China Prepares Yet Another Homegrown OS

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 |  Includes: GOOG, GOOGL, MSFT, QIHU
by: Doug Young

Sometimes reporting on China's high-tech industries feels like being trapped in a world where the same things happen again and again, as Beijing and companies repeatedly make the same mistakes. The nation is famous for its boom-bust cycles fueled by companies piling into the latest hot products, leading to price wars and battles for market share before most players go bankrupt or leave the space. A similar phenomenon has occurred in the computer operating system (OS) space, where China has tried repeatedly to foster development of products that can supplant Microsoft's (NASDAQ:MSFT) dominant Windows OS and more recently Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) popular Android OS for smartphones.

In the latest wrinkle of the OS story, media are reporting that Beijing is preparing to launch yet another homegrown OS that it hopes can ultimately replace Windows, and will roll out the system by October. (English article) Not surprisingly, experts quoted in one local media report predict the new OS could have a good chance for success following Beijing's recent decision to ban government offices from buying Microsoft's new Windows 8 operating system. (previous post)

There's not much detail on this latest OS being rolled out by Beijing, which was disclosed in a report in the People's Post and Telecommunications News. The reports cite an academic at the Chinese Academy of Engineering saying the system will be for use on desktop computers, and will support applications that can be downloaded from online stores. He added the government hopes the system can replace Windows within 2 years, and that a mobile version will come out in the next three years. Other details include participation in the project by security software maker Qihoo 360 (NYSE:QIHU).

As I've said at the outset, this project is just the latest from Beijing in its efforts to supplant Microsoft and Windows. All of the efforts to date have resulted in failure, though the campaign may be getting some new urgency due to Beijing's concerns that Microsoft products could pose a security risk.

In one of the highest profile and most recent failures, Red Flag Software closed its doors earlier this year after its product based on the open-source Linux OS failed to find a major market. (previous post) Red Flag's final death came slowly, starting with reports that it wasn't paying workers in April last year. Electricity and water were cut off at the company's suburban Beijing headquarters in December. The official end finally came in April when Red Flag formally posted a notice on its door informing the world that it was officially disbanding.

Last year, Beijing launched yet another major attempt to enter the field with its development of Ubuntu Kylin, a mobile OS also based on a foreign-developed Linux-based system. (previous post) I haven't heard anything about that initiative since the launch, which indicates the system hasn't gained any audience yet.

That's quite revealing in the current environment, where a current round of bloody price wars has left smartphone makers looking for any move for a possible way to cut costs and find new customers. Of course it doesn't help that Android is already free. So is a rival mobile OS from web browser giant Firefox, which was unveiled in a number of new models from smartphone makers ZTE and Huawei earlier this year. (previous post)

All that said, the prospects certainly don't look too promising for the new government-led OS that we can expect to see by year end. Such government-led projects are almost inevitably bogged down by bureaucracy, and it's worth noting that all of the major global OS products now in use have come from western-based private sector initiatives.

The biggest factor favoring this new system is Beijing's ban on Windows 8, which might drive some government departments to try out the new OS. But I expect that anyone who does try it out will quickly find it has many problems due to compatibility issues and lack of supporting software. As a result, most government agencies will probably shun the new OS and continue using their old Microsoft products until Beijing finally relents and lifts its ban.

Bottom line: Beijing's latest OS initiative for desktop PCs will get a boost from its recent ban on Windows 8, but will ultimately fail due to compatibility issues and lack of software designed for the system.

Disclosure: None.