July 28, 2005 11:20 AM PDT

Microsoft: Low-cost Windows gaining ground

REDMOND, Wash.--Microsoft said it has sold 100,000 copies of its Windows XP Starter Edition, the first indication of the popularity of the low-cost operating system.

Will Poole, senior vice president of Microsoft's Windows Client unit, gave out the sales figure on Thursday here, at the company's yearly meeting with financial analysts.

For months, the software company has been expanding the number of countries in which it sells the operating system, a basic version of Windows that is sold in conjunction with a new PC. Microsoft initiated the program in Thailand, Malaysia and Indonesia. It has since expanded sales to India, Brazil and, more recently, to Mexico and Spanish-speaking Latin America.

"We feel very good about how this has gotten going," Poole told the audience of analysts.

The sales figure is the first time the company has addressed how many people are buying Starter Edition. Critics have maintained that the operating system is too inflexible to appeal to many would-be PC owners, noting that Starter Edition carries limitations on the number of programs and windows that can be open at any given time. Poole said that Microsoft plans to step up efforts to work with telecommunications firms in emerging countries. He said the goal is to have deals in which a cutomer pays around $13 to $15 per month and gets broadband access as well as a PC.

The low-cost effort is a critical part of Microsoft's attempts to grow sales of Windows, which is already found on more than 90 percent of desktop and notebook computers. Microsoft's other key projects are a crackdown on piracy, and efforts to get customers in developed nations to buy more PCs as well as machines running pricier versions of Windows, such as Tablet PC or Media Center edition.

Poole noted that the overall Windows business faces several key challenges, such as the reluctance by buyers to upgrade from older versions of the OS and the threat posed by open-source operating systems. Poole also specifically highlighted a renewed threat from Mac maker Apple Computer, which has been making some computer market share gains, in part as a result of the widespread popularity of its iPod portable music player.

"We certainly recognize Apple's success with the iPod," Poole said, adding that the company has noticed "a bit of a halo"--meaning that the iPod has translated into greater Mac sales.

Earlier on Thursday, Microsoft CEO Steve Ballmer highlighted the company's broader growth prospects, including the antipiracy effort as well as Microsoft's move toward pricier versions of both Office and Windows.

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Apple threat?
I'm betting the iPod halo effect will pale in comparsion with the effect from Apple moving to intel processors.
Posted by nmcphers (261 comments )
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Huh? How's the iPod like this?
Windows Starter sounds like a piece of junk. Nonetheless, how do they make the analogy of a crippled version of their OS to Apple's iPod? Last I checked the iPod was an mp3 player. Hello?
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