Microsoft said Friday that it has reached an agreement with the government of Portugal to develop affordable computing packages for the country's schoolchildren.

Under the pact, Microsoft will introduce a suite of educational desktop software that can run on the Magellan PC -- a low-cost laptop built in Portugal for primary and junior high students. The suite will include the Windows XP operating system, Office 2007, and educational applications -- including Microsoft Student Learning Essentials, Microsoft Maths, and Microsoft Encarta Online.

The plan is part of the Portuguese government's e-Escolinhas technology-in-education initiative. "With the Magellan computer and the massive introduction of ICTs [information and communications technology] in the Portuguese education system, for the first time a whole generation will grow up to have strong English and ICT skills," said Portuguese prime minister Jose Socrates, in a statement.

The deal was announced at an event in Porto Salvo, Portugal that was attended by Socrates and Microsoft CEO Steve Ballmer. "Providing students with access to technology and educational opportunities that will enable them to thrive in the knowledge economy is critical to the future success of every community," said Ballmer.

Emerging technology markets represent a sizeable sales opportunity for Microsoft. PC sales in the so-called EMEA region, which covers Europe, the Middle East, and Africa, jumped 23.5% year over year to 23.1 million units in the second quarter of 2008, according to Gartner.

Parts of the region, however, have little money to spend on technology -- a fact that's leading numerous vendors to develop low-cost systems specifically for sale in EMEA.

Microsoft has responded by extending the life of Windows XP, which was retired from most markets in June, for use on inexpensive, subcompact systems that lack the horsepower to run Windows Vista. Other vendors, including ASUS, are pushing Linux-based systems in emerging markets.