Cracks seen in Microsoft pricing

Thailand's program that brings low-cost computers to the poor could have the unintended side effect of ending Microsoft's one-price policy, according to market researcher Gartner.

Today, a copy of the Microsoft Windows operating system or Office productivity suite costs roughly the same in every country. Windows XP Home costs $199, for example, and Office XP is priced at $399.

But that changed in Thailand this summer when Microsoft decided to offer Thai language versions of Windows XP Home and Office Standard Edition for a mere $40. The special deal is part of a low-cost PC program run by Thailand's Information, Communications and Technology (ICT) ministry. When the program began earlier this year, the Thai government was only offering the computers with the open-source Linux operating system.

Two other Asian governments are now seeking advice from Gartner about a low-cost PC program of their own, said Dion Wiggins, research director with Gartner Hong Kong. He declined to name them.

"Because of ongoing price pressures, backlash against Microsoft and programs similar to the Thailand ICT PC program, Microsoft will have to provide more competitive pricing globally," he asserts.

Wiggins predicts that by the middle of next year, Microsoft prices in developing countries could be halved. "Some markets may even see adjustments as early as year-end 2003," he said.

Wiggins' views are published in the Gartner report, "Thai PC Market May Change Global Windows Landscape," co-authored by analyst Martin Gilliland.

Microsoft disagrees with the report's conclusion of a major pricing policy change resulting from events that began in Thailand.

"We were disappointed in the Gartner note overall, as it seems it to be at odds with what we are seeing in the market and draws some conclusions we believed unwarranted by the market data," Ahmed Chami, Microsoft's president for Southeast Asia, said in a statement.

He also does not share Wiggins' view that Microsoft's participation in the Thai program was driven in part by an anti-Linux strategy.

"When we heard about the Thai government ICT program and realized we could support it even further by offering the people a choice in software, we felt it was important to be involved. It was a great opportunity for us. It was very exciting and matched our vision too," he said.

Microsoft has no plans to expand the discounts to other countries, he added.

"However, Microsoft is committed, globally, to furthering development and encouraging individual innovation through technology. We are always willing to discuss with governments how we can help bring the value of Microsoft products, and working together to provide better access to technology for the disadvantaged," he said.

John Lui of CNETAsia reported from Singapore.