As the computer company is poised to bring Xbox and Xbox live to the mainland, questions remain about Internet standards and profitability
One year ago, during a visit to Microsoft's headquarters in Redmond, Washington, President Hu Jintao said: "Because you, Bill Gates, are a friend of China, I am a friend of Microsoft."
It was a stunning recovery. Years of fumbling had left Microsoft's business in China a shambles. In 2004, it had struggled to save its government business from a campaign urging Chinese government bodies to purchase local software. Beijing had even flirted publicly with that home-wrecking vixen, Linux.
All of those bad memories vanished into the recycle bin as Microsoft earned the most public of endorsements from the most powerful man in China. A rash of new sales agreements with Chinese PC manufacturers followed in short order.
The resurgence was due largely to the efforts of Tim Chen, who took over Microsoft's Greater China business in 2003. Unfortunately, Chen's masterstroke in China came at the same time Microsoft's business overseas seemed to go into terminal decline.
Hit with delays to Vista, its next-generation operating system, fuming at Google's domination of search (and poaching of star researcher Lee Kai-fu in China), and sitting on the sidelines while Apple dominates online music and video, Microsoft seems past its prime.
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