Microsoft Corp. reorganized its leadership in China, as the company continues to contend with software piracy in world's largest personal-computer market and regulations barring sales of its Xbox 360 game console.
The Redmond, Wash., company said Friday that its Greater China chief executive, will be succeeded by the current area vice president for Microsoft Germany. It also said that the Greater China Chief Operating Officer will be switching positions with the managing director of Microsoft U.K.
Microsoft said in a written response to questions that its Greater China chief executive "decided to leave Microsoft for personal and family reasons," adding that the company's Greater China business has "experienced dramatic growth in the past four years under the strong leadership. He will depart at the end of April but remain in an advisory role, the company said.
Microsoft has reached a key milestone in their ambitious growth plans for the Greater China region and it is a good time for new leaders to take these plans to the next level.
Piracy has been a problem for Microsoft since it entered China about 20 years ago. In the past, people familiar with the matter have said piracy has been a cause for disagreements on performance expectations within the company's ranks. It was unclear Friday whether that was still the case.
In an address to employees in the company's Beijing office last spring, the Chief Executive said Microsoft's revenue per personal computer sold in China was only about one-sixth of the amount it gets in India, and that the company's total revenue from China—with a population of 1.3 billion—is less than what it gets in the Netherlands, a country with fewer than 17 million people.
At the time that the expected revenue from China—which Microsoft doesn't disclose—to be only 5% of the company's revenue in the U.S. in 2011. China surpassed the U.S. to become the world's largest PC market by number of shipments last year.
Microsoft's profits from China were growing, thanks in part to government crackdowns on intellectual-property theft and initiatives to make state-owned enterprises buy authorized software. On Thursday, the Greater China chief executive spoke at a roundtable about intellectual property hosted by the U.S. Ambassador to China, praising the government's efforts to improve intellectual-property-rights protection and saying he was "more optimistic than ever before about the Chinese market."
In its efforts to combat the piracy problem, Microsoft has maintained a close relationship with Chinese authorities, made deals with PC makers to have its software pre-installed on more computers, and even dropped its prices for its Microsoft Office software to encourage buyers to opt for authorized software.
The Greater China chief executive was also in talks with Chinese officials about restrictions on the sale of game consoles. In 2004, a group of government agencies issued a regulation to limit the influence of videogames and arcades on children, and it has had the effect of preventing Microsoft from officially selling its popular Xbox console in China, the company said.
The new appointments are a deviation for Microsoft in that both have worked in the company for years but not as managers in the Greater China region, which includes Taiwan and Hong Kong. Its last two top executives, who were brought in from Motorola Inc., had prior experience in the region.
Microsoft said in its statement that the new appointment is a "seven-year veteran of Microsoft" who "delivered excellent and sustainable results in growth and profitability," including in a previous position as head of the company's Europe, Middle East and Africa division.
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