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October 10, 1999

China Gives Boost to Microsoft’s Venus Project

By CBR Staff Writer

The telecommunications authorities in China’s three major cities, Beijing, Shanghai and Guangzhou, have agreed to help Microsoft Corp’s Venus project get off the ground by offering internet access fee discounts of up to 50% to Venus computer users. More than 30 Chinese companies are working with Microsoft to develop a range of information appliances using the US firm’s Windows CE operating system. Most of the appliances will enable internet access via television while combining some PC functions with those of a digital versatile disk or video compact disk player.

Two of China’s largest IT companies, Legend Holdings and TCL International Holdings, expect to have Venus products in retail outlets within two months at a price of less than 3,000 yuan ($360). TCL chairman Li Dongsheng said that Venus products will have a competitive edge over conventional computers because of their low cost despite dropping PC prices. There will always be a major price differential between Venus and conventional computers because Venus computers only provide partial computer functions and do not need a monitor, he said.

However there is some doubt as to how quickly the products will take off and even Legend, China’s top PC maker, is approaching the project cautiously and has yet to start advertising its product. Legend chairman Liu Chuanzhi said recently that the company doesn’t expect initial demand for the product to be huge.

The lack of good Chinese-language content on the internet and of broadband telephone lines which the products require to allow users to watch tv and access the internet at the same time are seen as holding back sales. An ageing, technology-resistant population may also be a barrier. Most families in China

have only one television set, and they won’t give internet access priority. The first priority will still be watching TV, said one analyst. However Microsoft and its partners point to the statistics which show there are more than 300 million TV sets in Chinese homes but only 12 million computers.

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