Redmond (Washington): Lenovo Group Ltd. and Microsoft Corporation on Monday formally signed a November agreement to pre-install the Windows operating system on Lenovo's computers made in China.
The agreement is expected to result in $1.2 billion in sales of Microsoft's Windows operating system software over the next 12 months, Lenovo said.
In November, Lenovo, China's largest PC maker, became the first personal computer manufacturer to pre-install Windows in all of its product lines for the China market, where software piracy is rampant.
Lenovo chairman Yang Yuanqing said the percentage of customers who chose to buy a Lenovo PC pre-installed with Windows XP rose from 10 per cent before November to more than 70 per cent now.
"The partnership we sign today will further increase our cooperation in this area, as well as extending our partnership to include high-end PC product development and joint marketing in new emerging markets," Yang said at a ceremony, attended by Microsoft chairman Bill Gates, Microsoft chief executive Steve Ballmer and Chinese government officials.
The formal signing of the November agreement at Microsoft's headquarters in Redmond, Washington, comes a day before China President Hu Jintao arrives in Seattle and tours the software giant's headquarters and has dinner at the Gates' residence.
Aside from Lenovo, three Chinese PC manufacturers have announced plans to buy a total of over $400 million worth of Windows operating system software.
The agreements follow a Chinese government decree that requires all PCs made in China to have a licensed operating software installed before leaving the factory as part of the government's efforts to crack down on piracy.
Lenovo, the world's third-largest PC manufacturer, last year bought International Business Machines Corp.'s PC assets for $1.25 billion.
Shares of Microsoft closed down 23 cents at $26.84, broadly in line with declines on Nasdaq.
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