Beijing Cancels Massive Microsoft Software Order

Amidst long-standing complaints that it should abandon foreign software and adopt Chinese-built solutions, the city of Beijing China has canceled a $3.5 million deal with software giant Microsoft. Previously, Microsoft had won a deal to provide Beijing with operating system and applications software.

According to the South China Morning Post, Beijing recanted its deal with Microsoft after receiving numerous complaints from Chinese software companies. In a meeting this week with representatives of those companies and the Chinese central government, various Beijing city officials eventually caved into the pressure and agreed to cancel its Microsoft deal.

Most of China's modern software industry is based on open source solutions, including Linux-based solutions from companies like Red Flag Software. But analysts note that idealism over open source software had nothing to do with the decision to drop the Microsoft bid. Instead, China is aggressively trying to push domestic products over those from outside companies like Microsoft.

On a related note, over 90 percent of all software used in China is pirated software from US companies. As the country moves to homegrown open-source software, it's unclear how that percentage will change. For Microsoft, however, the strategies for competing with piracy and open source software solutions are eerily similar anyway: The company has typically lowered prices and touted the benefits of its mature support channels.

Microsoft was to have provided Beijing with Windows and Microsoft Office software. Other Chinese cities, including Tianjin and Shanghai, have withstood outside pressures to give precedence to Chinese software and have awarded Microsoft lucrative contracts recently.

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