On a trip to Beijing a decade ago, Bill Gates was asked by a senior government official how much money Microsoft Corp. made in China. The official asked the interpreter to double check Gates' reply as he couldn't believe the figure was so low.
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 people in emerging markets are willing to pay for legitimate copies.
This 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.