generic x86 computer?

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