Software has a bright future here, says Microsoft’s country manager, Pily Wong, but only if the govt and private sector can reduce piracy and make IT products affordable

CEO TALK

By Nathan Green

We need to ensure ... that software has a bright future in Cambodia.

Microsoft opened its office in Cambodia in March 2008 as a Microsoft Development Project (MDP). What is a MDP and what was attractive about the market here?

A MDP is Microsoft’s way of exploring the potential of a country. You can only really see that potential when you are in the country, so the MDP is the first step towards becoming a fully-fledged subsidiary. Cambodia is a country people overseas are talking about more and more so after the very successful story of Microsoft’s subsidiary in Vietnam, it was logical to come to Cambodia in terms of this region.

Microsoft entered Vietnam in 1996 with five people and now employs 160 and earns around $10 million annually. How long until you transform into a full subsidiary here?

It took about five or six years in Vietnam. But Vietnam has around 80 million people and a lot more foreign investment. Cambodia is about six times smaller so it will take some time, but its hard to predict because the region is booming and we are also banking on that.

How many employees are there in Cambodia?

Five. I’m the country manager. I manage a partner account manager, who’s in charge of helping the resellers and distributors. We have a key account manager who visits key accounts to see if there is anything we can do to help. For example, for businesses with a lot of computers, we have different licensing and infrastructure choices. The key account manager helps them buy exactly the amount of software they need and we have a technology specialist to help them develop their networks. We also have an office manager.

How do you rate your performance 18 months in?

It’s been very encouraging to see that people really welcome us and that Cambodians are very enthusiastic about new technology. The government has also started some first steps towards respect of IPR [intellectual property rights] so we are quite satisfied. But we will not make a profit for at least four or five years. We are here for the long-term but as you know we have a high piracy rate here. To be profitable we will need to lower the piracy rate by 10 to 20 points, which is a lot. At the moment, our goal is to educate people and support our partners as much as possible, help the IT community to grow first, and then we can talk about revenue and profits later.

What is your education strategy?

We are trying to grow the community of developers and people who live from IT. We are also trying to persuade the government that IT is the future. The way for Cambodia to catch up with other countries is to use IT to be more efficient and boost productivity. We have about 12 students that we are sponsoring with free software and free online training so that they can learn and improve their IT skills so that they can inspire their classmates and even their teachers in some cases.

Are big corporates and government ministries receptive to your products?

In terms of government, some are and some are not. In terms of the private sector, multinationals are very receptive, [local companies not so]. But we went through that in every country, including China and Vietnam.

You are launching Windows 7 on November 21. How is it different to Vista, your most recent operating system?

First of all, we received a lot of criticism about Vista. Many people think it’s a failure, but to be fair to this product, Microsoft anticipated that the power of machines would constantly improve and we didn’t foresee that suddenly the race to power would be stopped and there would be a new trend towards the netbook. We launched Vista too much ahead of its time. We thought we would enhance security and put in a lot of very nice graphics, but it had a cost in terms of the machine’s resources so it could be a bit slow. When we started the Windows 7 product, we redesigned everything to make it faster. Vista is one of the most reliable and safe operating systems, but Windows 7 is all about optimisation. For example, when you boot a machine with Windows 7 it will not load all the drivers in the memory. It will be very much plug and play, so it will launch drivers only depending on what peripherals and hardware you connect to it. Vista would load all the drivers on start-up just in case you plugged something in.

What advance interest has there been?

A lot of people have complained about Vista so a lot of people are waiting for the launch of Windows 7. We have received a lot of calls since we announced the launch, asking us about the new features, about the benefits.

How do existing customers upgrade?

It depends on how they license their machines. If they bought it with their machine then they will need to buy the upgrade. If they bought the machine and then bought the software with what we call Software Assurance – it’s basically a premium you pay to get free upgrades – then they will get free upgrades.

You said before that piracy was a big issue here. How bad is it?

BSA [the Business Software Alliance, a software trade organisation] recently came here and did a survey. They found that the piracy rate was 95 percent, which is already high enough to make Cambodia the world champion. We estimate that there is a loss for the software industry of about US$40 million per year.

Given the high cost of Microsoft products relative to incomes in Cambodia, that is probably not a surprise. What are you doing to bring prices down?

For students and NGOs, we have academic or charity prices, which can be as low as just 20 percent of the retail price. We also have what we call OEM products, original equipment manufacturer, which include Microsoft operating systems and Microsoft Office that we provide for the system builders - ANANA, First Cambodia etc – to bundle with new machines when they assemble them. OEM products are cheaper than commercial versions. This is to encourage people to also buy the software when they buy a new machine.

What percentage of computers sold are bundled with your software now?

Well, the piracy rate is 95 percent, so you can work it out from that. Most of our resellers are afraid they will scare off their customers if they propose they use genuine software. This is the problem, and it’s a matter of education.

What are the risks of using fake copies?

The immediate risk is viruses or exposure to hacker attacks. According to intelligence from the US, counterfeiters make a very small profit from the CDs they provide. So, what they do is put a virus or a Trojan that will be installed at the same time to your machine. This programme will send all your data and keystrokes to a third party. If you do online purchases, they will get your credit card numbers, together with the CVV code, and that is what makes them rich. At Sorya or Russian market, you will find viruses on at least 50 percent. So the risk of counterfeit software depends on the value you place on your files and your data.

The other risk is to be punished by law. At the moment in Cambodia there is not much risk, but like in other countries we will slowly get there. And that will become a real risk to the reputation of a firm. If a big bank, for example, got caught with pirated software, that is stealing, and how will their customers feel about that.

The government created a National Committee For Intellectual Property Rights (NCIPR) chaired by the Ministry of Commerce in January and the Ministry of Culture’s Department of Copyright and Equal Rights said in September 2008 it would enforce copyright laws nationwide. How is progress on these initiatives and is enough being done?

The government has been surprisingly proactive because what has been said has been done. From the end of 2008 we started to see some enforcement for the local music industry with raids conducted by the economic police. From January 09, the Ministry of Commerce established the NCIPR. We had a meeting with the committee in February or March, and we have a project in collaboration with them to encourage intellectual property rights. It’s a bit slow because it’s a national committee with each and every single ministry represented, but if everybody is represented the committee will be stronger.

Microsoft is involved in the Unicode Consortium, a group of leading information technology companies standardising Khmer script into a computer-friendly format. Now the script has been created, is Microsoft planning to incorporate Unicode into its products for local release?

We have the Khmer Unicode, and now we are considering Khmer Windows and Office but that really depends on the government will to help us; it will be a very big project to redevelop the entire system into the Khmer language.

What do you mean it depends on the will of the government?

Well, we need to ensure first that software has a bright future in Cambodia. That starts with intellectual property rights. We want them to recognise that it is something important, and we want them to take measures to help enforcement.