China Just Dealt a Temporary Blow to Microsoft's Windows 8

The Chinese government has refused to put the Windows 8 OS onto any of its computers or tablets because of what it calls energy and security problems.

May 22, 2014 at 10:00AM

Evidently, Windows 8 doesn't have everything the Chinese government loves. Source: Microsoft.

As if Microsoft (NASDAQ:MSFT) didn't have enough setbacks for its Windows 8 operating system already, the Chinese government said in a statement this week that it's prohibiting the use of the OS on any of its government computers and tablets.

Closing the window on 8
China's Central Government Procurement Center made the decision that Microsoft's latest operating system didn't meet the energy-saving requirements the government has for its devices, and that the OS also poses a security risk.

But as The Wall Street Journal reported, the refusal to adopt Windows 8 likely comes as a response to Microsoft's canceling support for Windows XP. The older software runs about half of all computers in the country, and about 37% of government devices, according to Net Market Share data.

At this point, the Chinese government has few options. It can stick with XP and risk security issues unless it pays Microsoft for extended service, or it can upgrade to Windows 7. A possible third option would be to tap into the Chinese government's own Ubuntu Kylin OS, but switching over at such a massive scale seems pretty unlikely right now. 

Not the only one getting snubbed
While it may seem like Microsoft is being singled out for not continuing its support of Windows XP, the company is actually just one of many US tech companies receiving backlash from the Chinese government

Cisco Systems (NASDAQ:CSCO) has seen orders in China fall as the government has increasingly ordered equipment from Chinese suppliers after the country set up new cyber security standards. Part of that move against Cisco likely comes after US National Security Agency documents leaked by Edward Snowden showed the US government had tapped communications of foreign governments. 

In an earnings call back in October Cisco's CEO, John Chambers, fielded a question on whether or not National Security Agency spying had affected overseas business. He said, "I think if you look at it, it is an impact in China. I think we're all aware of that." He also mentioned that, "China continued to decline as we and our peers worked through the challenging political dynamics in that country."

Cisco may not be out of the woods yet either. The company saw a decline of 7% in revenue in emerging markets this past quarter, including China, and is fighting to prove that it's not working with the US government on spying. In open letter written by Cisco's General Counsel, Mark Chandler, said, "As a matter of policy and practice, Cisco does not work with any government, including the United States Government, to weaken our products."

So while Microsoft's Windows 8 hiccup is isn't good, it's clearly not the only one trying to regain its footing in China.

What this means for Microsoft
Microsoft has lost out on a lot of revenue in China over the years because its software is frequently pirated in the country. This latest move is yet another step backward, because the Chinese government is probably using legitimate versions of Microsoft's Windows operating system. Obviously, this isn't good for Microsoft's Windows 8 platform right now, but it's not all doom and gloom either.

This could play out in several ways, and a few of them still involve Microsoft's selling something to the Chinese government. The first possibility is that China ends up paying the same multimillion-dollar fee to extend Windows XP support that the Netherlands and the United Kingdom are paying. If that doesn't happen, the Chinese government could still upgrade to Windows 7, which apparently doesn't have the same so-called problems that Windows 8 has.

Or, ultimately, Microsoft and the Chinese government could come to some sort of agreement and Windows 8 will be installed in government devices. I wouldn't put it past Microsoft to work with China to try to figure something out. Obviously we don't know, but it's definitely within the realm of possibility.

While Microsoft doesn't break out its revenue numbers by country, we know that China continues to have a serious piracy problem, which has hurt Microsoft and other tech companies. Back in 2011 Microsoft's former CEO, Steve Ballmer, said that the company's revenue in China was less than that of the Netherlands, despite the fact that PC purchases in the country match those in the US. That year, Microsoft's revenue in China was equal to about 5% of the revenue in US, because of piracy. 

For Microsoft investors, China's latest pushback against Windows 8 is bad news for the OS, but considering that the company already faces piracy issues in the country and the fact that the lockout is only for government devices, it most likely won't have much of a negative impact on the company's overall revenue.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recent recruited a secret-development Dream Team to guarantee their newest smart device was kept hidden from the public for as long as possible. But the secret is out...and some early viewers are even claiming its everyday impact could trump the iPod, iPhone, AND the iPad. In fact, ABI Research predicts 485 million of these type of devices will be sold per year. But one small company makes this gadget possible. And their stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers