In a move that could lead to lower prices for Microsoft's software in other countries, the software company has cut the price of its Windows operating system and Office application suite in Thailand, according to a report released by market analyst, Gartner.
"Microsoft - in response to a Linux threat - recently reduced pricing to $US40 ($A61.50) for an Office and Windows package it offered as part of a government initiative in Thailand," the report said. "Microsoft may offer a similar package in China as an incentive to keep Chinese enterprises using its products."
Ongoing pricing pressure and backlash against Microsoft's dominance will move the company to offer more competitive pricing in other regions, according to Gartner.
Programs similar to one launched in May by the Thai government to help low-income earners buy a desktop or a laptop PC with Internet access would add to this pressure, Gartner said.
Microsoft initially did not take part in the Thai program, so the government selected Red Hat's Linux operating system and Sun Microsystems' StarOffice productivity suite.
Price adjustments should start this year and by the second quarter of next year Microsoft would have cut prices by at least half in emerging markets, the research company predicted.
Responding to the report, Microsoft said that it had no current plans to expand the Thai program to other countries. However, the vendor was willing to discuss with governments how it could help give underprivileged users better access to modern technology, it said.
Despite an increased effort to battle software piracy, Microsoft faced a flourishing market for illegal software in Thailand. Copies of Windows XP can be found there for $US4 and Office XP for $US8, Gartner said.
HP is selling Linux-based laptops in Thailand for $US450 as part of the program initiated by the country's Information, Communications and Technology (ICT) ministry. Those laptops went on sale in May and HP has described demand as overwhelming.
The Microsoft price cuts in Thailand represent a steep discount compared with the US pricing for Windows and Office. The full version of Windows XP Home can be purchased for as little as $US84 in the US, according to PCWorld.com's Product Finder. The full version of Windows XP Professional can be found for $US130.95 and Office XP Professional for $US254, according to the site.
The country-specific price cut in Thailand, the second in Asia this year, represents a further break in Microsoft's long-standing policy of charging the same price for its software in countries around the world.
Pricing of Microsoft products has been a sensitive issue in many parts of Asia. In 2002, Taiwan's Fair Trade Commission opened an investigation of Microsoft's business practices here, questioning whether the company had abused its dominant position in the market to inflate the prices of its products.
After a six-month investigation that proved inconclusive, the two sides reached a settlement earlier this year, with Microsoft agreeing to cut the price of some of its software products by an average of 26.7 per cent.
Under the terms of that agreement, the price of Windows XP Professional Edition in Taiwan was cut by 23.7 per cent while the price of Office XP was cut by up to 16.9 per cent. The greatest price reductions came for Windows XP Professional Academic Edition (54.5 per cent), Office XP Academic Edition (50.1 per cent) and Word (42 per cent).
Specific dollar figures for the price cuts, which became effective on March 15, were not released.