Microsoft's Linux defense: $3 Windows-Office bundle in emerging markets

Microsoft's Linux defense: $3 Windows-Office bundle in emerging markets

Summary: Microsoft can't afford to have open source software dominate emerging markets--or it's growth is toast. The solution: $3 Windows for governments to give away.

TOPICS: Microsoft

Microsoft can't afford to have open source software dominate emerging markets--or it's growth is toast. The solution: $3 Windows for governments to give away.

Microsoft Chairman Bill Gates outlining a plan to provide low-costs bundles of Office and Windows to governments, who in theory would load these on PCs for students to use.

Ina Fried reports the details (Techmeme discussion, Microsoft statement):

The collection of software, which will start shipping in the second half of this year, includes Windows XP Starter Edition, Office Home and Student 2007, Windows Live Mail Desktop and several educational products. The $3 price includes the software license, while backup discs and documentation will cost extra. In order to be eligible, governments must pick up at least half the tab for the PC, though the software can also be used on refurbished computers, which can cost as little as $50, Microsoft said.

Microsoft is hoping this program and others will help the company reach more of the 5 billion people who have yet to benefit from the PC revolution.

Now I hate to be a cynic on a worthwhile cause, but there's also this little thing called the One Laptop Per Child initiative with the same goal (gallery right). The rub: OLPC is putting Linux software in the hands of students in emerging markets.

If OLPC does nothing else it may create a great open source farm team. Jeremy Allison also argues that OLPC will change the computing landscape. And if emerging markets favor open source software Microsoft has some serious issues in the future. David Berlind noted last month that OLPC could be a Microsoft threat.

That threat is at least part of the reason why Microsoft is targeting the next billion PC users. You can't blame them. And a $3 Windows and Office bundle is competitive with open source offerings.

Add it up and it's thumbs up to Microsoft for the effort--but don't forget the business strategy at play either. If the developing world goes open source Microsoft's business slowly erodes.

Topic: Microsoft

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • The World has gone open source, MS IS Toast

    Having grown in a third World country, were Microsoft wants to charge 190 dollars for Windows XP where the most an average person makes is 30 dollars a month. 3 dollars is just too much.

    Computers run for 120 to 350 dollars, most may not have the same quality as the ones in the developed World, but Linux does the job and its in Spanish, with OpenOffice Org we were able to place in all schools for over 2 millon kids all Linux computers since they were young. That was 8 years ago, These kids now have grown, and you tell them MS has better quality, they don't even bother, cause to them Linux is the way to, it means FREEDOM.

    So MS, fight all you want, this is one you've lost over 10 years ago, when you muscled competition to oblivion. We may work with your products to earn an income in the developed World, but under any circumstance do we use it in our projects. Some you have no sight of yet, but its there and growing.

    So keep the blinds up, and face your fate.
    • I agree!

      No amount of software dumping would save M$ from Linux grip!
      Linux Geek
      • Mmm.. Sounds Like MS Going into Drug Trade Business Ethics!

        Well believe it or not even Bill Gates has been visiting China like a drug dealer on the prowl. You know, get them addicted with free cr*p while slapping the needle in them and looking oh so wonderful while doing it. Then later after you have them hooked, suck it to them!!!

        Gee Bill is such a wonderful humanitarian, giving money to organizations that kill the very same people he says he wants to help in Darfor and elsewhere. Bill? Steve "Monkey Man" Balmer? Guess what we know what you're doing and probably more people than you know in China know as well.

        Bill? Not just that Professor who ruined your little party in Beijing wih the "FREE SOFTWARE, OPEN SOURCE"! You aweful lot like you got caught with your pants down. TOO BAD, the guy didn't throw a Cream Pie as Well! ;)
    • Worldwide, MS still has 90% of ...

      ... the market. Like it or not, they're not TOAST yet -- and that lame OLPC computer will not make them so!
      M Wagner
      • You're half right

        MS isn't toast yet (and probably never will be), but that "lame" computer will make a major dent in their worldwide market.

        That "lame" computer is more machine than you could buy for any price just a few years ago. Growing up using open source will teach kids that open source does what they need, and they will get used to the environment -- this will carry over when they get older (the same way Apple survived because of the schoolkids using their computers in the 1980s who bought in the 1990s).
        • Ah, the wonderful world of American Ethnocentrism

          Personally, I think the kids in Africa will be more interested in getting clean water,
          electricity, representative governments and rapist U.N. peacekeepers out of their
          • False dichotomy

            [i]Personally, I think the kids in Africa will be more interested in getting clean water, electricity, representative governments and rapist U.N. peacekeepers out of their countries[/i]

            You make it sound like they have to choose one or the other.

            In the long run, education is the only way to get [i]and keep[/i] the others.
            Yagotta B. Kidding
          • Kidding I don't agree with you ofen

            Anything we can do to help education in this and the third world is a help.
        • If the kids who will use that OLPC ...

          ... machine have access to a pre-loaded Linux machine from a first-tier vendor when they out-grow the OLPC machine, then just maybe you are right. Today, however, there appears to be NO ONE except the OLPC foundation and Microsoft with the least bit of interest in pushing Linux out to the third world.

          The whole key to Linux gaining broad acceptance wiht consumers is it's being available pre-loaded on first-tier hardware. As long people have to install Linux themselves, it will not make a dent in the world-wide consumer marketplace.
          M Wagner
          • Hmmmm.... Preloaded..

            As a ZDNet MOD you should know that DELL is preloading LINUX at consumers request. Here is the first Domino of the # 1 PC maker to preload LINUX.

            PS: I used to MOD Anchor Desk!!
      • And so what?

        The OLPC is not intended for the great Microsoft sheep herd. It is intended for young and eager minds and provides a completely open platform for them to learn on.

        When I was a child, we had 8-bit computers and they were enough to spark my imagination and I later became a computer engineer. None of those machines had Microsoft operating systems. Microsoft is not a requirement for learning or imagination.

        Also, the OLPC machine is far, far more capable than any of those old 8-bit machines that I used as a child and the software is world's above too. I can't see how you can justify "lame OLPC" unless you have completely missed the purpose and intent of the OPLC project.
        • No but the threat for Microsoft is that ...

          ... OLPC will introduce the third-word to Linux. Microsoft's alternative helps keep them in the picture.
          M Wagner
      • That's simply not true.

        Microsoft may have 90% of the [i]desktop[/i] OS market, but there are many more markets, some of them considerably larger and more lucrative, that Microsoft is an also-ran at best in.

        Did you know that there is an OS out there that most people have never heard of, that outnumbers the [i]total[/i] installed base of [i]all[/i] versions of Windows com[i]bined[/i] by at least [i]ten-[b]fold![/b][/i] You yourself almost certainly have at [i]least[/i] one copy of this OS, and probably more (as many as a half dozen or more for a tech-savvy family). You likely use it every day and don’t even know it.

        It’s called VxWorks from Wind River. It’s in microwave ovens and other smart appliances. Musical keyboards. VCRs and DVD players and recorders and even TV sets (to display the menus and such). Non-PDA cell phones, Caller ID units, [i]etc.[/i] Cars (smart entertainment systems, [i]etc.[/i]). And many, many more.

        Microsoft has tried to get into this market, called the Real-Time Embedded market, ever since Windows NT Embedded. It has failed miserably every time. It has one of the [i]smallest[/i] market shares in that market, less even than such also-rans as QNX RTOS and RT Linux (which Wind River recently acquired). And this market outnumbers [i]all other markets[/i] [b]combined[/b] in both quantity and financial value, by several-fold.

        Then there are servers. Windows Server has indeed dethroned Novell NetWare as the king of file and print servers, but Unix still has a big share of this market. More to the point, though, Microsoft is well in the minority on Web servers, with Apache [i]alone[/i] beating IIS handily in installed base. And those are hardly the only two Web server platforms out there.

        This new emerging economies market is going to be bigger by [i]far[/i] than the desktop market. If Microsoft fails to get a majority of its share, then that will mean billions — [i]billions[/i] — of the next generation of computer users growing up learning an OS that [i]isn’t[/i] Windows, and worse, an office suite that [i]isn’t[/i] Microsoft Office (let’s face it: when business people object that the Mac OS, Linux, [i]etc.[/i] won’t run “the software that businesses actually use,” what they mean is that it won’t run Microsoft Office [of course, there is Microsoft Office for the Mac, but many seem to forget that — but I digress]). Guess what they’ll be comfortable with when they get into the business world of their growing economies?
        Joel R
        • The whole point of the Microsoft offering ...

          ... (and the OLPC project) is on the desktop. Linux and UNIX compete head-to-head with Microsoft in the machine room -- as it should be. The fact that Linux does not compete on the desktop is attributable to the Linux vendors not wanting to compete with MS in the commodity desktop market.

          The embedded markets probably are larger but they are not the subject of the original post either.
          M Wagner
      • 90% of what market?

        Servers? Desktop? Browser? If you're talking desktop then your 90% number represents a stunning reversal and, if you're Microsoft, a horrifying trend. If you meant browser, your numbers are way off. Productivity...hard to say. All we have to go on are sales numbers from MSFT and, as we found out during their announcement of Vista sales, you can't always trust those figures. You could track OpenOffice downloads but that doesn't really work, either. I download one copy and push it out to four or five different machines, then maybe copy it to a disk and give the disk and copies away.

        Makes me wonder how long the MSFT faithful will be quoting numbers from two years ago even when other operating systems are carving large chunks out of their market?

        I think MSFT is scared of OLPC and they should be. Not because millions of kids in third world countries will grow up on Linux, but because of potential demand in this country. If not the OLPC machine then something very much like it.
        • The reverse is true for downloading OSS

          Take Open Office. I download anytime I need it. So since I format my PC every 6 months I don't both burning the software to a CD. I just download it again. So over a 3 year period I download it 6 or more times but count as 1 for market share.
        • I don't think OLPC addresses the issue

          I think OLPC is a great idea, in that it introduces computing, networking, literacy (have to read to use it) and open access to the marketplace. For the developing world, if governments will buy it a million at a time (jury out, but deliberating and leaning that way), I think it's Nick Negroponte's greatest career gift to the world. It currently costs $150 bought a million at a time.

          Several months ago, I missed a deal at Fry's on a laptop, but ended up buying a different one at Staples - a Compaq Presario V2000. It had XP SP2, MS Works, a carload of craplets but some useful stuff for CD burning, etc, a big, bright screen, wireless, a 40 GB hard drive, 1.8 GHz Athlon mobile, CD-RW/DVD, Ethernet, VGA and S-video out, a modem to fax with, 256 MB of memory, and USB 2.0. It cost me $279. The one at Fry's was under $200. I only had to buy one. I can download more free applications for the MS environment than will fit on the hard drive. It works fine. Compare that to OLPC's specs.

          So: predicting the demise of civilization based on a single data point in a technology environment that moves so fast is a fun exercise, but ultimately folly. Did you think that it would only cost $75 for a 3 GHz Pentium 4 a couple of years ago? Or $35 for a half gig of notebook memory? Did you think a mainstream, fully-functional notebook would be available for $200 at a retail store? I sure didn't.

          I truly hope OLPC is a success in its target market, which is not the USA by any stretch (imagine that little green martian on a corporate desk? Me neither. (cute as it is)). I like the idea of the intense competition out there that has made computers nearly free. Microsoft is an excellent company with excellent employees in daily war with that competition, and only time will tell the outcome, but they've been "doomed" before and are still here. No dis on OLPC at all, but things change fast.
      • Quosque tandem Microsoft 90%, patientia mea?!

        About 7 years ago I made the prediction that one day not far off the world of Microsoft-faithful would feel like the ground yielding under their feet, because they would still believe they have 95% of the market. It is very difficult to tally the active users of Microsoft products, due to dual-boot, Windows wipe and Linux install, etc.
        The growing factor against MS market share is the decrease of the sucker community who are not amenable to FUD.
        There is no way of telling what the actual percentage is, and there lies the reason for Microsoft's desperation.
      • You've just proved

        [i]Worldwide, MS still has 90% of the market. Like it or not, they're not TOAST yet -- and that lame OLPC computer will not make them so![/i]

        Market share is such a comforting thing. The incumbents can afford to charge more per copy than the challengers, so even for equal unit shipments they get a larger market share. That was one of the things that kept the analysts focussed on IBM's microcomputers in the 80s -- they had so much more market share than the others. You've just proved that IBM had a perpetual lock on that market -- didn't you?

        Of course, in software (esp. compared to "free") the effect is even greater.

        Since you're measuring OEM preloads, [b]of course[/b] Microsoft has the market share. They even have the unit volume.

        However, as this move indicates, they're nowhere near as complacent as you are with regard to the actual trends in installed base, and installed base is what drives application development. In the end, application development is what drives market share. That's a circle that's worked [i]for[/i] MS until now, but they weren't given that role by a thunderous voice from the heavens.
        Yagotta B. Kidding
        • In 1981, IBM took the personal ...

          ... out of the hands of Apple (the clear leader at the time) and drove it
          M Wagner