By Ina Fried
Friday, July 01 2005 10:38 AM
URL: http://www.zdnetasia.com/news/software/0,39044164,39240289,00.htm

Even as Microsoft's low-cost version of Windows reaches more corners of the globe, some analysts are wondering whether it is hitting the mark.

The addition of a Spanish-language version this week means that Microsoft is now selling Windows XP Starter Edition, a localized adaptation of the full-fledged operating system, in a half-dozen languages in various emerging markets.

Critics say, however, that the software is still not flexible enough to really meet the needs of developing countries and individuals who live there.

To offer Starter Edition for far less than other versions of Windows XP without hurting its existing business, Microsoft imposed a number of restrictions, such as the fact the program can only open three windows at a time.

"I think someone who has any experience with a PC is going to start hitting the limitations pretty quickly," said Gartner analyst Michael Silver.

That, however, gets at one of the toughest things to figure out about Windows XP Starter Edition--who the target customer is. Identifying that person will help Microsoft reach its goal of getting a billion PC users, largely by upping computer usage in emerging countries such as Brazil, India and Russia.

Microsoft says the software, which is offered only as part of a budget system, is aimed chiefly at first-time computer users--those who have never really interacted with Windows. For that reason, the company has poured most of its development resources into things like local language videos that explain PC basics, such as how to print and how to use a mouse.

"It is the soul of Windows XP Starter Edition," said Mike Wickstrand, a director of Windows product management who helps lead the Starter Edition effort. "It's the part we've invested the most in."

But critics say the people in developing countries most likely to be able to afford a computer--even an affordable one with Starter--are middle-income residents who may well use a PC at work. Such customers may be more computer-savvy and less likely to buy a product with limitations. In a report last year, Gartner researchers said that while Starter Edition showed potential, it was unlikely to have much impact until its shortcomings were addressed.

"Microsoft will make little progress in the market with this product, as indicated by key PC vendors' adoption plans," Gartner analysts Dion Wiggins and Martin Gilliland wrote in an October report. Early signs appear to bear their conclusion out.

In general, Microsoft has been working with smaller, locally based computer makers in the countries where Starter has been offered. However, Dell is among the PC manufacturers that have signed on for the effort in Mexico.

The software maker has also concentrated its push in countries, such as Thailand, where the government is looking to play a central role in expanding PC usage. Microsoft announced plans to offer Starter

Edition in Russia, for example, but has placed that project on hold until the government there is ready with its low-cost PC program.

Starter Edition grew out of a test program Microsoft created for government-backed efforts in Thailand and Malaysia to offer budget PCs to consumers. Microsoft formally launched Starter Edition as a product in August 2004, promising to bring the OS to five countries as part of an expanded pilot project.

Edition in Russia, for example, but has placed that project on hold until the government there is ready with its low-cost PC program.

Starter Edition grew out of a test program Microsoft created for government-backed efforts in Thailand and Malaysia to offer budget PCs to consumers. Microsoft formally launched Starter Edition as a product in August 2004, promising to bring the OS to five countries as part of an expanded pilot project.

Gartner said that the software's restricted features also blunt the ability of Starter Edition to act as a check on pirated versions, which are widespread in most of the markets where Microsoft sells the OS.

"Ultimately, Microsoft can't limit the functionality of Windows and successfully fight piracy," Gartner said in its report. "The only real options are to lower the price and maintain functionality."

But Wickstrand counters that the limits haven't been an issue among testers of the version of Windows XP.

Wickstrand said that Starter Edition is meeting the needs of its target market, based on feedback from Microsoft beta program participants in Thailand, India and other countries.

One is Sagaya Shalini, a woman who runs an Internet cafe in a village in Tamil Nadu, India. Shalini uses her PC to run a variety of businesses for the very rural village, home to about 1,000 people. It is three hours from the nearest city and 10 kilometers from the nearest other computer. As a result, her PC gets a lot of use.

Shalini gives computer and language classes and also uses the PC to send basic medical information, such as a villager's blood pressure or EKG, to a distant medical professional. The PC even helps diagnose agricultural problems.

"She'll take a picture of someone's crop and get advice with what may be wrong with their crops," Wickstrand said.

When making product decisions, Wickstrand says he tries to think about what would work for Shalini. "I use Sagaya as a

tiebreaker," Wickstrand said. "She's really much more the expert than I am or my product managers are."

Another of Wickstrand's bellwethers is Manthana Upathe, a Thai woman who got her first PC through a Microsoft beta program for Windows XP Starter Edition.

"She doesn't want her 10-year-old son at an Internet cafe," Wickstrand said. "She wants her son at home."

What is "affordable"?
Wickstrand said that the limitations of Starter Edition were of little concern to the testers. "If making a PC more affordable means it doesn't have all of the bells and whistles, those tradeoffs become very easy for (Manthana) to make," he said.

But some say that Microsoft is missing a key point when it assumes that buyers are willing to make those tradeoffs when buying a computer. Although a US$300 PC may seem cheap by U.S. standards, for the customers Microsoft is targeting, such a purchase could represent years of savings.

"If I am saving for months and months and months to buy a PC, and I want it to last for years and years," Gartner's Silver said. "I'm going to have outgrown Starter Edition long before I get rid of that PC."

In particular, Silver and other analysts bemoan the fact that there is no easy way to upgrade a computer to Windows XP Home or Professional. As it currently stands, those who want to upgrade must pay the full price for a copy of the full-featured OS. They then must completely overwrite their hard drive and reinstall all of their programs and data.

Silver said he hopes that Microsoft will create a smoother path with Longhorn, the next version of Windows due next year. The current version of Starter Edition, Silver noted, was largely an afterthought to Windows XP, created as a hasty response to a Thai government program to offer low cost PCs.

Wickstrand said that Microsoft considered doing more dramatic changes to Windows, even creating some prototype software that was designed to be easier to navigate. But in the end, Wickstrand said the team decided it was more important to keep the software similar to other versions of Windows.

"We want to enable and train tomorrow's information workers," Wickstrand said. "The best way to do that is to have a program that is still robust and still navigationally (similar to other versions of Windows)."

Microsoft hasn't said what it plans to do with Starter Edition for future versions of Windows.

The company's Starter Edition program is seeing the strongest response, Wickstrand said, is in places where the government or other entities are working to provide financing that can create whole new classes of potential computer owners. In Mexico, for example, Microsoft is partnering with Infonavit, a state-affiliate entity that provides mortgages to low- and middle-income households.

But Directions on Microsoft analyst Michael Cherry said that governments that go with Starter Edition may be missing an opportunity to do more than just create knowledge workers. Many governments have been drawn to Linux, he said, in part because it offers the promise that countries might be able to create their own software industry.

"It isn't about just learning Windows," Cherry said. For governments, "it's about how do we move from no use of computers to having people who someday could be writing software in our country."

Cherry suggested that one option might be for Microsoft to include some basic programming tools, such as its Visual Basic software, with the low-cost PCs. While coding might not be the most mainstream use of such computers, Cherry said it only takes a few people with good ideas to get things started.

"Five hundred people will look at the computer, and only one will get that spark. But that may be all these smaller countries need," he said.