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Thursday, April 13, 2006 - Page updated at 12:00 AM

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Big Chinese PC maker to pre-load Windows

Seattle Times technology reporter

The Chinese government is cracking down on software piracy, and Microsoft took a step Wednesday to ensure that as the country moves to legitimate software, its products are at the top of the list.

Microsoft said it signed a three-year agreement with China's No. 2 computer maker, Founder Technology Group, in which Founder will sell computers pre-loaded with legitimate copies of the Windows operating system.

Founder will buy $250 million in Windows software in the deal.

Microsoft made similar agreements this month with two other Chinese computer makers, TCL Group and Tsinghua Tongfang. In November, computer maker Lenovo said it would pre-load Windows onto many of its computers.

The agreement comes as Chinese President Hu Jintao visits the U.S. next week, a trip that will include a tour of Microsoft's campus and dinner at the home of Chairman Bill Gates.

For Microsoft, the deals result from years of trying to make headway in a country where selling pirated software was an accepted business practice.

Founder holds about a 14 percent share in the Chinese PC market, said Tim Chen, who runs Microsoft's China business. For the past four months, Founder has been successful in a trial run selling PCs pre-loaded with Windows, he said.

People "are willing to pay a little bit extra for the legal software," Chen said. "This is really exciting to see it work in the market."

Reading a government proclamation at the ceremony, Jin Xu, the deputy director general of China's ministry of commerce, said his country has taken steps in the past several years to protect intellectual property.

As this continues, he said, the cooperation between China and the U.S. on software will improve.

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He asked that Microsoft support the protection measures the government is taking and help spread the message. The commerce official also said he hoped Microsoft would contribute more to the stable development of trade and economic relations between China and the U.S.

China recently said it would require computer makers to install legitimate copies of operating systems on PCs before selling them to customers.

The companies, including Founder, don't have to choose Windows, but Chen said he was hopeful because that's the operating system favored by most PC users.

"The usage is not the issue," he said. "The issue is whether people would purchase a legal one."

Two trends have worked against Microsoft in China over the past few years, said Mark Anderson, a Friday Harbor technology pundit and consultant.

One is China's desire to set its own software standards. The other is the overall emergence of the open-source Linux software platform as a strong and low-priced alternative to Windows.

Microsoft has been smart enough to stand aside and let these software issues build at their own speed, while at the same time continuing to promote its products and increase its footprint in China, Anderson said.

"The Chinese understand that," he said. "And they both expect and respect it. So it would seem to me likely that going forward we'll see an increasing number of wins for Microsoft in China."

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com

Copyright © 2006 The Seattle Times Company

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