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‘Pay-as-you-go services could cut software piracy’

Craig Mundie, who heads Microsoft Corp.'s research efforts, said in China that the company may be able to reduce its losses from software piracy by expanding the use of pay-as-you-go computing plans similar to ones it has tested in some developing countries.

Charging users based on the time they spend accessing online services, instead of an upfront purchase fee, could “take some of the pressure off of the purely licensed model of software,” Mundie said in an interview in Beijing.

Microsoft launched trials of pay-as-you-go services in China, India, Russia and other countries in 2006, using a technology called FlexGo that monitors software use on PCs and bills users for additional payments when their prepaid balances run out. The company applied for a U.S. patent on a similar-sounding pay-as-you-go scheme last December.

Allowing incremental payments or software rentals lowers the initial purchase costs, making users without a lot of money more likely to buy legitimate versions of products, said Mundie, who is Microsoft's chief research and strategy officer.

Mundie said that intellectual-property laws and copyright enforcement have improved in China. For example, a court in the city of Shenzhen sentenced 11 members of a software counterfeiting ring to prison in December, according to a press release issued then by Microsoft, which said it had assisted in the investigation.

The prison sentences were issued six months after China's state-owned media reported that government officials were investigating whether Microsoft — which previously had complained about the lack of copyright enforcement in the country — was unfairly dominating the Chinese software market.

Despite the progress claimed by Mundie, though, pirated Microsoft programs remain widely available at vendor stalls throughout the country. And the company provoked rage in China last fall when an automatic update to Windows XP turned the screens of PCs black if they were running a pirated version of the operating system.

Mundie also said today that the economic downturn won't affect Microsoft's investment in research work or hiring plans at its Beijing software lab. Microsoft will sacrifice other activities in order to be able to sustain our research and development,” Mundie told Chinese university students during a speech after the interview.

Hsiao-Wuen Hon, the head of the Beijing lab, said at the event that more than 10 new college graduates will be hired this year to join the operation's staff of 200-plus researchers.

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