If it's good enough for Thailand, what about us?

Differential pricing is a risky business. Microsoft's offer to Thai consumers of a cut-down $65 Windows XP is good news, though just how many will take it up when they can get the same for a fraction of the price is anyone's guess.

Differential pricing is a risky business.

Microsoft’s offer to Thai consumers of a cut-down $65 Windows XP is good news, though just how many will take it up when they can get the same for a fraction of the price is anyone’s guess.

I’m picking that it’s Redmond’s subtextual reaction to piracy as much as it is to open source alternatives.

According to reports, it’s part of a People’s PC programme created by the government of Thailand to help low-income earners afford $US250 PCs, a programme Microsoft initially declined to be involved in.

The first batch of subsidised PCs shipped with Linux TLE, a Thai-language implementation of Linux, and OpenOffice.org. Now Microsoft is offering a mini-me version to compete. "The Microsoft software provided for the ICT programme in June 2003 is a Thai language-specific, customised, entry-level version based on Windows XP Home and Office XP Standard," said a Microsoft spokeswoman.

But if it’s good enough for Thai consumers, why not everyone else? Why didn’t Microsoft simply reduce the price of XP in one or more developing countries? Peter Moore, Microsoft's general manager for the public sector in Asia-Pacific and greater China, says the worldwide price strategy is under review.

Thailand probably seems like a safe gamble to try something new, given that many of its 60 million native speakers probably can’t even afford the cut-down XP.

It’s an interesting response to piracy in that a cut-down, cheaper, Thai-language version is less likely to be copied for sale in Bangkok’s markets, though the Linux machines are still likely to be customised with pirated (full) Windows.

But if poor countries can get XP lite, why not rich ones? Why can’t we mix and match our core software like we can our hardware?

Price discrimination, as Lawrence Lessig points out in a recent

Wired magazine, is an awful name for a great idea. The price of lifesaving drugs is kept high by patents, he says, which give drug companies the right to control the retail price of their inventions. The rational strategy for a monopolist – patents and copyright are intended to give temporary monopolies to provide for a fair return on invention and encourage further innovation – is to price-discriminate, to charge more where people can afford it and less where they can’t.

The trouble is, as Lessig notes, under such a system arbitrage occurs – if the price difference is large enough, someone will sell the product in the more lucrative market. Somewhat easier with pills than with digitised software, but if a $US35 billion company can’t sort it, who can?

And if cut-down versions are okay, why not cut-down licences? I struggle to understand why large corporations put up with such onerous software licensing conditions: you can put it on this, but not on that. If you add a processor you have to upgrade your licence. Your employees can’t use it at home. Why is software such an exalted product? If you buy it, shouldn’t you be able to buy it wholesale like hardware, with no restrictions? If you want it without the built-in margins of support, why can’t you?

Such questions aside, the commercial model of software development – integrated, shrink-wrapped, depreciable -- suits companies, at least for the time being. But as has been noted, the open source model works informally in all sorts of ways.

I am researching a book that in part looks at the impact of IT and intellectual property law on innovation. Since I’ve mentioned it to a few friends, it’s like I have a research team gathering stuff. You will almost certainly be in a similar situation with friends or colleagues, them coming across news and tips that help you in your life or job.

Microsoft is at last finding practical ways of combatting open source – and piracy -- beyond just bad mouthing it. Fantastic. Bring it on.

Broatch is Computerworld's deputy editor. Send letters for publication to Computerworld Letters.

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