Is Microsoft Gunning for China?
Microsoft (NASDAQ:MSFT) is about to increase its efforts in China. Between adding more employees and services in the country and the launch of some new devices, it could be a big opportunity for Microsoft in the growing market.
Being so intricately wrapped up in the fate of the PC industry, Microsoft has shared significantly in the brunt of the fall. In April, International Data Corporation produced data showing that PC shipments had dropped 13.9 percent in the first quarter — the biggest drop since PC shipment numbers first started getting tracked. For companies in the PC industry, the drop hit revenues in a bad way.
To react to the dwindling PC business, companies have to react and find alternative business or tangential business, and Microsoft seems to be doing just that. Because China has a massive market that continues to grow, it presents an extra special opportunity for companies trying to keep up sales and business.
Microsoft already has 4,000 people on staff in China, but in a press conference in Shanghai, Microsoft Chief Executive Officer Steve Ballmer said that the company would be adding several thousand more employees to its China workforce, though he wasn’t specific on the exact number.
With the difficulty of the PC business, Microsoft has an opportunity to try focusing on smartphones, tablets, and services. The Windows maker plans to put an emphasis on its Windows Azure service, which it will begin previewing next month. The service is a cloud-based system that could be very useful to businesses that want to keep track of things across multiple locations without having to invest in their own servers, and since it’s the first public cloud-computing service offered by a multinational company, it could make a dent in the market.
Many of the new employees being added will likely take on support roles for the new service, but they could also take customer service roles to help Microsoft push into China’s smartphone and tablet market with greater ease.
Nokia (NYSE:NOK) might be helping Microsoft slowly grow a Windows Phone user base in some parts of the world, but its success in China might be limited. Fortunately, some of China’s biggest manufacturers are on board with the Windows Phone and could give it a stronger chance in China.
Currently, HTC offers the Windows Phone 8X and 8S, ZTE has the Tania, and Lenovo has the K900. Lenovo also has a selection of Windows tablets — and even PCs. Making sure that customers in China can receive proper support for these devices could help Microsoft make a solid image for itself in China and slowly work its way up the smartphone operating system totem pole.
Follow Mark on Twitter (@WallStMarkSheet)
Investing Insights: Is Marissa Mayer a Winner?