March 17, 2005 11:56 AM PST

In Asia, Microsoft sees slow start for budget XP

Microsoft may have started shipping its cheaper version of Windows in Asia, but getting support for its low-cost computing vision is still very much a work in progress.

The software giant first launched Windows XP Starter Edition, a localized version of the full-fledged Windows operating system with reduced features, in Thailand last October. The cut-rate version debuted in Malaysia and Indonesia in February.

The product has received the initial backing of more than 15 local system builders and multinational computer makers in these three countries.


What's new:
Microsoft has been depending on its partners to bundle and promote Windows XP Starter Edition with their low-end desktops--a strategy that so far has been met with a tepid response.

Bottom line:
Microsoft recognizes the distribution problems with Starter Edition and plans to tailor its efforts to suit individual countries as part of a 12-month pilot program. A major challenge is combatting piracy, which floods markets with cheap bootleg copies of Windows software. In Kuala Lumpur, for example, bootleg copies of Windows XP go for less than $5.

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Unlike Microsoft's flagship Windows offerings, however, Starter Edition is not sold at retail. The company is banking on its partners to bundle and promote the software with their low-end PCs, a strategy that has so far received lukewarm response.

"We're not focused on Starter Edition," said Kharisma Shintara, director of Arta Computer Center, a computer assembler in Indonesia that has licensed Microsoft's scaled-down offering.

Shintara told CNETAsia that his primary product line will remain Pentium 4 PCs that are preloaded with Windows XP Home Edition--not the lower-end Intel Celeron machines, which Starter Edition is designed for.

"We've only used it in some projects for schools," he said, adding that the price of such Starter Edition-based PCs is around $320 (3 million Indonesian rupiah).

In Thailand, a number of Microsoft's Starter Edition partners, like Atec and Belta, are still promoting PCs that ship without any operating system.

Supreme Computer--one of the largest PC manufacturers in the country--is even selling a low-end Celeron PC preloaded with Linux for $404 (15,490 Thai baht).

The company also offers a similar system featuring Starter Edition that costs $443. Microsoft declined to provide sales figures for the new operating system in Thailand.

Besides Malaysia, Indonesia and Thailand, Starter Edition is also bound for Russia and India this year, although the Indian launch has been postponed from March until June.

Related story
Ballmer: We need
a $100 PC

The Microsoft CEO says
cheaper computers
would help stem piracy
in emerging markets.

"Starter Edition has not gained much interest from vendors, nor has it generated much interest from end users," said Martin Gilliland, principal analyst with research company Gartner Asia-Pacific.

Gilliland attributed the tepid response largely to high piracy rates. Smaller computer retailers in these emerging countries, he said, tend to buy their systems from large original equipment manufacturers, or OEMs, and then load them with cheaper, unlicensed versions of Windows.

In Malaysia, Microsoft has set the pricing of Starter Edition at $32 (120 ringgits). In contrast, bootleg copies of Windows

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market doesn't exist
XP Starter is designed for a market that doesn't exist. It is a simplified version of XP that lacks a lot of functionality, but adds in a tutorial.

It is aimed at beginners, but beginners don't buy computers in these countries. Incomes are low and credit is not available, so people have to save up for several years to buy a computer.

By the time they do so, they have already expert as a result of using computers at work, school, or internet cafes. They want a fully functional OS, and they can't afford a legal copy of regular XP, so they buy a pirated copy or Linux.
Posted by Eduardo1234565 (10 comments )
Reply Link Flag
MS Pipe Dreams....
A somewhat cheaper version of Windows with stipped feeatures
versus a no cost (or very low cost) pirated version with full
features, maybe even Windows XP Pro with no activation

Damn..... That's a real tough choice to make, isn't it????
Posted by Earl Benser (4310 comments )
Reply Link Flag
Any ideas yourself?
I'm being serious. I'm not looking for an argument, or looking to debate the merits of 'Starter Edition'. In a situation where you can easily get a copy of the real thing, a lower version makes no sence.
But what should MS ( or for that matter, any company that produces paid for software ) do? Folks can easily get Linux for free; they don't want it. They want XP. And they are willing to steal it. How does a company make sure it gets paid for services rendered?
Posted by catchall (245 comments )
Link Flag
It's spelled Malaysia not Malasysia...
A piece of friendly advice: Misspelling a country's name could potentially insult a lot of people.
Posted by (4 comments )
Reply Link Flag
The misspelling I saw was in the news letter that was sent via email. After reading the full article I see that the spelling is correct....
Posted by (4 comments )
Link Flag
Just an idea: Sell Your Old OS for Cheap!
Sell the unsupport version of Windows (2000, ME) for a reasonable price (less than $20). That way average people (non techgies) are able to pay for it. People can always get free help from their computer store.

Something to think about: Games like Counter-strike:source is selling for $20 in Thailand while it is sold for $50+ in US or Sims 2 for $15 in Thailand and $39+ in US. How can they do it?
Posted by (14 comments )
Reply Link Flag
Official currency denomination of Malaysia
It is hoped that the world's media would honor how the Ringgit is officially quoted in print:

The official symbol of the Ringgit is "RM", and it must be placed in front of the amount quoted, ie. RM100, RM1,000. The currency name "Ringgit" is always verbally quoted in singular tense; there is no plural equivalent. An example in a conversation would be, "The car sosts 50,000 Ringgit."
Posted by Arby_CNET (2 comments )
Reply Link Flag
MS cheap OS
If Microsoft really wants to stay in the running in Asia (or the rest of the world for that matter) they should un-bundle all the garbage from the OS and let everyone pick their own email agent, browser, multi-media player and other software, then price it reasonably (< $20 US). They are so used to gouging the public and killing competition because of their monopoly they have come to think of it as their "right to gouge". Well they should learn that outside the US (Land of freedom and hypocrisy) they do not have government collusion in their gouging.

Linux versions sell for a fraction of the Windows cost and they include other software such as office suite type software for no additional cost. You can set up a legal fully loaded linux computer for $500-$1000 less than an equivalent Microsoft setup. It is taking people a long time to see Microsoft for what they are but people are learning.
Posted by HughT (28 comments )
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