SOC: Linux in China

Date: Sat Jul 08 2000 - 16:11:50 MDT

July 7, 2000

Fearing Control by Microsoft , China Backs the Linux System


HANGHAI, July 6 -- Janet Reno is not the only one worried about Bill
Gates's software monopoly. China's leaders are, too.

They are concerned that the country is growing overly dependent on
the Windows operating system, which controls computers running
everything from banks to President Jiang Zemin's e-mail box. But the
Chinese government, itself a master at monopoly, is taking its case
against Microsoft not to the courtroom but to the marketplace, albeit
with a bit of administrative fiat. It is backing the Linux operating
system, which was created by a Finnish university student in 1991 and
is distributed free to anyone.

"We don't want one company to monopolize the software market," said
Chen Chong, a deputy minister of information industries who oversees
the computer industry in China. With Linux, "we can control the
security," he added, so "we can control our own destiny."

A growing number of Chinese have likened dependence on Microsoft to
leaving the keys to the country's increasingly computerized economy
in the hands of a potential enemy. Some warn that secret holes in
Microsoft's computer code might allow the United States access to
Chinese networks or even enable it, in time of war, to shut those
networks down.

Such concerns were only heightened last year when a cryptographer for
a Canadian software firm working in the United States said he had
found a feature in Windows called an NSAKey -- as in National
Security Agency, the United States government agency that gathers
electronic signal intelligence worldwide. Though Microsoft said the
key was innocuous and no support has been found for any sinister
explanation, "no one can guarantee that Windows does not have back
doors," said Liu Bo, a former Microsoft executive who is now chief
executive of Red Flag, a government-backed company set up to create
software based on Linux and to encourage a homegrown software

In addition, various arms of the government have been warning of the
security risk posed by the country's reliance on Microsoft. "Without
information security, there is no national security in politics,
economics and military affairs," declared an editorial in People's
Liberation Army Daily earlier this year.

Microsoft calls such fears nonsense and says it continues to enjoy a
strong working relationship with the government. "We have shared
product information with them," said Michael Rawding, Microsoft's
regional director in China, "and I believe that their comfort with
our product information led them to allow the launch" of Windows
2000, Microsoft's new business-oriented operating system, in China
last spring.

Unlike the Windows source code, which Microsoft keeps secret, the
Linux code is open for all to see and is freely distributed with the
stipulation that anybody can improve it as long as any modifications
are shared with the rest of the world. The almost communistic "from
each according to his ability, to each according to his need"
approach appeals to China's Marxist leaders.

Despite the government's stand, no one is suggesting that Microsoft
is finished in China. Though it will not provide specific sales
figures, the company says its software sales in China surged 80
percent last year and continue to grow. But the government's move to
diversify reflects a broader dissatisfaction with the company and its
founder, Mr. Gates, who just a few years ago was hailed as a hero by
China's young technology enthusiasts.

The turning point in Microsoft's image was the introduction of its
Chinese-language Windows 95 operating system, which was programmed to
display references to "Communist bandits" and to exhort users to
"take back the mainland." Beijing, infuriated to learn that Microsoft
had used computer programmers in Taiwan to write the software,
demanded that the company hire mainland programmers to fix it.

Chief among the company's critics is its former general manager for
China, Juliet Wu, who has become a national celebrity with her
withering, best-selling exposé, "Up Against the Wind:
Microsoft, I.B.M. and Me." The picture she paints of Microsoft as an
arrogant Goliath feeds into the irritation many Chinese computer
users feel toward the company.

Ms. Wu and other critics say Microsoft's pricing -- a software
program can cost as much as an average office worker's monthly salary
-- forces users to buy pirated copies of the company's software. (The
Business Software Alliance, a nonprofit trade group, estimates that
as much as 95 percent of all software in China is pirated, though the
industry hopes China's expected admission to the World Trade
Organization will change that.)

Liu Dongli, an Internet entrepreneur in the southern province of
Fujian, was so enraged by having to pay $241 for Windows 98 that he
sued the company for unfair pricing. The suit was withdrawn when Mr.
Liu realized that Microsoft charges no more for its products in China
than it does elsewhere. "But that doesn't mean we lost the case," he
fumed, vowing to bring suit again when he has more evidence.
"Monopoly is not a good thing."

The news media, meanwhile, have criticized Microsoft for suing a
company last year over the sale of pirated software. Microsoft, which
was asking for $200,000 in damages, lost the case because the Chinese
court ruled that it had sued the wrong company. The defeat only
darkened Microsoft's ominous silhouette in the eyes of many Chinese.

"Microsoft is a bully," said Hua Yuqing, a young Internet
entrepreneur, who complains that Microsoft's high prices and
proprietary computer code squelch creativity. He is building a
business creating software programs that run on Linux. "I don't want
to feel that I'm subconsciously controlled," Mr. Hua said, referring
to the dependence on Microsoft that comes with using its products.

Mr. Hua and a half-dozen computer programmers peck away at their
keyboards here in a drab office empty except for computers, desks,
chairs and a shelf stocked with bottles of orange soda and boxes of
chocolate milk. He and his colleagues are using Linux to start a
company that provides services to subscribers over the Internet -- in
this case, the use of accounting software and sales-tracking
software. The software stays on Mr. Hua's server computer, and
customers rent it rather than buy their own.

Microsoft's public relations disaster has been a boon for Linux. So
far, several companies -- including Red Flag, which is backed by
President Jiang's son, Jiang Mianhang, and TurboLinux, based in San
Francisco -- have introduced Chinese-language versions of the Linux
operating system in China. Many other companies have started to
provide software and services for China's Linux users.

The Chinese government tried for more than a decade to develop an
operating system of its own, but was unable to keep up with the
fast-changing industry. Linux gives the country the tools to build
that system now -- and, in the Chinese view, the fact that the Linux
code is not privately held assures that any security it wants to
build into its computer systems will not have undetectable

But even Linux enthusiasts profess ambivalence about the government's
interest. Linux developers in China say some overseas colleagues
worry that China may not play by the rules for collaborating and
sharing and may adapt Linux to create a proprietary system instead.

In any case, China represents a market potential of such size, and
government influence over the market is still so strong, that
Beijing's support can turn almost any product into an industry
standard domestically. By the end of next year, the country may well
be the third-largest PC market in the world, and software sales are
expected to grow more than 30 percent a year for the foreseeable

As China's economy becomes increasingly integrated with that of the
region and the world, much of Asia is likely to follow its lead.

Mr. Liu, the chief executive of Red Flag, says a third of the
country's Internet servers -- the computers that power Web sites --
are already using Linux operating systems. He estimates that by the
end of next year Linux will run half of all servers in China and as
much as a third of the country's desktop computers.

Those estimates may be overblown; the technology research firm IDC
Asia-Pacific says its data shows less than 3 percent of all servers
shipped to China last year were loaded with Linux. But IDC expects
the number to more than double this year, and Linux's real market
share is most certainly higher because the operating system can be
downloaded free from the Internet.

"Linux, without doubt, has gained some headway among software
developers in China," Mr. Rawding said. "However, I have yet to see
any mission-critical organization deploy Linux because the truth of
the matter is that in businesses, you want the support and service to
be available to you instantly when something does go wrong."

Nonetheless, Great Wall Computer, one of China's biggest PC makers,
has already shipped 200,000 desktop computers loaded with the Linux
operating system, which looks much like Windows though it cannot yet
match all of Microsoft's features.

Ma Li, marketing chief at Great Wall, says his company shifted toward
Linux at Beijing's urging. "As a leading enterprise," he said, "we
should respond to the call of the government."

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