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Microsoft (Nasdaq: MSFT) plans to put a version of its Windows XP operating system on One Laptop Per Child's (OLPC) platform, XO.
The rudimentary computer is directed at nations that do not have a widespread user base. The low power requirements -- bright screen, and hand crank which can augment available power -- are all key to the device.
"The low cost Windows product is aimed at Eastern European countries where average annual salaries are a small fraction of what the U.S. and western Europe are used to," Charles King, an analyst at Pund-IT, told TechNewsWorld.
"The effort is aimed at establishing brand presence in these countries, but the pricing is also a practical matter: No sense delivering conventional Windows products to markets that can't afford them. By leveraging older Windows products and IP, Microsoft can do business here that's realistic for both the company and potential customers," added King.
Technical Challenges
Microsoft is devoting some 40 employees and contractors to work on its effort, King said.
"However, there are plenty of technical hurdles," he added. "One of the biggest is the fact that the XO has no hard drive and only 1 GB of built-in memory."
Microsoft concluded it needed at least 2 GB of memory just for Windows and Office, so it convinced the OLPC to include a SD (secure digital) slot on the laptop's motherboard.
Looking at product details, Microsoft's plan (after saying it would offer US$3 copies of Windows for some European markets) is to offer low-cost versions of its Windows and Office software packages that fit on a 2 GB hard disk card. This will be able to be upgraded to new BIOS (basic input/output) software so the company can ensure the operating system can boot directly from a memory card.
In January, Microsoft is expected to write about 10 different hardware drivers to support things such as the XO's special screen, mesh networking, camera and other unique features. All of this is a Linux Red Hat (NYSE: RHT) iteration.
"To support all of that takes time," said Microsoft executive James Utzschneider, general manager of Microsoft's emerging market unit.
Market Exposure
Is Microsoft looking to cash in on what is a charity market? No, said King.
"Two issues are at work in Microsoft's case: First, the company operates a number of efforts that are genuinely altruistic and aim to share the benefits of technology in emerging markets. [Two:] Microsoft understands the importance of establishing brand recognition in these regions, so as markets mature and consumers prosper they will consider purchasing the company's products," he said.
"Microsoft is not alone here, as virtually every IT vendor is running similar sort of consumer and business programs," added King.
Competitors Weigh In
Besides Microsoft, Intel (Nasdaq: INTC) has a hand in manufacturing low-cost laptops for developing nations.
This is more a play for overseas markets than a strategy 
to take market share away from OLPC, according to King.
"Intel's Classmate PC and one other are the only direct competitors to the One Laptop Per Child program. A few months ago, when Dell (Nasdaq: DELL) announced a partnership with a major Chinese retailer, the company said it would offer PC products priced at around $200 in China and similar markets," he said.
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