Microsoft to trial pay-as-you-go PCs

Microsoft is starting up trials of pay-as-you-go PCs in underdeveloped nations as a way to give residents of those countries more access to low-cost computers.

Microsoft will provide the prepaid PCs in retail outlets in Brazil, Mexico, Russia, India and China beginning this week, said Mike Wickstrand, director of product management for Microsoft's market expansion group.

These PCs will be built using a technology called FlexGo, developed by Microsoft and its partners. FlexGo is a combination of hardware and software that enables PCs to be sold and used on a pay-as-you-go basis, much like wireless phones, Wickstrand said.

A user will buy a PC for about half the normal retail price and, in exchange, will be given a certain amount of time on the system. The computers have metering technology built in that tracks a user's time and alerts them when they are running low on time.

As time begins to run out, the PC will shut down certain functionality, going into "reserve mode" so a user knows to buy more usage time. Users can buy this time over the Internet or through prepaid cards. If usage time runs out completely on a FlexGo PC, the technology locks the machine until a user buys a new card.

The FlexGo PCs were inspired by the success of prepaid cellular phones in countries where people may not have credit cards or predictable income streams, Wickstrand said. In India alone, there were 5 million prepaid cell phones five years ago; today there are more than 90 million, and that number is growing every month, he said.

Microsoft has been looking for new ways to sell Windows in emerging markets for some time now. Many see the company's push in these markets as a way to stave off competition from inexpensive open-source technologies that threaten Windows revenue growth.

Brazil will be the first country to sell the PCs. Microsoft had quietly tested FlexGo pay-as-you-go PCs in Brazil last year, selling them in a national retailer Magazine Luiza. The other countries will follow Brazil with rollouts in the next two months, Wickstrand said.

The PCs, which will cost about the equivalent of $300, will be available at various local retail outlets in each country. However, the PCs are technologically equivalent to a machine that would cost about $600 in the U.S., Wickstrand said.

"Customers pay a lower amount for the PC up front because they have to keep purchasing [usage time]," he said.

Partners that have worked with Microsoft to design the FlexGo PCs in the current round of trials include Intel, Advanced Micro Devices, Infineon Technologies, Lenovo Group, Phoenix Technologies, and Transmeta, Wickstrand said.

Manufacturers building the FlexGo PCs are Lenovo in China and India; First International Computer in Brazil; Excimir D.M. in Russia, and Avatar in Mexico.