RESEARCH TRIANGLE PARK, N.C. –The budding relationship between Lenovo and Microsoft blossoms a bit bigger today in Beijing.

With Microsoft Chairman Bill Gates in the Chinese capital, the software giant and Lenovo will formally announce the opening of a joint research and development center.

The People’s Daily reports that Microsoft and Lenovo will share a Lenovo facility that already exists in Beijing. Microsoft plans to invest several million dollars in the center, which will be owned by the partners on a 50-50 basis.

Lenovo already has some 40 engineers at the operation, The People’s Daily reported.
Since buying IBM’s personal computer division for $1.2 billion in 2005, Lenovo has actively courted Microsoft from taking steps to make sure its PCs sold in China come with licensed Microsoft products in an effort to cut down on rampant software piracy in that country to a deal announced last month in which Lenovo made Microsoft’s search tools the default choice on its laptops and PCs.

A year ago, Lenovo Chief Executive Officer William Amelio journeyed to Microsoft’s headquarters in Redmond, Wash., to sign a deal with Microsoft CEO Steve Ballmer for joint cooperation and development. The companies agreed to joint sales, marketing and training programs in China and elsewhere around the world.

In November of 2005, Lenovo became the first PC manufacturer to preload Windows on all its product lines sold in China. Some 5 million Lenovo PCs packaged with Microsoft products were sold in China in 2006, according to the People’s Daily.

The R&D center will focus on market opportunities in China ranging from digital photography to mobile markets, the newspaper said.

Lenovo is the world’s third largest PC manufacturer behind HP and Dell but trails by a wide margin. However, in China where the company was born it owns more than 30 percent of the market.

"Based on our common understanding that personal computers will extend to every part of people’s work and life, we believe our cooperation will bring many many opportunities to Lenovo and Microsoft," George He, senior vice-president and chief technology officer of Lenovo, told the Chinese newspaper.

The Peoples Daily also said the R&D center would be the first joint effort launched by Microsoft. The companies will “share” intellectual property developed at the center, the newspaper added.

Lenovo’s headquarters are in Morrisville, but its stock trades on the Hong Kong exchange and the company maintains operations throughout China.