April 21 (Bloomberg) -- Microsoft Corp., the world's largest software maker, plans to open more campuses and increase the number of researchers in China amid sales loss to piracy in the world's second-biggest computer market.

``We are initiating new campuses in Beijing and Shanghai,'' Bill Gates, chairman of the Redmond, Washington- based company, said in a speech today at the opening of the Boao Forum for Asia on southern China's Hainan island. ``We see us and other major players doing this expansion throughout Asia'' for research, he said.

Microsoft is stepping up research operations in a market where about 80 percent of business software is pirated, and more than 90 percent of 1.3 billion people don't own computers. Earlier this week, Gates, 51, announced a $3 software package for students that may help spur sales in emerging countries.

``People are interested in China because of the domestic demand,'' Robert Chiu, head of technology media and telecommunications banking at Merrill Lynch (Asia Pacfic) Ltd., said at the forum. ``China is arguably the biggest market and China will be the logical choice'' for companies to focus research and development, he said.

Microsoft, which started its first research center in Asia 10 years ago, will establish one with Lenovo Group Ltd. to help develop new computers and handheld electronics. The companies haven't set a date for when the center will begin operations, Lenovo, China's biggest computer seller, said on April 18.

`Source of Breakthrough'

``Not only is Asia benefiting from the use of technology, Asia will also be the source of breakthrough and advances in technology,'' Gates said today.

``We'll more than double the capacity we have to hire R&D staff'' in Beijing and Shanghai, he said, without specifying the number of centers or people to be added. Microsoft China Research & Development Group, which has centers in Beijing and Shanghai, employed 1,200 people as of October, according to the company's Web site.

Companies including Microsoft lost $1.9 billion of potential sales in China last year because of piracy, down from $1.6 billion in 2005, according to the International Intellectual Property Alliance, a lobby group of copyright holders. About 82 percent of all business software in China last year was pirated, the group said.

Microsoft will sell a $3 package of Windows, Office and educational programs to governments that want to load the software onto personal computers for students, Gates said in Beijing at a conference for government leaders on April 19.

The programs would normally cost between $100 and $200, the company said. Large numbers of Chinese can't afford retail prices for Microsoft's Windows and Office, and pirated copies are sold for about $1 each.

More Centers

Microsoft also said on April 19 it plans to add to its network of Innovation Centers, which let local businesses gain access to software and training. The company, which already has 110 such centers in 60 countries, will open 90 more in another 25 countries by 2009, Microsoft Senior Vice President Will Poole said that day.

Gates, the world's richest man, reiterated calls made earlier in the week for more investment in technology that would improve education and health care.

It is Microsoft's goal to lower the cost of personal computers so every student can afford to own one, Gates said. By that time, the PC will likely be in the form of a ``tablet computer'' that can recognize voice and handwriting via electronic ink, he said.

Separately, Gates held a meeting with Jack Ma, founder of Alibaba.com Inc., this morning at the Boao Forum. Ma declined to say if the two companies signed any partnership agreement.

Alibaba is the operator of the Chinese Web site of Yahoo Inc., the most-visited U.S. Web site.

To contact the reporter on this story: Janet Ong in Beijing at jong3@bloomberg.net

Last Updated: April 21, 2007 05:21 EDT