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Cheap Windows For New Markets

Microsoft aims to take advantage of opportunities in countries where PC use remains low with Windows XP Starter Edition.

On the lookout for new markets for Windows--and at the same time seeking an opportunity to stymie the growth of Linux--Microsoft will offer its cheaper version of Windows XP in more countries this year.

Windows XP Starter Edition, Microsoft's biggest weapon in opening up markets outside the United States and Western Europe, is part of pilot programs in Thailand, Malaysia, and Indonesia. It's reportedly priced at less than $50. Starter Edition's lower price "is appropriate for the emerging-market needs," said Will Poole, senior VP of Microsoft's Windows client group, at Microsoft's annual financial-analyst meeting late last month.

Microsoft's program is designed to provide localized editions of Windows to take advantage of sales opportunities in countries where PC penetration remains low.

"Over 400 million households worldwide by 2008 will have the income, the electricity, and the connectivity necessary to make an appropriately tailored PC for their market a desired product," Poole said.

More than half of those households are in markets that Microsoft is most interested in grabbing: Brazil, China, India, and Russia. "Those are the big dogs of emerging market opportunities," Poole said, and would be the natural targets for expansion of Starter Edition.

A less-expensive version of Windows may help slow rampant software piracy in countries such as China, where Microsoft believes about 92% of the PCs are running unlicensed versions of Windows, Poole said. According to Microsoft, 22% of machines in the United States running Windows use pirated copies.

There's "a lot of opportunity" to crack down on piracy, Poole said. But "it's not easy to get revenue, particularly given the challenges of respective copyright law" in China.