Worth the wait?

Can Microsoft XPSE lure customers to lose some conveniences of the standard
version for its lower cost

The long wait just seems to get longer. The Microsoft XP Starter Edition (XPSE),
which was initially expected to be laun-ched in India in early 2005, has not
kept its date with the Indian audience. Though a portion of the market is
skeptical about Microsoft's relatively low cost computing vision, XPSE might
just turn out to be its mixed bag of fortunes.

Last October, the software giant first launched XPSE in Thailand, followed by
Mala-ysia and Indonesia in February 2005. The starter edition was also bound for
Russia and India this year. In a September press release, Microsoft had said
that it would release the product in "early 2005," which in simple
market language would translate to the Jan-March quarter. Till date, the XPSE
fact sheet posted on Microsoft website states that the availability of the
product in both these countries is slated for later in 2005.

Its spokespersons maintain that the product is very much on time, according
to Micro-soft's roadmap. But delay rumours galore even though the company had
never expli-citly mentioned the month of launch. The spokespersons insist that
the confusion seems to have arisen from an informal discussion between Ranjivit
Singh, Microsoft's India director (Business and marketing operations), and the
media in Bangalore during a Microsoft Real Time commu-nications product launch
on March 15.

Next comes another down-side. Whether late or not, feelers in the market
suggest that its features may be too bland for Indian tastes: there is a limit
of running only three applications at one time; a limit of three windows per
application; no support for PC-to-PC home networking or sharing printers across
the network; and no significant changes in default settings. Microsoft, however,
insists that this is an attempt at simplification of the operating system.
According to the com-pany, too many features actu-ally confuse first time users.

Alok Gupta, CEO of Soft-mart Solutions, says:"The starter edition is an
important step in Microsoft understan-ding the expectation of the small user.
Though it is a powerful tool to tap a portion of the pirated market, the
soft-ware's limitations might also lead to client dissatisfaction."

Microsoft XPSE is an inex-pensive version of its flagship operating system
and does not contain as many features as the standard version. Windows XPSE is
offered only with new PCs in local langua-ges and is not sold separately in
stores. Low prices could help woo customers away from pirated Windows, and,
unlike people who buy pirated software, the starter edition customers would get
patches and updates. Also, the inex-pensive version may lessen the
attractiveness of the Linux open source operating system.

The poor man's Windows has its target audience in first-time PC users,
which also inc-ludes rural markets (multilin-gual solutions). The rural market
would be the best tap for XPSE because the software in local languages would
impact day-to-day life.

Microsoft business group head Rishi Srivastava insists that XPSE is not a
defensive tactic to protect its market share from piracy or Linux: "XPSE is
designed for first-time users in developing tech-nology markets and providing
local and regional govern-ments with the ability to address the specific
technolo-gical and economic challenges that hinder digital access in their
regions. It is this that has driven the development of the offering, not
Linux."

According to Rishi Sriva-stava, the product has been in a pilot stage in
India in 200 households since August last year. While XPSE aims at increasing
the PC penetration in lower income households, it also wants to capitalize on
the advantage of training through its tutorials.

The starter edition of Windows XP is tailored to each country. For instance,
it comes with a getting-started guide, audio-visual tutorials on using the
computer and a getting-started CD, which contains how-to demos on popular first
time user tasks-all in the local language-plus loaded screen savers that
reflect local landscapes, flags and traditional designs. In August 2004, about
600 Microsoft employees were said to be working on the starter edition
initiative.

While things don't look very bright in India, things have not being going
great guns in other countries either. In downtown Kuala Lumpur bootleg copies of
Windows XP go for less than $5. Many prospective starter edition partners sell
their kit without any windows installed, while others continue to pre-load full
editions of XP, clearly believing that customers are not ready to compromise on
features.

Delay factors

Citing possible reasons for the product delay, Alok Gupta of Softmart says:
"Microsoft might be waiting to realize their mistakes from previous
countries before releasing it in the next country. The other reason is probably
delayed work on the design, capability and quality of XPSE in an atte-mpt to
face less market reje-ctions. As long as the product quality takes precedence
over timing, the delay is excusable."

Another possible factor could be Microsoft's table talks with the
government to roll out the software in regional languages for e-governance. This
might be fuelling the increase in release time.

Rishi Srivastava of Microsoft says: "We have been in talks with various
governments but these are still under wraps. We are also concentrating on
increasing our presence in different verticals through customized delivery
mecha-nisms. With regard to Indian languages, we are in a learning phase in our
Windows XPSE programs and have not determined, which, if any, Indian languages
beyond Hindi will be released."

Though Microsoft refused to comment on the pricing or timing of the product,
market estimations suggest that the product could cost between Rs 1500-2000 for
the Indian market, approxi-mately 50 percent of the standard XP available in the
market today. It might be July or August before its XPSE sees the light of day
in India.

Alok Shende, director-tech practice at Frost and Sullivan, believes that this
is a good opportunity for Microsoft to convert a portion of the Windows gray
market to the organized market: "While genuine users would not go in for a
lower end version, XPSE is an open offer to the poorer customers who want
licensed software and support at lower prices. Even if 5-10 percent of the 40
percent consumer market of pirated windows market can be converted to genuine
Microsoft, it would add both to the company's top line and bottom line."

Jasmine Kaur in New
Delhi