The Chinese are none too pleased that Microsoft will be retiring XP next month, and the bitching and moaning has been fairly loud. But while it is true that in a sense, Microsoft will be leaving a large percentage of its PRC user base in the lurch, I would argue that the complaints have been hyperbolic and unfair.

First off, let me get my biases out in front. I run the Asia legal department of an American software company, and I am naturally very sympathetic to Microsoft’s right to retire its “old” products. Granted, my employer is not in the operating system biz, and our relationship with our user base is significantly different from the way Microsoft does business.

But even so, I have spent many a negotiation arguing over why my employer should not have its hands tied by users regarding support and maintenance obligations in the post-retirement out years, and I am therefore predisposed to take Microsoft’s side on this. Just for the record.

What’s going on here? Keep in mind that as of April 8, Microsoft is not going to show up on every XP user’s virtual doorstep and shut down their OS. When we talk about “retiring” software, it simply means that the vendor will no longer push out updates or provide support for that particular product. What you get in updates are things like security patches and bug fixes – these can be significant as operating environments change and hackers discover and exploit weaknesses.

Microsoft is retiring the 12-year-old XP globally, so this is not just a China issue. However, China users adopt upgrades much less frequently than in other parts of the world:

Although the percentage of computers running Windows XP in China is declining ahead of Microsoft’s deadline, it’s still quite high. As of January, 49 percent of Chinese computers were using the 12-year-old operating system, according to StatCounter, an analysis firm. That compares with less than 18 percent worldwide and less than 11 percent in the United States. (AP)

About half of all PC users in China? Wow! And I thought my wife was the only one still running XP. Full disclosure: I’m on 8.1 at home and am generally happy to install updates as soon as they are released.

The move to retire XP could therefore potentially impact a whole lot of folks here. What are their options? First choice is to upgrade to a newer operating system. That of course costs money, quite a lot for a large enterprise. Second choice is to essentially ignore all this and pray to the Computer God (I don’t know, Alan Turing?) that security and maintenance issues will not crop up. Third choice is to “upgrade” by obtaining a pirated copy of a newer operating system.

Is Microsoft leaving China users out in the cold here? I don’t think so. For software, XP is ancient stuff. As of Windows 8, there have been three upgrades already. If a big institutional user demanded to me during contract negotiations that we must guarantee maintenance and support for 12 years and four upgrades, I’d laugh in his/her face. In a polite way, of course.

Consider how the user ends up with an operating system this old. XP came out in mid-2001 and was succeeded by Windows Vista in 2007. Let’s say you were a user who hated Vista (very likely, in fact) and preferred to go with XP. You might have been able to get a legal copy all the way up to maybe the beginning of 2009, when Windows 7 was released. (I’m guessing here, don’t hold me to these dates.) That would mean that legal copies of XP are at least 5+ years old at this point.

I don’t know about you, but 5+ years is about the limit of most shitty hardware out there these days. I suppose some folks might swap out faulty power supplies, hard drives and even motherboards to keep these ancient PCs going, but a lot of people would upgrade their hardware after 5 years. And please, don’t write to me about your 10-year-old PC still humming away at home – it’s my blog, so I get to rely on my unsupportable anecdotal evidence. Now, if someone had some stats on the average age of a PC, that would be useful.

Some critics of Microsoft in China have claimed that retiring XP and forcing people into expensive upgrades is inviting piracy. I think most of the folks saying this are suggesting that given Microsoft’s extensive software legalization efforts in China, perhaps the benefits of retiring XP (i.e., upgrade revenue plus lower maintenance and support costs) are outweighed on the IP side.

I disagree. Yes, some users who wish to upgrade will decide that the price is too high and opt for a pirated copy – the number of illegal copies of Windows in China would therefore increase. That’s a bad thing, but think about it in terms of revenue to Microsoft. That illegal copy of Windows does not necessarily equate to lost revenue for Microsoft; if the illegal copy was not available, that user might have decided to stick with XP as a Plan B.

Remember that Microsoft’s OS business model is to sell perpetual licenses. Once that user bought XP, there was no further revenue until an upgrade situation (i.e., a new license purchase). So the revenue stream to Microsoft for all these old XP users is zero. But when XP is retired, each new purchase of Windows represents new revenue, and pirated copies, from a revenue perspective, are no worse than the status quo ante. For Microsoft sales, this is a win-win.

For Microsoft’s IP lawyers and legalization lobbyists, this could be a setback. But I’d say that the financial benefits will outweigh the downside. Besides, if they don’t retire the 12-year-old XP now, when is a good time? In my experience with similar situations, if Microsoft were to decide to postpone the retirement of XP for, say, two more years, we will be having this exact same conversation in 2016.

Best to simply get on with it.


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