Microsoft talks up 'entry-level' Windows

Update: The company is to compete in poor countries with a cut-price, reduced-functionality version of Windows XP - and Thailand is already using the software

Microsoft has provided a modified version of Windows XP with reduced functionality for use in the Thai government's low-cost PC programme, and may make this software available to other governments, the company has revealed.

The "entry-level" version of Windows was created to allow Microsoft to participate in the Thailand ICT Ministry's programme without adjusting its policy of charging a single price for Windows and Office around the world, Microsoft said on Monday. The software was provided at a cost of 1,500 baht, or about £20, compared with the usual price of several hundred pounds.

"The Microsoft software provided for the ICT programme in June 2003 is a Thai-language specific, customised, entry-level version based on Windows XP Home and Office XP Standard," said a Microsoft spokeswoman.

Last year, analyst firm Gartner said the Thai deal was the beginning of the end for the one-price policy, predicting Microsoft would be compelled to halve its prices in poor countries by the middle of 2004. Now Microsoft says it is looking to collaborate with more governments on low-cost PC initiatives, using customised software with reduced functionality, as in Thailand.

Andrew McBean, Microsoft Thailand's managing director, said in an interview with The Bangkok Post last week that the company was developing an entry-level version of Windows for sale in poor countries, but his remarks were inaccurate, Microsoft said: the software has been in use since June of 2003.

Microsoft has come under increasing competitive pressure from open-source software such as Linux in poor countries, where the single-price policy makes Microsoft software too expensive for most. The Thai ICT PCs were originally available only with Linux. Linux PCs are seen as a threat to Windows partly because buyers are considered likely to replace the operating system with pirated copies of Windows.

Several Asian governments have recently embraced open-source software in an attempt to fix problems such as high software costs and wide-scale software piracy. The price of Microsoft software is often cited as the root of the problems.

Authorities in Asia have bemoaned the company's lack of flexibility, arguing that market price should be tied to local economic conditions. Being forced to use English-language versions because of the lack of local-language options is also a sore point.

Countries like Malaysia, Vietnam, China, Japan and Korea are wary of giving monopolistic control of crucial software to a foreign-based corporation, free to charge any price without regard for national interests.

Microsoft has repeatedly denied it will adjust its one-price policy. Speaking at the Singapore launch of Office System 2003 productivity suite last November, Oliver Roll, Microsoft general manager for Asia-Pacific and Greater China, said that while the single-price policy won't change, the company was willing to give discounts if it would help certain IT-disadvantaged groups.

Today, a copy of the Microsoft Windows operating system or Office productivity suite costs roughly the same in every country. For example, Windows XP Home is $199 (£125.77) and Office XP, $399. Given that the average income of a Thai worker is $7,000 a year, it would be the equivalent of charging $3,000 for the bundle in the US, according to Gartner Hong Kong.

CNETAsia's John Lui contributed to this report.