Why a China-made PC operating system is not up to scratch

When Mr Xi Jinping walks into Microsoft’s headquarters today for a global technology forum, he should have an extra spring in his step.

Last week, Dell announced that 42 per cent of the computers it sells in China now come pre-loaded with NeoKylin, a Chinese government-designed operating system that hopes to seize some of Windows’ 97.2 per cent market share in the country.

That is an eye-catching sales bump and welcome news for a Chinese regime that has unsuccessfully sought to challenge Windows for the last 15 years. It is also, however, a reminder of how quickly technology continues to outpace Beijing’s efforts to control it.

The Chinese government’s eagerness to develop a homegrown OS grew out of fears that Microsoft and other software developers had built security vulnerabilities into their products that could be exploited by the US government. Such suspicions have intensified in the wake of the Edward Snowden revelations. The Chinese government has subsidised the effort since 2001, and more recently, it has pushed state-owned enterprises, government agencies and banks to transition away from Western technology such as Windows by 2020. Dell, which controls around 11 per cent of China’s PC market, sells largely to such big institutions.

At the same time, the authorities hoped a Chinese-designed OS would serve as a platform for innovation, thus boosting the local software industry. That effort has largely failed. Whatever Beijing has invested in OS development — the total has not been publicised — there has been little to show for it. Red Flag Software Company, a high-profile enterprise formed by the Chinese Academy of Sciences, produced a local variant of the open-source Linux operating system that went bankrupt last year, having never generated more than US$1.57 million in annual revenues.

TECHNOLOGY GAP

According to CCID, a China-based research and outsourcing consultancy, the market for Chinese-made operating systems amounted to a paltry US$51 million last year and may grow to US$68 million in 2017.

The project that would become NeoKylin started in 2004 at China’s National University of Defense Technology, and until quite recently it did not appear to have much better prospects. As with other Chinese-made operating systems, its technology lagged foreign competitors: As of last year, NeoKylin still could not run Tencent’s QQ, China’s most popular instant-messaging platform with roughly 800 million registered accounts; the program works just fine on Windows and Mac OS.

NeoKylin’s struggles point to a wider problem: Software designed exclusively for a Chinese audience is inevitably going to be more buggy, and will support fewer programs than technology that benefits from an international community of developers, users and critics.

More importantly, while government agencies may still depend on desktops, the majority of Chinese no longer do. As of last year, more Chinese are accessing the Internet via smartphones than PCs. And the gap is growing, driven by the explosion in homegrown mobile apps.

Indeed, even as the government has poured resources into OS development for PCs, private Chinese companies have been churning out some of the world’s most innovative and popular software for the fast-growing mobile computing sector.

In particular, Tencent’s WeChat messaging app has so deeply integrated personal finance, e-commerce and browsing functions that it has become a kind of mobile operating system in its own right.

As Ms Connie Chan at Andreessen Horowitz recently wrote, China is essentially leapfrogging “over the PC era directly to mobile”.

NeoKylin is not part of that great leap. True, if the government’s top concern is security, then backing a clunky-but-safe operating system is probably justifiable — even if the technology never draws meaningful market share away from Microsoft.

But, if China wants to become a centre of innovation, wasting government resources on technologies that cannot compete globally — and have shrinking markets to boot — is pointless.

The authorities would be better off taking steps to create an environment that encourages innovation, beginning with better enforcement of intellectual property laws. Over the long term, that is more likely to produce a stronger and more secure, China. BLOOMBERG

ABOUT THE AUTHOR:

Adam Minter is an American writer based in Asia, where he covers politics, culture and business.