Linux, piracy drive price cuts from Microsoft

Reed Stevenson

SEATTLE: Microsoft Corp. said it will begin selling a stripped-down, low-cost version of its Windows XP operating system in the emerging markets of Indonesia, Malaysia and Thailand in order to spread the use of computing and develop technology markets.

The move comes as the world's largest software maker grapples with the twin threats of piracy and the spread of Linux, the freely available operating system, in developing economies.

Windows XP Starter Edition will be available in the three countries in Southeast Asia from October as part of a one-year pilot program and includes most of the features found in Windows, which runs on more than 90 percent of the world's personal computers.

"It will be our most affordable Windows operating system offered to date," said Microsoft senior vice president Maggie Wilderotter, "We're very excited to see what the reaction will be."

Initially, Windows XP Starter Edition will be shipped pre-installed on PCs and then eventually sold as CD-ROMs on retail shelves. Microsoft has not yet set a price for the newest edition of Windows.

Although some features will not be available on Starter Edition, the operating system will be localized for each country's language and also include extra features and tools to make it easier for first-time computer users to use their PCs and connect to the Internet, Microsoft said.

Microsoft, based in Redmond, Washington, sells globally two versions of Windows XP, which debuted in October of 2001, the Professional Edition for $150 and Home Edition for $80 on most North American store shelves.

Microsoft has long resisted introducing flexible global pricing for Windows and its other software programs, such as Office, although large corporate customers often get better prices through long-term licensing deals.

Microsoft said it is also talking to governments of two other countries and will be announcing them later this year. The pilot program will involve a total of five countries, Wilderotter said.

In some cases, Microsoft already offers Windows at lower prices for governments that are offering cheaper PCs for their citizens in an effort to promote the use of information technology.

Many governments in Asia have also adopted Linux as a way to cut costs and address security concerns, since as "open source" software its basic programming code can be copied and modified freely by developers. Linux also runs on the same hardware as Windows.

Microsoft also faces the challenge of getting users in Asia, most notably China, to pay for its software, since much of it is distributed as pirated copies at a fraction of the price.

After the pilot ends, Microsoft said that it is considering the introduction of Windows XP Starter Edition for other developing markets, and hinted that it may even consider introducing the newest version of Windows on a wider scale.

"This doesn't preclude us from launching (Windows XP Starter Edition) in developed countries," Wilderotter said.