A well-known computer scientist in China is touting the potential of Cloud Computing to start a long march towards developing a legitimate software market.

"China has been plagued by piracy for the last 20 years and that unfortunately has caused China not to have a software industry," said Kai-Fu Lee (former head of Google China) in remarks at a conference in Abu Dhabi as originally reported by Reuters India. "But (with Cloud Computing that problem is) irrelevant now, because software distribution is shifting from packaged software, from end user license, to cloud Internet distribution. and when you're on the cloud you gotta pay."

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Meanwhile, India may be forced to swim upstream in its software sector, as Cloud Computing takes over many maintenance tasks that were previously outsourced to India from the US, according to Microsoft's Director for Cloud Services in India, Vikas Arora. Speaking at a Microsoft Azure announcement in New Delhi, Arora said “the cloud will take away some of that regular maintenance role. You have to see this as a continuum across the world. Think of the IT department in the US or Europe, they have been forced to upscale. For them, outsourcing was the catalyst, cloud could be ours (here in india)."

China's software industry was reported to hold about a 3-percent world market share, and will likely not improve in the absence of improved intellectual property (IP) protection, according to a Microsoft spokesperson at the Abu Dhabi conference.

To me, it behooves the Chinese government to start to create a new IP environment, as this is the best thing for business. Black markets the world over thrive because they deliver goods, illicit or not, at a price people can pay. I've encountered laughable DVDs and counterfeit clothing brands spanning the gamut of quality in several Asian countries, and not just along sidewalks. Many upscale malls offer these goods without shame or fear of prosecution.

As a country's ability to produce higher-end products and services rises, its wages and living standards rise accordingly. At some point, a transition takes place in which people start to shun the cheap stuff and start demanding the real thing. In the case of China, Cloud Computing may impose this transition, and the country's leaders would do well to understand the opportunity Cloud Computing offers.

In India, no tears will be shed in the US if the low to middle range of the India outsourcing industry is damaged by the software assuming some functions. As always, people should be careful what they wish for, as Cloud may improse a transition upon the Indian IT industry as well, forcing it to become a higher-end place that could offer renewed competition to the US and other wealthy countries.

There are 2.5 billion people, about 37 percent of the world's total, in India and China, with any number of them in a near-frantic drive to establish their economies as global leaders. One only has to drive a bit beyond the gleaming skyscrapers (often designed by US companies) in Shanghai, or drive almost anywhere in India, to see a grinding poverty unknown to most Americans. But, given where these two countries were 25 years ago compared to today, it seems clear that the globalization and IT genies are not going back into their bottles anytime soon.