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TECH TALK: Massputers, Redux: Ballmer Talk

October 26th, 2004 · No Comments

Microsofts CEO Steve Ballmer spoke at a conference organised by Gartner last week. News.com has more on what he had to say:

“The biggest problem we have right now is that people who should be paying for software aren’t,” Ballmer told an audience of technology executives at an industry conference here sponsored by market researcher Gartner.

One way to stem piracy is to offer consumers in emerging countries a low-cost PC, Ballmer said. “There has to be…a $100 computer to go down-market in some of these countries. We have to engineer (PCs) to be lighter and cheaper,” he said.

People in poorer countries have one low-cost computing option, Ballmer said. “They have a leased-PC concept: the Internet cafe. Pay-by-the-drink computer use–that has a very important place in the market. (Microsoft) has five times as many Hotmail users in India and China than there are PCs because of this,” he said.

Ballmer said piracy of Microsoft’s Windows and Office software in emerging markets has become a major concern for the software giant, especially among business users who can afford to pay for software.

“PCs are not selling to the lower end of the population in China and India. People buying machines there are relatively affluent. So…should the prices be lower? Not really. Until government and situational factors reduce piracy…those people…don’t pay,” Ballmer said.

But lower prices have become part of Microsoft’s strategy for gaining market share in developing nations. In recent months, the software maker has announced plans to introduce low-cost “starter editions” of Windows XP into countries including India, Russia and Thailand. These versions will be bundled only with entry-level PCs and will not be available for retail sale.

The Microsoft CEO bristled at the suggestion that Linux is gaining in popularity as a client operating system at the expense of Windows. “There’s no appreciable amount of Linux on client systems anywhere in the world,” he said.

So, Steve Ballmer wants a $100 PC, probably on a pay-per-use model. Hopefully, in his unstated view, this will make hardware cheaper and entice more people to pay for software (that they currently pirate), especially Microsofts software. Before I provide my views later in this series, here is what a commentary on ZDNet UK said:

Once again with the grace of a lithe gymnast rather than a rotund middle-aged executive, Ballmer has managed to skip around the big, fat elephant squatting in front of his nose and find another excuse for why the inhabitants of poorer countries are opting not to pay his company’s licence fees.

Microsoft has made some stabs towards shifting the licensing pachyderm recently but only after considerable external pressure. A cut-down, cheaper version of Windows XP, the so-called Starter Edition, is now available in Russia, India, Thailand, Malaysia and Indonesia — all hotbeds of pirated software. But crucially, Starter Edition is only bundled with entry-level PCs and not as a standalone product — which isn’t much good for anyone with a functional existing machine with no plans or resources to upgrade their hardware. What are their options, Steve?

Ballmer’s missed another point. Anyone can build a $100 machine right now, just not one that will run Windows. Linux, however, can be shoehorned into anything. Its cost of licensing means that you can spend every last cent on hardware, and $100 these days buys you bits just as good as $4,000 spent 20 years ago when the PC first broke cover.

So if Microsoft is serious about encouraging computing in the developing world — and we have no reason to believe otherwise — it has to come up with more convincing arguments than this. It has to support the most cost-effective way of bootstrapping IT on the other side of the digital divide, and that means active promotion of free and open-source software. It can cash in when the billions of people it thus helps become richer — and able to move up to the more expensive, (but oh so superior, right, Steve?) Windows alternative.

Tomorrow: AMDs $185 computer

Tags: Tech Talk

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