updated 1/7/2004 6:00:16 PM ET 2004-01-07T23:00:16

A pair of Chinese and Japanese software companies announced a joint venture Wednesday aimed at developing a Linux-based platform for Asian markets that they hope will challenge Microsoft Corp.'s dominance.

Chinese, Japanese and South Korean officials have expressed hopes for creating a product to compete with Microsoft's Windows operating system, reducing reliance on it and creating more opportunities for Asian companies.

China's Red Flag Software Co. and Japan's Miracle Linux Corp. said they expect to complete the new system, called Asianux, by May.

"We want to have a unified platform throughout Asia," Miracle Linux President Takeshi Sato said at a news conference.

Sato said that while it would be difficult to replace Windows operating systems for desktop PCs, he hoped Linux could dominate server operating systems for business and governments within as little as three years.

Linux is an open-source system, meaning the code on which it is based is freely available to users who can contribute improvements. By contrast, Microsoft's source code is a company secret. (MSNBC is a Microsoft - NBC joint venture.)

Some Asian governments worry about security holes in Windows and dislike having to rely so heavily on a single foreign company for the development of their technology industries.

U.S.-based Oracle Corp. owns 58.5 percent of Miracle Linux, which provides products and services for Linux-based computer servers. Red Flag Software was co-founded by the Software Research Institute of the government-run Chinese Academy of Sciences and NewMargin Venture Capital.

Linux represents one of the biggest threats to Microsoft's business, prompting the Redmond, Wash.-based giant to offer steep discounts to government agencies and school systems around the world.

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