In Asia, Microsoft sees slow start for budget XP

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XP Professional or Home Editions are sold at IT malls in Kuala Lumpur for less than $5.

According to Gilliland, PC makers in developing markets are mostly focused on driving hardware sales, not software margins. "They don't really make much profit from the OS (operating system) component of the PC. If they can sell more PCs to resellers by removing the OS, that's what they are going to do," he said.

To address this issue, he said, Microsoft will have to "create a different sales or go-to-market strategy."

"Their current standard vendor and channel relationships will need to be altered slightly to make this product succeed for them," Gilliland added.

Trial and error
Microsoft recognizes the problems with Starter Edition and plans to tailor its distribution and marketing efforts to suit individual countries as part of a 12-month pilot program, a senior company executive told CNETAsia.

"We'll be testing several go-to-market approaches," said Mike Wickstrand, Microsoft's director of Windows product management.

He said Redmond has decided on a "focused" approach in Malaysia by partnering with furniture and electronics megastore Courts Mammoth. On Tuesday, the retail giant announced it will start selling Starter Edition PCs made by local computer manufacturer FTEC in its 20 outlets.

According to Kelvin Wong, FTEC's executive director, the company hopes to sell 1,500 to 2,000 Starter Edition PCs per month. Besides the potential in rural areas, another market for these low-end machines could exist in schools and community projects, he added.

		Related story A billion PC users on the way But the new buyers are going to need some discounts.

Microsoft CEO Steve Ballmer has proposed that the industry launch a $100 PC as a way both to stem piracy and to offer consumers in emerging countries an affordable computer.

Blue Dot Systems, another reseller of Microsoft's budget Windows package in Malaysia, plans to launch Starter Edition PCs at the end of this month. They will be priced between $342 (1,300 ringgits) and $395, a company representative said.

Wickstrand hinted that in Indonesia, Microsoft will partner with a local bank to offer financing schemes for Starter Edition computer buyers.

"To really address the affordability of a PC, what really helps is financing," he said. "If we're going to see a large uptake in PCs, consumer finance needs to be available for the segment we're targeting."

In Thailand, Microsoft is not tweaking its channels strategy but has instead chosen to increase the awareness of Starter Edition by embarking on a five-city tour and an advertising and promotions blitz, the company said.

Winston Chai reports for CNetAsia. CNETAsia's Cordelia Lee contributed to this report.

[Eduardo1234565]

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.

[Earl Benser]

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
requirements.

Damn..... That's a real tough choice to make, isn't it????

[catchall]

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?

It's spelled Malaysia not Malasysia...

A piece of friendly advice: Misspelling a country's name could potentially insult a lot of people.

Apologies...

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....

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?

[Arby_CNET]

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."

[HughT]

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.