New Beijing-backed OS Set to Fail

Beijing was back in the R&D labs last week with its announcement of a government-led effort to develop a made-in-China computer operating system (OS) to rival products from global tech giants like Microsoft (Nasdaq: MSFT), Google (Nasdaq: GOOG) and Apple (Nasdaq: AAPL) that now dominate the market. While it’s understandable that China wants to get a piece of a market that will have a huge influence on the future of computing, this kind of government-backed approach is misguided and almost certain to fail like similar efforts have in the past.Instead of trying to lead this kind of product development, Beijing needs to do what governments do best, namely creating policies and incentives that encourage product development from its own increasingly vibrant technology sector. Under the newly announced high-tech initiative, Beijing has assembled a team of engineers to develop the new OS to be called Ubuntu Kylin. (English article) The initial product, based on the open-source Linux OS, will be for desktop and laptop computers, but presumably a mobile version could later follow for use on smartphones.

Perhaps somewhat ironically, the foundation for the new OS isn’t even Chinese and comes in the form of Ubuntu, a foreign-developed OS based on Linux, yet another foreign-developed system that also powers Google’s popular Android OS. In many ways this initiative isn’t new either, since Beijing has encouraged the use of Linux for years as an alternative for Microsoft’s popular Windows OS that now dominates the PC market.

The older Linux initiative has been largely a flop, much like many of the other government-led initiatives aimed at fostering development of homegrown technologies that can compete with Western rivals. In one high-profile case, Beijing tried to foster development of a homegrown wi-fi standard known as WAPI in the early 2000s. That effort ultimately failed when both Chinese and global product developers refused to embrace the technology despite strong-arm tactics from Beijing.

More recently, Beijing has been in the tech-development business with its attempts to popularize a family of homegrown mobile communications standards known as TD.  That initiative has been slightly more successful because the government forced the standard upon industry leader China Mobile (HKEx: 941; NYSE: CHL), the nation’s dominant mobile carrier. But even with the backing of such a heavyweight, the 3G version of TD has been largely a flop though the 4G version is showing more promise.

Rather than actively leading the development of new technologies, Beijing should implement policies that encourage its vibrant computer and Internet sectors to do the job on their own, much the way Western governments encouraged developments that led to the rise of big names like Microsoft, Google and Nokia (Helsinki: NOK1V).

A host of major Chinese firms are already trying to produce mobile operating systems, with names like Baidu and Alibaba all actively working on products that they hope can someday compete with Android and Apple’s iPhone OS. To boost these companies’ chances of success, Beijing should abandon programs like Kylin and use tax credits, research grants and other government incentives to encourage its private sector to develop and popularize new technologies, giving them a much better chance of success.

Bottom line: A new Beijing-backed computer operating system is likely to fail, and the government would be advised to let the private sector handle future similar efforts.

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