Microsoft to sell $1 billion software to Lenovo

Lenovo Group Ltd has signed an agreement with Microsoft Corporation to buy Windows,
Office and other software suites for its personal computers in a deal worth as much as
$1.3 billion.

A Beijing-based spokesman for China’s largest PC maker said, "Our projection
in the price tag could be as much as $1.3 billion for this fiscal year."

In November 2005, Lenovo became the first personal computer manufacturer to pre-install
Windows on all of its product lines for the Chinese market, where software piracy is
rampant. Agreement followed a Chinese government decree that required all PCs made in
China to have licensed operating software installed before leaving the factory, as part of
Beijing’s efforts to crack down on piracy.

The latest agreement is similar to one inked last year, worth $1.2 billion over a year,
to pre-install Microsoft’s Windows operating system software on Lenovo’s
computers. "Last year’s agreement was executed very well," the spokesman
said.

Lenovo—one of several Chinese companies trying to craft an international
brand— commands a dominant market share in Asia excluding Japan but faces fierce
competition from Dell Inc and Hewlett-Packard elsewhere. The Chinese firm is now vying
with Taiwan’s Acer Inc for the mantle of world’s third-largest PC manufacturer,
after Dell and Hewlett-Packard.