The ongoing battle between the United States and China over the Chinese government’s demand that all new PCs sold there include web-filtering software has several side-effects.
One of them is it creates a public-relations nightmare for leading PC companies. And it also has those companies facing the possibility of losing out on the lucrative Chinese market at a time when spending on new technology products remains less than stable elsewhere in the world.
China is pressuring PC makers to install the web-filtering software called Green Dam with all new computers sold in the country beginning July 1. The government says the move is to protect children from pornography and other inappropriate content. There are strong suggestions coming from the United States, and elsewhere, that there is a wider scope for this censorship.
The exact size of the Chinese market for the industry is unclear. Few of the top PC companies are willing to reveal how much of their business comes from China. No one, however, would argue that it is the biggest developing market in the world. To lose it would, for most manufacturers, spell disaster.
According to Gartner, which gets it right more often than most, 291 million PCs were sold worldwide in 2008. Of that total, 41 million units, or about 14% of all the world’s PC sales, came from China.
More importantly, perhaps, Gartner estimates that by 2012, the worldwide total of PC sales will reach 391 million units, and China will account for close to 16% of those sales.
The Seattle Times reports that Hewlett Packard includes Chinese PC sales within its Asia Pacific figures. Both HP and Dell come behind the Lenovo Group, with 24.4% of the total unit shipments in China.
Gartner said Hewlett Packard came in second with a 12.3% market share, while Chinese PC maker Founder was third with 7.6%, narrowly pipping Dell with 7.2% of the quarter’s shipments.
Thus the PC companies are faced with the toughest of decisions. Do we do what China insists we do or do we risk losing one of the biggest markets in the world. In truth, there is little doubt that if it comes to the crunch the software will be supplied. No risk.