TECHNOLOGY SPECIAL REPORT

Microsoft Loses to Linux in Thailand Struggle

To prevent Linux from running away with Thailand’s subsidized “people’s PC project,” Microsoft has dropped the price of its Windows and Office packages from nearly US$600 to $37. Other Asian countries are lining up to duplicate the Thai program. As a result of the events in Thailand, analysts have begun to predict the end of Microsoft’s long-standing “one-price-fits-all-markets policy.”

Significantly, first-time PC users in Thailand are finding the Linux Thai Language Edition easier to master than Windows.

In a computer shop on the outskirts of Bangkok, Nalong Sripronsa is teaching his assistant how to install Linux Thai Language Edition OS on a secondhand Pentium PC. Nalong, manager of DCO Computer, has seen growing interest in Linux since the Thai government launched its people’s PC project in May of this year.

The Ministry of Information and Communications Technology (ICT) is offering a million PCs preloaded with Linux StarOffice at rock-bottom prices to increase computer literacy in Thailand.

“Many people in Thailand have never used a PC before,” Nalong told LinuxInsider. “They don’t know the difference between Windows and Linux. If you go from Windows to Linux, it seems difficult, but for first-time PC users, the Thai edition of Linux is easier to learn than Windows.” Nalong added that Microsoft has neglected the Thai market. The company only recently made Thai-language documentation available for beginners.

People’s PC Project

The people’s PC project, formally known as the ICT PC Project, revolutionized the Thai PC market, and its effect is being felt around the region. The Ministry of ICT aims to sell 700,000 PCs and 300,000 notebooks in the first year of the project. To make the PCs affordable, the government has insisted that computer makers offer the machines at fire-sale prices — $250 for PCs and $400 for notebooks, including the software.

The government did invite Microsoft to participate in the project, but the company initially refused to lower its prices. Microsoft has a long-standing policy of charging the same prices throughout the world, which could help explain the widespread piracy in developing markets like Thailand, where the average annual income is about $7,000. Charging Thai consumers nearly $600 for Windows/Office is the equivalent of charging U.S. consumers $3,000.

Pirates in Bangkok sell copies of Windows XP for $4 and Office XP for $8. With Microsoft refusing to lower its prices, the Ministry of ICT turned to Linux and StarOffice.

The rock-bottom prices — and easy financing terms — generated enormous interest in the ICT PCs. An estimated 35,000 people showed up at a Bangkok convention center where the machines were launched. Some people even camped overnight to sign up for the program. By August of this year, Thai consumers had snapped up 300,000 ICT PCs. Three regional computer clubs joined forces to produce alternatives for those who were not qualified for the ICT PC, offering similar PCs for a slightly higher price.

Microsoft Has Second Thoughts

Microsoft, faced with the prospect of a million Linux PCs, began to have second thoughts about its pricing structure. With many students buying an ICT PC, the company risked losing both market share and mind share to Linux. Microsoft’s newly appointed regional general manager, Andrew McBean, no doubt having consulted Redmond, offered to supply the ICT PC Program with the Windows/Office package for a mere $37 — a price cut of 85 percent.

Gartner research director Martin Galliland, coauthor of the report “Thai PC Market May Change Global Windows Landscape,” told LinuxInsider that Microsoft’s concerns about Linux and piracy explain the company’s change of heart. “The price drop was clearly motivated by a feared loss of market share for legal copies of Microsoft software,” said Galliland.

While some buyers still will install pirated copies of Microsoft’s software, Gartner estimates that 70 percent of Thai consumers will stick with Linux, citing freely available software, lower prices and lack of knowledge among first-time PC owners.

Microsoft’s Andrew McBean in Bangkok was not available for comment on the company’s decision to participate in the ICT PC project.

Two Month’s Salary

Gilliland said Gartner has been contacted by several other Asian countries wanting to duplicate the Thai initiative. “The apparent success of the Thai ICT project has spawned some interest in other emerging markets, and they have approached Gartner with very early statements of interest,” Galliland told LinuxInsider. He refused to identify the countries involved. In what could signal an ominous sea change for Microsoft, nearly all countries in the region are developing localized versions of Linux.

Gartner had more bad news for Microsoft. In the second quarter of 2003, just 40 percent of all desktop PCs shipped in Thailand had a licensed copy of Windows installed, an all-time low that Gartner expects will dip even further. Moreover, PC manufacturer Laser Computer has replaced HP as Thailand’s top PC seller. Laser Computer sells only Linux PCs and has been growing at an annual rate of 300 percent.

Nalong Sripronsa at DCO Computer believes Linux will take market share from Microsoft. “Even people who do not qualify for the ICT PC program think Microsoft is just too expensive. Schoolteachers make only about $300 per month. How can they afford to pay $600 for Microsoft software? That’s more than the cost of a basic PC. For a few dollars you can buy a Linux CD with all the applications you need.”

9 Comments

  • in 2001, GDP/capita (average income) was $774 in Thailand and $35277 in the US. the $560 cost of Windows + Office XP (amazon.com) is 3.6 months of average income in Thailand, equivalent to $10482 in the US.
    see my paper on "open source: a case for developing countries" at http://flossproject.org/papers.htm>
    similar figures (among other things) are listed for several other countries.
    best,
    rishab ghosh
    programme leader FLOSS
    MERIT, University of Maastricht, Netherlands

  • I used to be a MS PC user for years (now I’m using Mac), I felt so sad that MS software was so expensive for Thai people to buy them (legally), that why they had so many pirate copies spread all over.
    It’s time for Thai people will choose the best thing for their lives (in legally way), it’s so independent feeling that we’ll not be tied up with just one company, now we had another choices of life to move on!!
    Thanks Linux, you’re such a sunshine through Thai people!! Hope you’ll keep on your good works and help Thai people develop their education via your services!

    • While I agree with you 100%, the underlying feeling of this report is still very bright for the Linux community.
      2 years ago Linux was just for geeks. It has made great strides and will continue to do so.
      As for the gaming, with the desktop userbase growing at this rate game companies will see the need to port they’re games to Linux. Atari has been doing this for years with they’re Unreal series games. Others will follow.

  • Schoolteachers make only about $300 per month. How can they afford to pay $600 for Microsoft software? <<<<<<<<<——–
    That is very thrue, but all schoolteachers that I know did buy the OS, the OFFIce, and all the other programs at 150 baht per CD.
    That’s 4 dollar.
    And every schoolteacher can afford that.
    I know, because I AM one. Here in Thailand.

  • Despite the articles rosy hues, Linux plurality is an uphill battle. Here’s why:
    Systems shipped with Linux: Most systems are bought bare bone – MS was not able to require systems be shipped with an OS as it has in the US – and the local vendor installs whatever MS he has in the shop. Many manufactured systems are shipped with Linux as a test system, with the expectations that the OS will be replaced before delivery to the customer.
    The main PC users are gamers. An internet shop is a game shop. At any one time, nationwide, probably 50% of active PC users are gamers. The games are *not* Linux. And the gamers are the base of future users. Until Linux is able to win over gamers, Linux will have a tenuous foothold in the future.
    Reliability: The Thai are used to things breaking. The MS blue screen of death doesn’t bother them. Having had no experience outside of MS, they are used to the idea their systems will be hacked and killed. It’s the way it is.
    Thailand has been sponsering Linux for some time. A school can buy a CD for $4 that will serve as an internet host as well as keep school records &tc. The Nation (newspaper) runs a weekly feature on Linux, eg, a hospital moving to Linux, bootstrapping off public domain and using in-house programmers, the whole project completed for $250,000. *But* this type of support is seen as stodgy. If a corporation wants to be seen as cool and leading edge, it uses MS – almost opposite of the US.
    And Thai users are used to getting software for free – hundreds of titles. Only with MS clamping down on registrations (as with XP) will the software not be free, with the result that Linux’ success in Thailand is directly proportional to MS success in forcing its licensing upon the Thai.
    The bookstores and training are over 90% MS. (If someone finances me I would happily teach Linux/Web in Thailand for a few years.)
    The way business works in Thailand, with patronage and payola: It’s very difficult for new consulting firms, using new technology, to have an impact on the business community. And to suggest to an IT manager that he might use another system would infer that currently he is using the *wrong* system – this would make him lose face, and you will never do business with him again. Lastly, many (if not most) companies are owned by Chinese families, with all management positions given to family members, and with a (well deserved) reputation of squeezing blood out of a turnip – doing business with these organizations is an almost impossible way to grow a consulting company.
    Conclusion: The normal advantages of Linux over MS — pricing, reliability, and sexiness — are lost in Thailand. The new and future users, the gamers, deal with no other system but MS. And with a dirth of documentation and training for Linux, added to overwhelming difficulty for middle-tier consulting firms, mean few seeds of success are being sown.

    • "Conclusion: The normal advantages of Linux over MS — pricing, reliability, and sexiness — are lost in Thailand." – however, the "absence of piracy" advantage is still with us, as are all of the others, and as it was in the case of Vietnam, this argument is likely to be conclusive. BTW, thanks for some insight from a country which is much less colour-inhibited than Oz.

  • It is just grerat that Linux is making a GREAT impact!!! on the world stage. I AM sure that in about 5 years’s time there will be so few ppl in Thailand that depend on Windows and Microsoft.
    Thanks to Linus!, poorer countries have a good chance to join the league.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

LinuxInsider Channels