Low-Cost Windows XP Flops

The Inquirer reports that Microsoft’s flaunted low-cost version of Windows XP for the developing world hasn’t been, uh, a raging success in Thailand, Malaysia or Indonesia – its initial markets.

To understand why, it helps to know the full history of the project.

A couple of years ago, the government of Thailand worked with local computer manufacturers to produce a surprisingly capable PC system at a rock-bottom price. It wasn’t the $100 PC of Ballmer’s dreams, but for a few hundred dollars, any Thai national could pick up a decent system – and the government provided financing.

When the Thai government approached Microsoft and asked the ‘Softies if they would provide a low-price version of Windows XP and Office for the cut-rate PC, Microsoft said “let them eat cake.” Or words to that effect. The officials responded with a wonderfully Thai “Up to You”, and distributed the initial systems with a free version of Linux.

The PCs sold in droves. Thousands and thousands of people lined up to get their low-cost machines. A very large percentage of the folks who bought machines didn’t particularly want to run Linux, or teach their kids how to use Linux, so they moseyed down to the local pirate software shoppe and picked up a copy of Windows XP Pro for, oh, $2.50. That’s the going rate in my home town, anyway. A couple of re-boots later, those folks had fully functional Windows XP Pro systems up and running.

The brass at Microsoft saw what was happening, and (much to their credit!) relented. They came up with a package for the new PCs that couldn’t be beat – a fully copy of Windows XP Home, with a slightly stunted version of Office XP (no Outlook), all for the reasonable price of $38.

(In Thailand, $38 is about a week’s wages for a store clerk. By contrast, a “real” copy of Windows XP and Office costs three or four months’ gross wages.)

The market reacted very favorably to Microsoft’s largesse: many people forked out the additional $38 for the privelege of running a legitimate copy of Windows and Office. Microsoft got a lot of good publicity. People started learning and using Windows and Office, Thai style.

That’s how the low-cost Windows project started – a gutsy team of ‘Softies in Thailand pushed a revolutionary marketing change through the bean counters in Redmond. What happened next is typical big-company BS.

After several fits and starts, Microsoft announced that it would make a low-cost version of Windows available in many developing countries, starting in Thailand, Malaysia and Indonesia. One teensy-tiny problem: the low-cost version was so stunted it was hardly usable… maximum 800 x 600 screen resolution (!); maximum three programs running concurrently (!!); no networking (!!!); no Office (!!!!); and so many other limitations only a moron would buy the package. Oh, and Microsoft boosted the price, to boot.

I, for one, found the offer insulting. I railed about it in my weekly newspaper column, here in Phuket. Thai consumers greeted the new product with a Bronx cheer. I bet Microsoft has sold maybe ten boxes. In one fell swoop, the folks in Redmond turned a truly revolutionary idea into a complete joke. An insulting one at that.

So now you know the rest of the story…