Microsoft’s Emerging Market Strategy

WSJ writes:

U.S. software giant Microsoft Corp. will discuss with the Association of Southeast Asian governments the introduction of a cheaper version of the Windows operating system, company Chairman Bill Gates said Tuesday.

“We will talk with other governments about whether they have programs to get very, very low-cost computers to their citizens. When they have programs like that, we will talk about which versions of Windows will make sense for them,” Gates told reporters.

He was speaking at a press conference after signing a memorandum of understanding with the Malaysian government to collaborate in information technology-based education in public schools.

ASEAN comprises Malaysia, Singapore, Thailand, Indonesia, Philippines, Brunei, Vietnam, Laos, Cambodia and Myanmar.

Last week, Microsoft introduced a starter version of Microsoft XP operating system for Malaysia and Thailand.

Microsoft faces increasing competition from cheaper rivals – such as those based on “open source” Linux technology – in developing markets, and faces a continual challenge to combat piracy of its products.

Earlier Tuesday, he met Prime Minister Abdullah Ahmad Badawi for a half-hour and pledged to invest 10 million ringgit ($1=MYR3.80) to train teachers and improve information technology in 10,000 schools over five years.

“We are eager to work with the government of Malaysia to help change how education is delivered,” Gates said in a statement.

So, this seems to be Microsoft’s strategy for the emerging markets:
– talk to governments directly
– get them to source low-cost computers (probably, AMD or VIA based systems)
– offer Windows XP Starter Edition in local language at a discounted price bundled
– probably expect large volume guarantees
– offer the bait of investments in teacher education (or development centre) in return for commitments on Windows usage

This is not going to work. As I write in my Business Standard column, affordability is just one of the dimensions of the problem. What also needs to be looked at is manageability. The strategy Microsoft, Intel and the others should be looking it is:
– sell not hardware or software, but “commPuting” as a service (hardware, software, communications, support)
– the price point needs to no more than $15 (Rs 700) per user per month
– solution should be thin clients and server-centric computing (the latter will eliminate piracy)
– push broadband deployment across the country
– create a platform for relevant local content
– create community centres (Tech 7-11s) locally where people can experience the new computing platforms

Taking computing to the next markets needs a paradigm shift in the way we think about computing., and about making computing available as a utility. Only then will the next billion users become consumers of computing.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.