Microsoft sets sights on emerging markets<\/p>\n
Grant Peck, Associated Press, Bangkok, Thailand<\/p>\n
The long-running legal battles between Microsoft Corp. and
\ngovernments in Europe and the United States make the company look
\nlike a partner in a bad marriage, ready to walk out and call the
\ndivorce lawyer.<\/p>\n
But in Southeast Asia, the software giant seems more like an
\nardent suitor, wooing governments with sweet promises and gifts -
\nsuch as unprecedented bargain prices on its Windows operating
\nsystem.<\/p>\n
Microsoft executives suggest that pricing policies for
\ngovernment-promoted PC sales pioneered last year in Thailand and
\nused again in Malaysia this year presage a new marketing approach
\nfor emerging markets.<\/p>\n
So far, the localized versions consist of Windows XP minus
\nEnglish language support. The company also has hinted that it's
\ndeveloping a kind of \"XP Lite,\" a leaner Windows with features
\nmore appropriate to developing countries where \"high tech\" is not
\na reality of everyday life.<\/p>\n
Microsoft executives are themselves being lean with details,
\nciting competitive strategy. But they're willing to discuss the
\nconcept.<\/p>\n
\"This is a new market with very different needs, from an
\neconomic perspective, from a social perspective, from a technical
\nperspective,\" Barry Goff, group product manager for Windows
\nClient group, said in a telephone interview from company
\nheadquarters in Redmond, Washington.<\/p>\n
Setting prices based on geography is not new in other
\nindustries. Pharmaceutical firms charge lower prices in
\ndeveloping markets like Africa than in mature ones like the
\nUnited States. Even McDonald's sets different prices for Big Macs
\nbased on geography.<\/p>\n
But the software industry is just beginning to move beyond a
\none-price-fits-all strategy.<\/p>\n
Besides Microsoft, Symantec Corp. in May released a Thai
\nversion of its Norton antivirus suite for half the price of its
\nregular English edition. And earlier this month, Sun Microsystems
\nInc. introduced a government pricing scheme for its enterprise
\nsoftware based on population and degree of development, as
\ndetermined by the United Nations.<\/p>\n
\"What we're seeing is the beginning of a trend,\" said Joe
\nWilcox, a senior analyst at Jupiter Research. \"The more companies
\ntest the waters, the more of a trend there is because of the
\ncompetitive threat.\"<\/p>\n
Microsoft changed its tune a year ago.<\/p>\n
The software giant previously promoted a one-price-fits-all
\npolicy: A shopkeeper in northern Thailand, for example, would be
\ncharged the same for his copy of Windows as a corporate lawyer in
\nNew York, despite the disparity in average national incomes.<\/p>\n
Microsoft had little incentive to do otherwise as it commands
\nthe market. At the same time, lax enforcement of intellectual
\nproperty laws throughout the region meant that many home users -
\nand not a few companies - used pirated versions of Microsoft
\nsoftware.<\/p>\n
When Thailand's Information and Communications Technology
\nMinistry last year launched a program to boost the country's
\nmodest installed base of home computers by selling machines at a
\nrock-bottom price, it asked Microsoft to help out.<\/p>\n
To keep to its targeted price of the equivalent of about
\nUS$260 for a fully equipped desktop computer, the ministry sought
\na discount on the company's software.<\/p>\n
Convinced that price rather than feature set was the key to
\nsuccess, the ministry went ahead and began marketing its
\ncomputers in May 2003, bundling them with freely distributed but
\nless user friendly \"open source\" software: a Thai language
\nversion of the Linux operating system and an office productivity
\nsuite.<\/p>\n
Within a month, the ministry had more than 100,000 orders in
\nhand. And it also had the attention of Microsoft, which came back
\nwith an offer the ministry couldn't refuse.<\/p>\n
\"Microsoft offered a special price of 1,500 baht ($38) for XP
\nHome and Office XP combined,\" recalled Jumrud Sawangsamud,
\nchairman of the affordable computing working committee. Normally,
\nWindows XP Home Edition sold for 4,500 baht ($114) and Office XP
\ncost 15,000 baht ($380).<\/p>\n
The only thing lacking, said Thai and Microsoft officials, was
\nEnglish-language in the Windows displays - menus and the such -
\nto discourage exports to outside markets.<\/p>\n
The success of the program allowed the ICT Ministry to move on
\nto new promotions with Microsoft's participation, such as the
\nsale of cut-rate notebook computers to civil servants.<\/p>\n
Microsoft now touts its original Thai deal as a model for
\nemerging markets.<\/p>\n
When Malaysia's Ministry of Energy, Communications and
\nMultimedia announced a similar project to boost the number of
\ncomputers in rural households, Microsoft got in on the ground
\nfloor.<\/p>\n
Purchasers of Malaysia's PC Gemilang: PC Mampu Beli- \"Glorious
\nPC: Affordable PC\" - can buy machines loaded with open source
\nsoftware, for 988 ringgit, or $260. Or they can opt for a desktop
\nloaded with a Malaysian-language only version of Microsoft
\nWindows XP Home Edition and the lightweight Works suite for 1,147
\nringgit, or $302.<\/p>\n
Vietnam, which announced a similar large-scale, low-cost
\ncomputer project, is a likely candidate for a similar deal and
\nhas been in discussions with Microsoft since late last year. Ngo
\nPhuc Cuong, Microsoft's chief representative in Vietnam, declined
\nto give further details.<\/p>\n
It's clear the rise of piracy in Southeast Asia and the low
\ncost of open source alternatives are spurring Microsoft's new
\napproach.<\/p>\n
The company said the initiative was geared mostly for
\ndeveloping countries, and that it was meant to fend off advances
\nby Linux. But Linux poses little immediate threat to Windows on
\nconsumer desktops.<\/p>\n
Even when Thailand was rolling out its cheap Linux PCs last
\nyear, officials assumed that a substantial number of them would
\nbe reconfigured with pirated copies of Windows.<\/p>\n
The International Intellectual Property Alliance, a multi-
\nindustry lobbying group, estimates 72 percent of the business
\nsoftware used in Thailand last year was pirated. For Malaysia,
\nthe figures were 68 percent, while Vietnam tied with Russia as
\nthe world's worst, at 93 percent.<\/p>\n
Microsoft's Goff characterized the program as an opportunity
\nto fulfill the company's vision of \"a PC on every desktop and in
\nevery home.\"<\/p>\n
\"From a ... First World perspective, we've largely succeeded
\nin that,\" he said. \"But Microsoft is truly a global organization,
\nand if you really think about globally, 'Have we succeeded?' the
\nanswer is 'Not even close.\"'<\/p>",
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