What happened: Speaking at University of Washington, Bill Gates said: “Although 3 million computers get sold each year in China, people don’t pay for our software. Someday they will, though, and as long as they are going to steal it, we want them to steal ours. They’ll get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade.” Gates & Co took a stand that piracy wasn’t all that bad. Their reasoning: if people were pirating the software, they were at least using it, and this could someday translate into real market share once these countries developed. As China got richer, computers got cheaper and Microsoft lowered its prices for operating systems. Today, after a few decades of piracy, Microsoft is the market leader in China.
What it means: For a large profit-making company, it makes sense to acquire new customers for free. Grab mind-share and market share first, revenue share will follow