* Cloud computing offers way out of piracy predicament
* Chinese business software market 3 percent of world total
* Salesforce.com-scale company seen in China in 5 years
By Georgina Prodhan
ABU DHABI, March 11 (Reuters) - Cloud computing, a
fast-growing way of selling services via the Web without
physical software, offers a chance for China finally to develop
a software market, according to a Chinese industry veteran.
Kai-Fu Lee, who recently resigned as head of Google China,
said the kind of piracy that has hobbled Chinese IT was
near-impossible in a cloud-computing model, in which companies
or individuals pay to access services that are hosted elsewhere.
"China has been plagued by piracy for the last 20 years and
that unfortunately has caused China not to have a software
industry," Lee told Reuters in an interview at the Abu Dhabi
Media Summit.
"But it's irrelevant now, because software distribution is
shifting from packaged software, from end user licence, to cloud
Internet distribution. and when you're on the cloud you gotta
pay," he said.
Lee resigned from Google last year, a few months before the
company reported a large-scale hacking incident that caused it
to threaten to withdraw from China. Google is in talks with the
Chinese government and expects an outcome soon.
Lee, who also previously headed Microsoft's Chinese
operations, has now started a $115 million venture-capital fund,
Innovation Works, that aims to foster Chinese entrepreneurs in
the areas of mobile Internet, e-commerce and cloud computing.
China's business software industry will make revenues of
$6.2 billion this year, analysts at IT research firm Gartner
estimate, dwarfed by the United States' $99.2 billion and less
than 3 percent of the world's total.
Microsoft's chief operating officer said last week the
company would be cautious about investing in China until it
improved intellectual property rights, and said China would not
achieve its potential until that happened.
Cloud computing, or software as a service, is still a young
industry and was pioneered by Salesforce.com, which centres
around offering Web-hosted customer relationship-management
(CRM) software for sales people.
Lee said cloud computing had already revived China's online
gaming industry, which seemed moribund 10 years ago but is now
thriving, thanks to micropayments that gamers make for virtual
weapons or other props that improve their performance or status.
"If you don't pay, you can't log in. If you log in, we're
gonna charge you. If you don't give me your credit card, you
can't use our product," he said.
"That's going to enable the next Salesforce.com, the next
CRM, the next whatever company, because now the software
companies can charge."
Lee estimated it would take about five years before China
would produce a company of the scale of Salesforce, which made
sales of $1.3 billion last year and has a market capitalisation
of $9.4 billion.
(Editing by David Cowell)
