Global software giant Microsoft has undertaken an ambitious plan to increase its sales in China by slashing the retail prices of its Windows and Office products. But what's the reason for the price cuts and how will consumers react?

Microsoft has announced that it will reduce the retail price of its Windows and Office products in China by as much as nearly 60 percent.

The company Local software sellers say the move is an attempt to win over customers who usually buy less expensive illegal copies of the same software.

Microsoft China says it will cut the price of its Windows XP Home Edition to 399 yuan from 960 yuan in the next 12 months. It will also reduce the retail price of Microsoft Office 2007 software to 398 yuan from 699 yuan.

But some software dealers at Beijing's Zhongguancun, known as China's Silicon Valley, say the seemingly lucrative discounts are not enough to win over prospective buyers.

Here is one salesman who sells genuine Microsoft's products at Zhongguancun.

"I only sell five to six kits everyday. Most people just take a look."

Many consumers say the prices are still too high for them.

"For computer users, we all hope to use genuine software considering the quality and services, but it should be reasonably priced."

"For me, I think pirated and genuine software are almost the same. I don't think I will buy the genuine copies, because they are too expensive."

Consumers have also linked the price cut to the "black screen" crackdown on pirated software that Microsoft started in October. Those who use unauthorized Windows or Office applications see their screens turn black or show pop-up alerts every hour.

The move has annoyed some computer users who call it a "monopoly act" and complain about the high price of genuine Microsoft products.

Microsoft first entered China in 1992. Since then, its revenue in the world's second largest personal computer market has grown sluggish because of the large amount of pirated software sales.

The company has convinced government agencies and computer venders here to use genuine Microsoft software in recent years. But illegal software still prevails among individual consumers.
Critics say Microsoft's high prices have forced many Chinese consumers to turn to pirated versions.

Statistics show about 40 million PCs are sold in China annually. But according to Yuan Meng, vice secretary-general of the China Open Source Software Promotion Union, it will take time for the majority of computer users to recognize the significance of using genuine copies of software.

"The Chinese public does not fully realize the value of genuine software, and they also lack the awareness to buy it. This prevailing thought cannot be changed on a short-term basis."