Redmond, WA-based software giant, Microsoft (MSFT), is trailing a new path to the ever-expanding markets of Asia.

Microsoft, the $301 billion SOFTWARE company is restructuring its Windows XP for a section of the South Asian market. This restructured software—WinXP Starter Edition (SE)—is making inroads to reach out to the first-time-PC-users across Asia. Like its higher-end version (XP), this new but stripped-down model is planning to penetrate a larger market, using a new tool: native tongues.

Although this sanguine product underlines best business strategy of the recent times, it is believed to be an endeavor to make PC a people’s commodity.

Its strategy: “matching the standard to middleclass market,” is a unique step towards disseminating computer awareness along with ownership. This is achieved through cost-cutting and new-way packaging (native language) of its operating system; by which the software giant can introduce this SE for $35, versus its now sophisticated home edition of $85 in the Asian continent.

But along with the cost are also some features that are cut, making SE a grunt version of XP.

Microsoft began this flagship pilot project first in Thailand. But soon, realizing the importance of local language and its impact on the company’s profit sales figure, the software giant migrated to other South Asian markets like the South Korea, Indonesia and Malaysia.

Now, after signing the accords in these countries, Microsoft is hatching the same in India. And India, with an overwhelming1 billion population and an appalling one percent PC ownership, is believed to be the prospective money market for Microsoft’s SE product.

India needs what Microsoft has
Rishi Srivatsav, Business Marketing Head, Microsoft Clients India, is answering our call from Lucknow, a northern city of India. He is there on a business meeting with a government enterprise in order to promote the new SE product. “This pilot project is unique to India, given the fact that India’s PC penetration is just as abysmal as 2 percent,” says he. From Lucknow his itinerary includes a slew of tier 2 cities across India—all to meet the bureaucrats.

For Microsoft, these spots aren’t just exotic locales, but a land of vast opportunity. And its new product, as a matter of fact, was created for such places. Talking about the shoddiness, Srivatsav explains, “This product is designed for an average educated Indian, so the features added to it are the means through which we could reach them and the ones discarded were those which were complicated and cumbersome.”

Unlike the full-fledged version of Windows, which supports nine vernacular languages, this cut-rate, stripped-down and budget-priced operating system for India will be available only in Hindi; while the other applications like notepad, word, excel et al are bilingual—both English and Hindi. And this software has also shrunk the software capacity to open only nine windows for three applications (three windows each) concurrently.

Microsoft SE will be bundled only with entry-level PCs in India and is not for retail sale. A mix of local and multinational computer makers, including Hewlett-Packard, HCL and Wipro, have so far put their weight behind the operating system. PC vendors like HCL and HP charge about $100 for loading the current version of XP home edition. Industry experts believe that if the price of the SE could be slashed by over 60 percent, the PC prices would be slashed substantially.

Seeing The Darker Side: Analysts
If belief is that this software could slump PC prices, analyst on the other hand are skeptical that the restricted features of software can promote piracy.

Dion Wiggins, Gartner’s vice president and research director said, “Microsoft could have made a big difference with this product, but is more likely to be seen as pushing the upgrade path and frustrating users rather than delivering the value that this product is capable of, due to unnecessary limitations.” As a result, Wiggins added, end users will invariably turn to bootleg copies of the standard WinXP, which will lead to higher piracy rates in these developing countries.

In spite of this censure, Microsoft’s cut-price WinSE will likely prove to be a success, simply because the firm has nothing to lose from this pilot project, but more to gain. “If the SE is improved, it gives users little reason to cough out 10 times more for a legitimate copy of Windows XP Home Edition. This edition must be good enough for novice users, yet “bad” enough to avoid cannibalizing its flagship Windows revenue stream. It’s a hard balance to strike,” opines Srivatsav.

“The cut-price Windows package allows Microsoft to salvage sales it would have otherwise lost to piracy anyway. Should a user decide to install a bootleg copy of Windows XP Professional Edition a day after splashing on his low-cost PC, he would have already paid for the Starter Edition at the point of computer purchase. “This is profit Microsoft wouldn’t have normally made,” says Martin Gilliland, principal analyst with Gartner Asia-Pacific.

Confronting Reality with Logic
Microsoft’s ground work before launching this software is apparent even to the novice net-researcher. In light of the piracy levels, PC and the Internet penetration, and also the Linux market in these five countries of SE launch, it’s a clear indication that these countries have grown in all aspects. So, it was a strategic move from the software giant to grab the market for the second time in a lucrative way. Also, Microsoft is keen in its approach in launching its customized products in a way to lure its customers. It has successfully implemented the Microsoft Launch Guide to train its user about the interface, how to create emails, how to use the Internet and so on. Added to this, for a country like India, for example, Microsoft has given the SE a flavor of the Indian: featuring the Tajmahal and other historic pictures to its logo and also as a screensavers.

If all these work to Microsofts credit, it’s surely a success that can keep its business continuing for a longtime—since any other competitor will need a substantial time to oust it. But for Microsoft, it is a well-learnt lesson that for the ‘first-time-PC-User’ it’s always the need that matters more than greed.