Microsoft offers cut-rate Windows

By Matthew Broersma
Posted on ZDNet News: Feb 9, 2004 2:43:00 PM

The "entry-level" version of Windows was created to allow Microsoft to participate in the Thailand ICT Ministry's program without adjusting its policy of charging the same price for Windows and Office no matter where in the world they are sold, Microsoft said Monday. The software was provided at a cost of 1,500 baht, or about $40, compared with the usual price of several hundred dollars.

"The Microsoft software provided for the ICT program in June 2003 is a Thai-language specific, customized, entry-level version based on Windows XP Home and Office XP Standard," said a Microsoft spokeswoman.

Last year, market research firm Gartner said the Thai deal was the beginning of the end for the one-price policy, predicting Microsoft would be compelled to halve its prices in poorer countries by the middle of 2004. Now Microsoft says it is looking to collaborate with more governments on low-cost PC initiatives, using customized software with reduced functionality, as in Thailand.

Andrew McBean, Microsoft Thailand's managing director, said in an interview with The Bangkok Post last week that the company was developing an entry-level version of Windows for sale in poorer countries.

Microsoft has come under increasing competitive pressure from open-source software such as Linux in developing countries, where the single-price policy makes Microsoft software too expensive for most. The Thai ICT PCs were originally available only with Linux. Linux PCs are seen as a threat to Windows partly because buyers are considered likely to replace the operating system with pirated copies of Windows.

Several Asian governments have recently embraced open-source software in an attempt to fix problems such as high software costs and wide-scale software piracy. The price of Microsoft software is often cited as the root of the problem.

Authorities in Asia have bemoaned the company's lack of flexibility, arguing that market price should be tied to local economic conditions. Being forced to use English-language versions because of the lack of local-language options is also a sore point.

Countries like Malaysia, Vietnam, China, Japan and Korea have said they are wary of giving monopolistic control of crucial software to a foreign-based corporation, free to charge any price without regard for national interests.

Microsoft has repeatedly denied it will adjust its one-price policy. Speaking at the Singapore launch of the Office System 2003 productivity suite last November, Oliver Roll, Microsoft general manager for Asia-Pacific and Greater China, said that while the single-price policy won't change, the company was willing to give discounts if it would help certain IT-disadvantaged groups.

Today, a copy of the Microsoft Windows operating system or Office productivity suite costs roughly the same in every country. For example, Windows XP Home is $199 and Office XP, $399. Given that the average income of a Thai worker is $7,000 a year, it would be the equivalent of charging $3,000 for the bundle in the United States, according to Gartner Hong Kong.

Matthew Broersma of ZDNet UK reported from London. John Lui of CNETAsia contributed to this report.