Microsoft launched its own initiative targeted at emerging markets. Taking a leaf from the mobile industry, it is a pay-as-you-go solution. The Microsoft FlexGo site has more:
Until now, people in emerging markets have faced two formidable financial barriers to PC ownership. The first is the high entry cost in markets without widely available consumer credit. The second is the often high fixed-monthly loan payments required to finance a PC combined with uncertain paychecks from month to month.
These obstacles have limited the number of households that could purchase a PC.
Now, with business models enabled by FlexGo, Microsoft is removing these barriers to PC ownership. Microsoft FlexGo makes it possible to lower the entry cost of PCs and let people pay for computers as they use them. This technology supports two models today: a pay-as-you-go model enabled by prepaid cards or a subscription model with monthly payments.
Microsoft has been testing FlexGo in Brazil for more than a year. A feature on its website gave more details:
The experience of the mobile phone industry vividly illustrates the appeal of pay-as-you-go plans in developing markets. Over a billion cell phones round the world are used on a pay-as-you-go basis. Among cell phone users in emerging markets, 72 percent pay for their service this way, and that figure rises as high as 90 percent, according to research groups Strategy Analytics and Gartner. Pay-as-you-go methods are also commonly used in South Africa to pay for electricity, and prepaid Internet service is available in more than 80 countries.
With this in mind, Microsoft began testing the pay-as-you-go model for PC ownership in Brazil over a year ago. Consumers such as Garcia paid a portion of the upfront cost to bring home a computer running Windows XP Home. Consumers pay off the remaining balance by purchasing from local vendors prepaid cards that activate the machine for a defined amount of time. If time runs out on the PC, it enters a “reserve tank,” or limited access state, until additional time is added. Once the computer is paid off, the metering technology is deactivated and the consumer owns the machine outright.
The response from Brazilian consumers was extremely positive, with PC sales more than doubling Magazine Luizas previous sales record. When customers who participated in the trial were surveyed, more than 31 percent said they had not intended to buy a PC in the next 12 months, but were able to do so because of the pay-as-you-go model.
FlexGo will be launched in India soon.
Tomorrow: The Mobile Alternative