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

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?

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.