Microsoft to expand cheap Windows offer

REDMOND, Wash. -- Aiming to foil the advent of Linux and attack software piracy in emerging markets, Microsoft plans to expand its cheap Windows XP Starter Edition offer to more countries, a company executive said Thursday.

Windows XP Starter Edition is a version of the operating system designed for a specific market that is easy to use, support and sell, Will Poole, senior vice president of Microsoft's Windows Client group said in a presentation at the company's annual financial analyst meeting here. 

Microsoft is already working with the governments in Thailand, Malaysia and Indonesia to offer the version of Windows, which has a "lower price appropriate for the emerging market needs," Poole said. While the Starter Edition is still a pilot project, Microsoft does plan to offer the software in other countries as well, he said.

Microsoft has identified emerging markets as a major sales opportunity partly because PC penetration in those countries is low. In the U.S. about 60 percent of households have a PC, in Western Europe about 30 percent have a PC, but in India the figure is below 2 percent, while Russia and China are below 5 percent and Brazil is at about 10 percent, Poole said, citing IDC figures.

However, software piracy is rife in the same emerging markets. Microsoft estimates that 92 percent of the PCs sold in China have unlicensed, pirated copies of Windows. That compares to 22 percent in the U.S., Poole said. Also, competition from open-source products, specifically the Linux operating system, is strong in the emerging markets.

Windows is not the only group seeking to conquer emerging markets. Microsoft's Office group is also working to win more customers in those countries through "tailored and market specific offerings," said Steven Sinofsky, a senior vice president in Microsoft's Office group. In China, for example, Office includes an English writing assistant, he said.

Microsoft has generally stuck to a system where its products are priced the same around the world, but the company has said before that it is rethinking its unified pricing. Windows XP Starter Edition is part of that.

Microsoft has not shared many specifications of the Windows XP Starter Edition, but company executives have said it is not a stripped- down version of Windows, but instead a tailored version in local languages.

As part of the Malaysian program, for example, Microsoft offers a localized and specific Windows XP Home Bahasa Melayu version. The software bundle for the cheap PCs also includes the English version of Works Suite, the vendor has said.

The Malaysian PC Gemilang program offers two PC models, one with the special Windows version and Works priced at 1,147 Malaysian Ringgit (US$302), and one running Linux and the OpenOffice productivity suite for 988 Malaysian Ringgit, the online edition of Malaysia's Star newspaper reported in March.