Against this backdrop, Bill Gates arrived in town. With his superstar status, and his company's clout, he was able to line up every major Chinese computer manufacturer behind Microsoft's "Venus project": a combination of software and hardware that lets VCD players (and similar devices) display Chinese-language Internet content on a common television. "Web lifestyles are spreading quickly around the world," said Gates. "I want our Chinese customers to be an integral part of this phenomenon."
This announcement, and the plan behind it, have so far escaped serious scrutiny. When Bill Gates says he intends to embrace and extend the world's largest potential computer market, people are inclined to take his word for it.
And it sounds like a good plan. China has 1.3 billion people, 320 million TV sets and only 2.1 million Internet users. Even a low-cost PC costs an average Chinese city-dweller several months' wages. So Venus, in theory, "will bring entertainment, education and communication technology into the homes of many families that couldn't otherwise afford it."
The Venus project was designed and produced by Chinese staff (at Microsoft's China Research and Development Center), in Chinese, specifically for the Chinese market. Curiously, Venus does not have a proper Chinese name--only a nearly-meaningless phonetic transliteration from English. But it does have Windows CE, which is probably why Microsoft is the first company to try to introduce such a product.
The idea of low-cost family computing is not new in China; for many years, every major department store has sold simple educational computers for as little as US$50. These computers use technology similar to video-game consoles of five years ago, but have full-sized keyboards, display Chinese characters on a common television, and can run a wide variety of educational and entertainment software cartridges.
Most of the Chinese companies that Microsoft has lined up behind the Venus project have the technology and resources to introduce such a product on their own. They haven't, and a closer look at the market can help explain why:
Another obstacle is the low quality of content available for the mainland market. Currently, Internet access is most attractive to young, educated, English-speaking Chinese who can use it as a window to the outside world and a means to communicate with friends and classmates now living abroad. The Internet in China doesn't offer much today for the conservative lifestyle of the "lao bai xing" (common people).
For Bill Gates, though, the problems faced by Venus in China are insignificant compared to the problems faced by Windows CE at home. Windows 95 has dominated the desktop market because of compatibility: users buy the system that has the most third-party software, and third-party developers produce software for the system that has the most users. Windows CE, on the other hand, is targeted at the handheld and embedded systems market. For handheld computers, ease-of-use and functionality are more important than third-party software compatibility; so far Windows CE has only managed to capture 25% of the handheld market, far behind the 41% share of PalmOS.
Embedded systems, such as the proposed Venus "information appliance", are self-contained by nature, meaning almost no third-party software, and no requirement for compatibility. This fosters greater variety and stiffer competition: the embedded systems industry site, www.embedded.com, lists over 30 different commercially-available embedded real-time operating systems. Windows CE isn't even mentioned.
So Windows CE needs help. Even if the Venus project never makes a significant impact on the Chinese Internet market, the very act of embedding Windows CE into millions of Chinese consumer products will create momentum that can only help the marketing of Windows CE elsewhere. In other words, when Bill Gates comes to China, he may not be asking what he can do for the country, but asking what the country can do for him.