Microsoft To Sell $1 Bln Software To Lenovo

Lenovo Group Ltd. has signed an agreement with Microsoft Corp. 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 on Thursday that the framework agreement, encompassing this fiscal year, had been signed on Wednesday in the United States with an estimated price tag of more than $1 billion.

Details of the purchasing agreement would be finalised later, he added.

“Our projection is the price tag could be as much as $1.3 billion for this fiscal year,” the spokesman said.

Lenovo’s shares slipped 0.34 percent on Thursday morning, in line with the market’s 0.35 percent dip.

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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.

That 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.