By now, most people have heard that Microsoft will be selling a $3 version of Windows XP Starters Edition along with Office and some other educational software to students in the third world, but fear and anger have erupted in some circles in the Internet community. The two primary concerns I'm hearing across the forums are:
To address the first question, we must look at the definition of dumping. It is generally accepted that dumping is taking place when a product is being sold below the cost of production as a means to undercut a competitor's price to put them out of business. Some may view the mere act of selling a product at lower prices in the recipient country than in the country of origin as an act of dumping, but the recipient country wouldn't usually file a complaint unless its local industry is being undercut in prices. In this case, the competitor in question is open source software, which isn't really owned by anyone, and Microsoft obviously isn't undercutting the price since $3 > $0.
Educational discounts are also nothing new, and companies are free to donate software to the schools. I've even seen programs where Microsoft actually gives away entire suites of software, including Windows, Office, Visual Studio, SQL Server, and more to computer science departments in American universities for the mere cost of the media and shipping.
But why is there so much fear of a $3 software suite comprising a crippled version of Windows XP along with Office and a few other educational titles? Surely this is a great opportunity for Linux and OpenOffice.org to compete in a market where people have no attachment or habit on any platform, since the open source solution is 100% free. These are countries where $3 might be a few weeks' food supply, and it's still a serious challenge for those nations to pay Microsoft millions of dollars in licensing fees. Surely in a situation where we're starting with a clean slate and the potential untapped market is bigger than the entire present computing user base, free has to be more attractive than not free. For the Microsoft suite to stand any chance of winning, it would have to be head and shoulders above a much cheaper competitor.
From my test results last year, Desktop Linux required significantly more hardware power than Windows XP, and it lagged behind in performance. While Desktop Linux has lower hardware requirements than Windows Vista, it is definitely more memory hungry than Windows XP, especially when you factor in the bloat and sluggishness from OpenOffice.org (OpenOffice.org wiki on performance). Since third-world nations will be getting a lot of old and refurbished computers, a modern GUI-based Linux plus OpenOffice.org will definitely present some challenges. From a novice user and administrator standpoint, Linux is still going to be more challenging than Windows. Now I am perfectly willing to accept the possibility that my assessment of the performance and usability situation is in some way, shape, or form wrong or misguided. But if that's the case, Microsoft will surely fail, and there is no need for open source advocates to fear a $3 suite from Microsoft.
The other big question among Americans and people in other first-world countries is why they aren't getting these kinds of breaks in pricing. The perception here is that the first-world nations are subsidizing the third-world nations in software, but is that really what's happening? Earlier this week, I read the news that Vista sold only 244 copies in China (that would be 243 more copies than I expected). All joking aside, I'm not surprised by these numbers in China or in any other developing nation where people make less than 1/10th the income of first-world nations. You cannot expect someone who's making $200 a month to fork out $200 in OEM software licensing costs. They'll save up for the hardware, since that can't be copied and you would actually have to deprive someone else of their goods in order to steal it. But they're not going to pay hundreds of dollars for software when they can just copy it. What this means is that first-world nations are subsidizing what is essentially free software to the third-world countries under the current system.
Full subsidization isn't the only problem; we're all under constant attack from the hordes of zombie armies born from software piracy. The vast majority of pirated black-market software being sold in the back alleys from Moscow to Bangladesh are laced with backdoors and rootkits. Not selling them software at prices proportional to their income levels simply means the bad guys get rich selling the software and they get a zombie army to boot. Software companies like Microsoft have the opportunity to undercut the pirates by selling low-cost legitimate software, since people would rather not break the law and they would rather not have infected computers. We would all benefit with fewer zombie botnet armies roaming the Internet.