Microsoft In Thailand

[sabaijai]

Jun 6, 2:00 PM (ET)

By GRANT PECK

BANGKOK, Thailand (AP) - The long-running legal battles between Microsoft Corp. (MSFT) and governments in Europe and the United States make the company look like a partner in a bad marriage, ready to walk out and call the divorce lawyer.

But in Southeast Asia, the software giant seems more like an ardent suitor, wooing governments with sweet promises and gifts - such as unprecedented bargain prices on its Windows operating system.

Microsoft executives suggest that pricing policies for government-promoted PC sales pioneered last year in Thailand and used again in Malaysia this year presage a new marketing approach for emerging markets.

So far, the localized versions consist of Windows XP minus English language support. The company also has hinted that it's developing a kind of "XP Lite," a leaner Windows with features more appropriate to developing countries where "high tech" is not a reality of everyday life.

Microsoft executives are themselves being lean with details, citing competitive strategy. But they're willing to discuss the concept.

"This is a new market with very different needs, from an economic perspective, from a social perspective, from a technical perspective," Barry Goff, group product manager for Windows Client group, said in a telephone interview from company headquarters in Redmond, Wash.

Setting prices based on geography is not new in other industries. Pharmaceutical firms charge lower prices in developing markets like Africa than in mature ones like the United States. Even McDonald's sets different prices for Big Macs based on geography.

But the software industry is just beginning to move beyond a one-price-fits-all strategy.

Besides Microsoft, Symantec Corp. (SYMC) in May released a Thai version of its Norton antivirus suite for half the price of its regular English edition. And earlier this month, Sun Microsystems Inc. (SUNW) introduced a government pricing scheme for its enterprise software based on population and degree of development, as determined by the United Nations.

"What we're seeing is the beginning of a trend," said Joe Wilcox, a senior analyst at Jupiter Research. "The more companies test the waters, the more of a trend there is because of the competitive threat."

Microsoft changed its tune a year ago.

The software giant previously promoted a one-price-fits-all policy: A shopkeeper in northern Thailand, for example, would be charged the same for his copy of Windows as a corporate lawyer in New York, despite the disparity in average national incomes.

Microsoft had little incentive to do otherwise as it commands the market. At the same time, lax enforcement of intellectual property laws throughout the region meant that many home users - and not a few companies - used pirated versions of Microsoft software.

When Thailand's Information and Communications Technology Ministry last year launched a program to boost the country's modest installed base of home computers by selling machines at a rock-bottom price, it asked Microsoft to help out.

To keep to its targeted price of the equivalent of about $260 for a fully equipped desktop computer, the ministry sought a discount on the company's software.

No deal, said Microsoft.

Convinced that price rather than feature set was the key to success, the ministry went ahead and began marketing its computers in May 2003, bundling them with freely distributed but less user friendly "open source" software: a Thai language version of the Linux operating system and an office productivity suite.

Within a month, the ministry had more than 100,000 orders in hand. And it also had the attention of Microsoft, which came back with an offer the ministry couldn't refuse.

"Microsoft offered a special price of 1,500 baht ($38) for XP Home and Office XP combined," recalled Jumrud Sawangsamud, chairman of affordable computing working committee. Normally, Windows XP Home Edition sold for 4,500 baht and Office XP cost 15,000 baht.

The only thing lacking, said Thai and Microsoft officials, was English-language in the Windows displays - menus and the such - to discourage exports to outside markets.

The success of the program allowed the ICT Ministry to move on to new promotions with Microsoft's participation, such as the sale of cut-rate notebook computers to civil servants.

Microsoft now touts its original Thai deal as a model for emerging markets.

When Malaysia's Ministry of Energy, Communications and Multimedia announced a similar project to boost the number of computers in rural households, Microsoft got in on the ground floor.

Purchasers of Malaysia's PC Gemilang: PC Mampu Beli- "Glorious PC: Affordable PC" - can buy machines loaded with open source software, for 988 ringgit, or $260. Or they can opt for a desktop loaded with a Malaysian-language only version of Microsoft Windows XP Home Edition and the lightweight Works suite for 1,147 ringgit, or $302.

Vietnam, which announced a similar large-scale, low-cost computer project, is a likely candidate for a similar deal and has been in discussions with Microsoft since late last year. Ngo Phuc Cuong, Microsoft's chief representative in Vietnam, declined to give further details.

It's clear the rise of piracy in Southeast Asia and the low cost of open source alternatives are spurring Microsoft's new approach.

The company said the initiative was geared mostly for developing countries, and that it was meant to fend off advances by Linux. But Linux poses little immediate threat to Windows on consumer desktops.

Even when Thailand was rolling out its cheap Linux PCs last year, officials assumed that a substantial number of them would be reconfigured with pirated copies of Windows.

The International Intellectual Property Alliance, a multi-industry lobbying group, estimates 72 percent of the business software used in Thailand last year was pirated. For Malaysia, the figures were 68 percent, while Vietnam tied with Russia as the world's worst, at 93 percent.

Microsoft's Goff characterized the program as an opportunity to fulfill the company's vision of "a PC on every desktop and in every home."

"From a ... First World perspective, we've largely succeeded in that," he said. "But Microsoft is truly a global organization, and if you really think about globally, 'Have we succeeded?' the answer is 'Not even close.'"

[translator]

The Ministry of Information and Communications Technology (ICT) is offering a million PCs preloaded with Linux StarOffice at rock-bottom prices to increase computer literacy in Thailand.

To prevent Linux from running away with Thailand's subsidized "people's PC project," Microsoft has dropped the price of its Windows and Office packages from nearly US$600 to $37. Other Asian countries are lining up to duplicate the Thai program. As a result of the events in Thailand, analysts have begun to predict the end of Microsoft's long-standing "one-price-fits-all-markets policy.

1. It's going to piss off a lot of people in the US and EU that are paying out the ass for M$ products, only to see that they are offering it at almost 90% less elsewhere.

2. This could be the start of a wonderfull trend. Between this and what's going on in the EU with M$ on trial, and the middle east governments looking to switch, M$ could be in some real trouble.

3. Worried about linux or what.........Come on thailand, no license to pay, all the open source (free software) you need from around the world at the click of a button by a programmer who wants to give his knowledge for free. M$ is a worried company within the asian markets as stated above....All you have to do is learn it....to be able to connect with it....its not hard given time.