Microsoft to co-develop cloud products with Chinese OS firm

Microsoft said on Tuesday it will work with a Chinese operating system developer to create cloud computing products for the country's market, a move that could help the U.S. company sell to China's government agencies.

China Standard Software, Microsoft's Chinese partner, has co-developed a Linux operating system with a defense lab, China's National University of Defense Innovation, and the operating system, called "NeoKylin", has been approved by a number of government ministries.

The agreement

By the agreement, Microsoft and China Standard will jointly develop and sell private and public cloud computing products. Microsoft and China Standard will as well sponsor a joint virtual innovation lab in Beijing aimed at making NeoKylin interoperable with Microsoft's Hyper-V Cloud architecture.

Vendors and analysts expect China's cloud computing market to grow fast. A survey by innovation firm Gartner found that 55 percent of Chinese respondents would like to spend more than 10 percent of their total IT budget on cloud computing. This compared with 42 percent in Europe and 49 percent in the U.S.