Microsoft is going to provide a low-cost, that is for $3, Windows and Office bundle for governments. This is an effort to reach the next 1 billion users. It is commendable that Microsoft has realized that it is expensive for a lot users to keep upgrading to newer versions. The only options available are to either not upgrade or use the pirated copies. Only 244 legal copies of Vista have been sold in China since its launch! The pirated copies are available for $1. Now this is not true only in China, a lot of developing countries, including India, see this happen.
Some thoughts on this.
One of the reasons for this is that the cost of upgrade is usually not justifiable, other than that a couple of years later Microsoft is going to pull the plug on it. This makes the pirated copies more lucrative. Of course there is always the Genuine Advantage program, but frankly, not a lot of people care about it.
And, I somewhere believe that piracy is one of the reasons behind popularity and wide userbase of Windows. Compared in whatever aspect, Windows is not better than the other options, including the open source ones. The only edge that Windows has over the others is because of the first mover advantage. The pirated copies have made availability of Windows easier and more viable as compared to its competitors, helping them maintain the advantage.
I feel that only reduction in the price is not the best way of targeting the next 1 billion users. Its competition with the open source is not only because of the price, it is because of the other two biggies – freedom and quality. Windows licensing is not exactly friendly, it tells the user more about what he/she cannot do than what he/she can do with it. The quality is of course a subjective matter, but the recent days have seen a surge in demand for Linux, especially because it has made huge developments in usability for the common man.
To be able to target the future users Microsoft should better its first mover advantage by proving how it can solve problems for the users, better than the competitors. Whether it is the OS, the office suite or the browser, Microsoft is up against quality and freedom more than price.