Microsoft recently broke its global pricing policy for the Thai market, offering steep discounts in the Royal Kingdom for its Windows and Office products. From a report at Linux Insider, we learn why.
First-time computer users are flocking to a government-subsidised programme to bring cheap PCs to the public. Although pirate copies of Windows and Office have a street price as low as $4, the information ministry's scheme of selling PCs loaded with Linux and OpenOffice for $250 is a runaway success. A million new PC owners will be using Linux within the next few months.
"Charging Thai consumers nearly $600 for Windows/Office is the equivalent of charging US consumers $3000," notes the report. But even at the right-sized price of $37, Thai first-timers are preferring Linux. Which also cites Linux's superior Right-to-Left support as a reason why the ministry's computers are popular.
From the report we can draw several, and some surprising conclusions. As a business model, charging a software licence fee against a comparable free rival is now, perhaps, a risky proposition. The oft-cited factors of global brand appeal (Microsoft is one of the world's most recognised names) and integration count for little in emerging markets.
This isn't to say Microsoft will disappear in a puff of smoke: with a cash pile of $51 billion, it isn't going to go away anytime soon. And it can conceivably switch, as IBM did, from dictating the market to shift to a services model where it maintains legacy code: keeping it just about up to date for incumbents to count the costs, and find it cheaper to stay where they are. Microsoft's most valuable software asset right now is not any of the interesting file system or user interface enhancements in Longhorn that it unveiled at PDC, it's Windows Update. Keeping the worms and viruses at bay is going to be a full-time job: probably one that ensures Microsoft's long-term survival.
But in terms of simple economics: when a piece of software with an expensive licence fee is pitched against a free rival of equivalent functionality, the software with the licence fee will lose. And this particularly applies to emerging markets in the East. Here in the occident, we expect to hear "exit costs" to emerge as the dominant theme of Microsoft marketing in the coming months and years.
We also have an anecdote to offer, which might be useful.
This reporter gave up Mac OS X for Ramadan. Well, sort of. Fasting is good for soul, to be sure, which explains why 2.5 billion people around the world practice it in some form, but my reasons weren't so high-minded. Not having spent more than an hour at a time at an x86 PC in the past three years, I was curious to see what was going on in the Windows world. I have no great revelations that you haven't heard: yes, Opera on Windows is incomparably great (and makes Safari look like, to paraphrase my colleague Ashlee Vance, a grey rectangle). And yes, the hardware is much better value and feels dangerously cheap. (When I began to burn a CD, the USB bus failed: Windows reported that there had been a "power surge" - and disabled all the USB devices).
But all this, you already know. However, I found that moving from a coherent (although still flawed, as John Siracusa points out this week in his latest heroic installment) the user interface on Windows is a very jarring experience. There are many patches, spyware and virus checkers to install, nothing is ever quite predictable, and the system guides the user over a barbed wire fence. Ctrl-W now closes many applications windows, but not all. Alt-F4 closes the others. What should I press?
Now this is relevant, we figure. The new PC users in Thailand have only some muscle memory of legacy systems, which levels the playing field in unexpected ways. Linux on the desktop is still immature and infuriating, but for a new and resourceful user, the legacy is as much of an encumbrance as it is an opportunity. And here's the key.
Linux Insider reports that most of the new Linux users are expected to stick with their PCs thanks to the fanatical level of support provided by the Thai Linux user groups. Gartner predicts a 70 per cent stick rate: which is quite extraordinary, given the power that is so often attributed to factors such as branding and incumbent advantages.
So here we have two related phenomenon. A government is prepared to look after its people and subsidise a low-cost PC initiative, which enfranchises a new middle class. (Thailand's infant mortality rate doesn't look to shabby compared to some laissez-faire countries, such as the United States). And community based support groups, which are very much part of software libre's growth, hold a huge advantage, here. The report cites Thai language support as a key factor in Linux's popularity: but this didn't appear out of nowhere over night.
Asked to "think local", Thailand has provided an intriguing and successful solution: a community-based model that atomises concepts we're used to thinking of as important, such as "brand". It's a new way of doing business, and we look forward to seeing how Western companies adapt, given that the potential market is so large in Asia.
And is it too early to declare the software licence dead? ®