'Naked PCs' Expose Microsoft's Emerging Markets Problem

It's a problem that hasn't gone away. Indeed, Microsoft's current issues in China conceal a deeper problem for the U.S. software giant -- despite the popularity of its Windows operating system and Office suite, few consumers in emerging markets are willing to pay for legitimate copies.

   That not only costs Microsoft in lost revenue, but is also holding back the spread of its newest Windows 8 version -- analysts say even buyers of pirate software prefer older versions. According to StatCounter, a website that tracks what software is loaded on Internet-connected computers, more than 90 percent of PCs in China -- now the world's biggest market -- are running pre-8 versions of Windows.

   Microsoft is trying to tackle the issue. This year it's offering Windows 8 at a discount to PC manufacturers who install its Bing search engine as the default. And it's giving away versions of Windows 8 for phones and some tablets.

   But, as the industry shifts from desktop to mobile, the cloud and free or cheap software, China sums up both the old and new challenges Microsoft faces in making money in emerging markets -- and, increasingly, in developed ones.

(Source: dailyfinance.com)