Is $3 Windows/Office bundle too good to resist? It is when you throw in a cheap PC

Is $3 Windows/Office bundle too good to resist? It is when you throw in a cheap PC

Summary: Microsoft takes aim at the emerging markets with the $3 Windows/Office bundle. Is this too good a deal to resist? No? What if they throw in a cheap PC?

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When Microsoft decides to devalue Windows and Office down to $3 per seat in emerging markets which currently make limited use of technology (no, you and I won't be getting these great deals!), you know that the Redmond giant is Maybe $3 for Windows an Office is an offer that people can pass up on, but $53 for a PC and software ... that's a deal that's hard to resistworried about the effect that adoption of open source software would have in these markets.  But is the $3 Windows/Office bundle too good a deal to resist?

When I read the statement by Microsoft, the only bit stood out was the $3 price tag.  $3 is a pretty low price for Windows and Office, not exactly the $0 that open source software would cost, but it’s not far off it.  The statement highlights the benefits that this deal will have on the economies of countries such as Botswana, Chile, and China where technology is under-used and there's a massive potential market for software.  

However, that low value of $3 is only part of the deal.  When I read an account of the deal on CNET (by Ina Fried), a whole different, and far more significant number stood out:

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. [emphasis added]

Your eye is drawn to that $3 number, but far more significant is the price at which Microsoft can supply refurbished computers at.  While there's no doubt that $3 doesn't compete with the $0 that open source would cost, the $50 per refurbished PC price-tag is a very good deal indeed, and it far outweighs the benefits of taking the open source route where you can get the software for nothing but have to pay full whack for hardware.  That makes it half the price of the hardware on offer by the One Laptop Per Child initiative.  Microsoft might just have hit two birds with a single stone here.

Microsoft is playing hard ball against open source software because the company is well aware of the size of the emerging markets:

"We've set an internal goal that by 2015 we will help to reach the first billion of the next 5 billion that have been underserved," said Will Poole, the corporate vice president who heads Microsoft's market expansion group.

Maybe $3 for Windows an Office is an offer that people can pass up on, but $53 for a PC and software ... that's a deal that's hard for emerging markets to resist.

Thoughts?

Topics: Windows, Hardware, Microsoft, Software

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144 comments
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  • when is a $50 computer not enough?

    We need to put on our third world context to fully understand this situation. First,
    you need to get the $50 computer to the intended people. Shipping the device will
    cost more than that.
    Keeping the $50 computer running needs to be addresssed. Where are they getting
    the electricity? Where are the repair parts coming from. At $50, the equipment will be
    old and prone to breakdown.
    Unless governement or corporations are prepared to provide infrastructure and
    subsidies, I don't see this being as viable for the third world masses as the OLPC
    initiative.
    mmay
    • I took it that

      emerging markets don't necessarily include every villiage on the involved continents.
      xuniL_z
    • think about it

      where are they getting the $50 PCs from?? where do you think all the computers go when people upgrade to newere ones? Instead of melting them down adn recycling them, they are probably being used to do this..

      also repairs are not going to be a big deal liek you think. Yes PCs break down but most work on computers is not because of parts breaking down, it is because of upgrades, software problems and corruption. while there are still parts that need replaced every now and then, with a price like $53, just get a new one because it will probably be cheaper then getting the parts and fixing it.

      but i do agree with you on the electricity part. underdeveloped nations do not have a huge energy production and if a country like US at times has problems keeping up with energy demands, then how is an underdeveloped nation going to keep up? Dont get me wrong, turning on a couple PCs will probably not be much of a problem but when 1,000 people turn on computers, it is going to make a huge differnce.. and by what they say, i think that over 10,000 is going to be more accurate.
      Kaniki
  • FIve problems that make the idea Very Very Bad.

    1:
    A PC to run Windows + Office cost much more then 50$ even if refurbished/second hand.
    50$ is not even enough for the monitor ...
    So for poor people ... it is not even worth the effort to propose something they can not simply have.

    2:
    For the intended market a aprt of the population fortunately is getting out of poverty and in case they can buy reasonable PC's they can get for 0.5$ a copy of Windows Vista Premium And Office And whatever they want in any part of Third world countries.
    Unfortunately we know that in many countries there are Massive industrial licensing violations.
    Even in developed countries that is a problem ...

    3:
    They are all massively going Opens Source because in the medium term those countries do not have financial capacity to huge MS licenses on the Government and enterprise market ... so no advantage to go for MS platforms.
    There is no value proposition on MS products.
    Imagine a company with say 120 PC's ... in terms of licensing MS products (say, Windows+Office+Exchange) this is equivalent to the costs of paying that same personnel for at least two/three months ... in the developed countries that is not a problem, but in the countries where costs are very low ... things get a totally different meaning in term of their financing.

    4:
    Cross-selling risk:
    Anyone can buy a, say 10$ license to a Chinese in exchange for their 300$ product.
    For them is great, they gain 7$ for each copy ... remember, they can acquire hundreds of Legal copies for 3$/each.
    This is not stoppable.
    I do this today providing my customer with Licenses from the US, taking advantage from both lower price as well as euro/dollar exchange rates ...
    This is a huge problem for Microsoft ... really cuts down their revenue ... very bad idea ...

    5:
    Anti-trust problems to MS ...
    Better be ready for a new wave of new law-suites.


    It is simply not a good idea for a market already lost to MS specially with the One Laptop per child initiative ...
    Apparently they think it is not the case ... they had the same view over Zune, Live, ... we will see.


    Regards,
    Pedro
    p_msac9
    • why do people talk about Live, zune

      in a past tense sort of way. Live is just getting started and MS is putting out the infrastructure for it. <br>
      Check out msn.com today for just a small sample of word 2007 which is currently partially embedded in the web site for a few sample operations. It doesn't take much imagination to see what Office 2007 on the web would be. Traditional client based version is already very popular and building a solid new base.
      xuniL_z
    • Also.....

      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.<br><br>

      Sounds reasonable. XP Starter doesn't require much resource. <br>
      there is no Exchange server in the MS Live Mail equasion? Much of MS products are soon moving online anyway.
      This is feasible in the emerging markets. <br>
      The software component is not a losing proposition for microsoft. Any sale at any price is fine when there was no chance of a sale ever prior to it. I think it's fine for Microsoft to give open source a challenge in these emerging markets. If the linux camp were honest about their mission they'd have to say the same thing. Surely nobody wants to see control by just one OS (or family of highly related OSes as in the Linux family of operating systems).<br>
      There must be choice for there to be innovation so this is a great thing to be happening. Just as companies providing the linux choice in any country using Microsoft heavily is a good thing. <br>
      When people say the Linux is "free" that is also very misleading. There is more training required for many of the distros and other hidden costs that are not immediately seen when someone thinks of "free" software. there is teh same problem for Linux as windows in these markets when it comes to hardware and all associated costs. the emerging markets would outgrow the 100.00 pc very quickly, so while that is a good idea for a wide region of the world there is another void that needs filled in areas that are under development and gaining on poverty and creating economies.
      xuniL_z
      • However . . .

        1) The Price of the OLPC is going to be paid by other people than the user, i.e., either the Govt in the region, or Benevolent groups who have an interest in educating the children in that region.

        2) The OLPC is designed to use use in areas without ANY electricity at all. That's what the crank is for, remember?

        3) the OLPC is there to use as an Educational tool ONLY.


        Quite frankly, I think this is nothing more than a MS Dog and Pony show . . .[;)]
        JLHenry
    • FIve problems that make the idea Very Very Bad.

      I can't understand some of what your writing about. Your English &/or typing sucks. My suggestion is that you not post things here if they can't be understood!
      DoYouKnow?
      • That's a bit harsh!

        At least Pedro had a go at offering something to the debate. Yeah, his grammar is a little stilted, however, I understood most of what he is trying to say.

        Your comments make no valuable contribution. How about you "not post things here if they" are pointless.
        Big Scoddie
      • I suggest you don't waste your time here trying

        If you don't understand or can't comprehend what the posts are, go to another website, nobody died and made you head honcho. If you don't like the post, ignore it, if you can't read it, fine, go on to the next one. I don't think anyone here has the right to tell anyone regardless of spelling, type errors or thoughts, that they should post some stupid, mindless opinion such as yours. Go get a life and make it a happy one.
        intrepi
  • Where's this $50 computer coming from?

    Microsoft didn't say they'd supply refurbished computers for $50. It sounds like they were just speculating that $50 refurbished computers were available. If that's the case, where are these computers coming from? Most computers will have broken before the price depreciates to the $50 mark, so yes, there may be a few thousand around, but Microsoft are talking about reaching out to a billion.

    $50 is a number plucked out of the air by some MS exec to try to create a talking point. It's not a viable proposition.
    StevoCJ
    • You could be right...

      ... about the $50 computer. I thought it was part of the deal, but it seemed foolish to me. See the post I made below - point no. 3
      bportlock
    • $50 is not "plucked out of the air"

      I saw an unrelated story recently. $50 is not "plucked out of the air". In some African countries they get hold of "ancient" PC's by American/European standards and [i][b]local[/b][/i] techs fix them up. They [b][i]are[/i][/b] sold [i][b]with monitors and software[/b][/i] for $50. I think the program I saw was in Nigeria. It was coordinated by the government. They are also providing training so the people can get jobs. They showed a woman who had learned how to use Excel and was now working because she had some basic computer skills.

      Keep in mind that even a 486 running Windows 95 still can handle most routine business tasks. The average worker only sends and receives email, types and prints simple letters and text reports and maybe does simple spreadsheets or runs basic accounting programs.
      Rick_R
      • And there are a billion of these are there? (nt)

        (nt)
        StevoCJ
      • but will this run Vista

        Don't think you would get Vista/Office running on this spec and that seems to be what MS are offering.
        At least OpenOffice offer a version running on windows 95 which is more than can be said for MS!
        ismoore
    • Exactly right

      Microsoft's statement doesn't imply that they're about to provide $50 refurbished computers, not in any way. It's hard to imagine why the writer would have read that into their statement. The hidden lie in MS's press release is the suggestion that their new operating system would run on an old, presumably once-broken device that someone's managed to get to light up again.
      kentfx_z
    • Well, today it happens I'm recycling

      There's a program where the city where they are coming over to get computer stuff we are giving. I am giving 16 PCs, 8 monitors, 5 printers that I've collected of the last years.

      All free. It's a blessing for me to give away that stuff I don't need. I did not know what to do with it. Now it's gone and I'm happy.
      AxleMunshine
      • Well, today it happens I'm recycling

        I agree it is a blessing. But in the first place why have you no need/stopped using these old PCs? Are they not working? Or have they been made obsolete because they donot run with the latest versions of software, which thru clever advertizing etc. you bought ? The M$ of he day business model forces them to keep having new releases to generate new revenue, even if you are quite happy with your old PC and old software.

        The Open Source business model is different, you donot release a new version because you need the cashflow (indeed there is no cashflow to the developers), as source is available, if there are users, someone can keep supporting the older OSS software. Unlike say M$, where they stop support after a few years of introducing the new version.

        M$ etc., need government backing, via IPR and copyright laws enforcement. Maybe, for our planet's environment, the govt. should also make it mandatory to give free support for the life of the hardware. Then we will get the true societial costs of the IPRs provided/charged by M$ business model.
        vmahajan1
    • $50 computers are easily available

      There are $50 computers (including monitors) very readily availalbe. I just bought two 22" 2048x1536 high res monitors (Dell) for $10/unit last week. I can get a keyboard and mouse for $5, and a Pentium 1 box with CPU, minimal memory and a small disk drive for $30. That leaves me with $5 left for upgrades. This is off the shelf one-at-a-time pricing today. I suspect MS can get better.

      The problem with the idea is getting Windows down to a size which can run on a slower Pentium with only about 64MB. I strongly suspect that with a bit of tolerance for slow response MS can accomplish that. Solve the maintenance problem by doing this as a live CD type of distribution (a CD-ROM drive just used up $3 of my $50 budget-I'm down to $2 left).

      Electricity and shipping are the real bugaboos of this idea. I have a bin with about $75 machines in that category right now. It would cost me thousands to ship them to another continent, or hundreds for even across the US. And with older monitors they each need a clean source of 120v 60hz at about 3 amps minimum. That power is not readily available in places where these machines are needed most.

      The OLPC initiative considered all of the design problems, not just the pricing of the software and hardware. That is why OLPC has a chance of working. If MS wants into the OLPC project they can probably find a way to do something useful. If they want to derail OLPC then they will have to do better than $3 Windows and Office bundles. Perhaps MS will fund someone to come up with a suitable hardware platform to manufacture for their initiative. Refurbished $50 systems are available, but they won't do the job everywhere they are needed.
      gardoglee
    • Where will the $50 PC come from?

      At this time you have to pay to dispose of computers and monitors in the US and other countries and it will keep getting more expensive.

      If you give away the computers, and pay a reasonable amount for handling and bulk shipping, a large company is money ahead to donate their computer surplus to a qualifying third world country.

      Its also a great PR thing!

      It makes legal and financial sense.

      I know local computer shops and small to medium sized businesses that will give away 15 inch monitors in small quantities.
      I bet their are hundreds of thousands, or millions of good CRT monitors that will be scrapped and paid for that would function just fine for many months or years.
      Of course there is the ethical problem of shipping your electronic waste to another country to deal with as well.

      Bottom line, I don't think its unreasonable to expect to find an XP capable computer used/refurbished for $50-$100 ea.
      ebayironman