Microsoft Works With China After Windows 8 Exclusion

Microsoft Corp. (MSFT), the world’s largest software maker, said it’s working with China’s government to evaluate its Windows 8 operating system after the software was excluded from a government purchasing order.

Microsoft, which continues to provide Windows 7 to government customers, was “surprised” to learn Windows 8 was shut out of China’s purchase of energy-efficient computers, Joanna Li, a Beijing-based spokeswoman for Microsoft, said in an e-mailed response to questions. The company learned of the decision in a notice from the China Central Government Procurement Center yesterday, she said.

The notice from the procurement center gave no reason for excluding Windows 8, yet China’s official Xinhua News Agency yesterday reported it was “a move to ensure computer security” after the company ended support for Windows XP. Microsoft stopped support for XP, which has a 70 percent market share in China, on April 8, Xinhua reported.

“Microsoft has been working proactively with the Central Government Procurement Center and other government agencies through the evaluation process to ensure that our products and services meet all government procurement requirements,” Li said. “At the same time we are working on the Windows 8 evaluation with relevant government agencies.”

Part of the reason for the exclusion order is concerns over Internet safety, Xinhua reported, without citing anyone. The news agency said that China must be careful after reports of U.S. spying. Microsoft and other software makers have been contending with customer concerns following leaks about the U.S. National Security Agency’s data-collection programs.

Hacker Threat

Windows XP users in China are concerned about the threat from hacker attacks following the end of Microsoft support for the XP system, Xinhua reported. China’s Ministry of Industry and Information Technology said last month the end of Windows XP support brought risks to the nation’s communications networks.

Microsoft has encouraged XP users to upgrade to Windows 7 and Windows 8.

China’s decision to exclude Windows 8 was announced in a statement dated May 16. Procurements are often not immediately posted online.

Lenovo Group Ltd. (992), the world’s largest maker of personal computers, will see no impact from China excluding Microsoft’s Windows 8 from government procurement as the company has other software options for customers, Chief Executive Officer Yang Yuanqing said on a conference call today. Lenovo, which has its headquarters in Beijing and Morrisville, North Carolina, has no plan to make its own operating system, Yang said.

The U.S. indicted five Chinese military officials for allegedly hacking into the computer networks of U.S. companies to steal trade secrets.

Following the indictments, China’s Defense Ministry accused the U.S. of “hypocrisy and double standards on the issue of network security.” China also suspended its involvement in a cybersecurity working group with the U.S.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Subramaniam Sharma, Suresh Seshadri

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