Microsoft to release stripped down XP to tackle Linux and piracy

Microsoft is getting ready to release a cheap, easy-to-use version of Windows XP for developing markets.

Windows XP Starter Edition - an inexpensive version of Microsoft's flagship operating system that does not contain as many features as the standard version - will begin shipping on PCs in Thailand, Malaysia and Indonesia in October, said Maggie Wilderotter, senior VP for the worldwide public sector at Microsoft.

The Redmond giant is also working out the details of getting a starter version of Windows XP into two other countries, Wilderotter said. She declined to identify the countries but in a previous interview discussed Microsoft's initiatives in Brazil and Russia as well as in Jordan, which in five years has seen its IT industry expand from $20m to $400m in annual revenue.

Starter Edition is part of an effort Microsoft kicked off about 18 months ago to collaborate more closely with foreign governments on expanding computer literacy and use. The company has created programs under which it provides regional government officials with advice on developing indigenous capabilities in high technology.

As part of the program, certain schools in 67 developing nations can qualify for free upgrades to the regular Windows software and for copies of Microsoft Office that cost $2.50.

About 600 employees at Microsoft now work on this effort, Wilderotter said.

"We have really tried to look at our engagement through a more holistic approach," Wilderotter said.

Microsoft, of course, benefits from an increase in the pool of potential customers. About 670 million people - about one-ninth of the world's population - use PCs today, and that number will likely increase to one billion by 2009, analysts have predicted.

Good public relations also help Microsoft. Critics and governments have complained in the past about the company's business tactics and prices.

In 2000, one of the best-selling books in Beijing was "Flying Against the Wind: Microsoft, IBM and Me," a tell-all book on Microsoft's tactics that was written by Juliet Wu, former general manager at Microsoft China.

The Starter Edition of Windows XP is tailored to each country and differs in a number of ways from the standard product. Microsoft has, for instance, loaded screen savers that reflect local landscapes, flags and traditional designs in Thailand, Malaysia and Indonesia. It also comes with a helper CD called MySupport. Users can only run three programs on the operating system at once, however. In addition, home networking has been deleted.

The operating system comes in Thai and in Bahasa, which is spoken in Indonesia and Malaysia.

Microsoft has already separately released a version of its Microsoft Works applications package in all the relevant languages. However, it has not produced a starter version of its Office productivity package.

The Thai government, in conjunction with Microsoft, is already running a program to get Starter Edition PCs to the local population.

Wilderotter said final pricing for Starter Edition has not been determined but noted that it will be the company's "most affordable operating system in the market." Reports have pegged the price of the Thai version at about $36.

Low prices could help combat piracy, Wilderotter added. Unlike people who buy pirated software, Starter Edition customers can get patches and updates. Similarly, a cheap version of Windows could lessen the attractiveness of the Linux open-source operating system.

"We are competing with Linux and will continue to do so," she said.

Michael Kanellos writes for CNET News.com