Microsoft offers pay-as-you-use PCs and software

Stuart Corner
Monday, 22 May 2006 18:22

Business IT - Technology

Microsoft has unveiled a radical new approach to selling computer hardware and software to emerging markets: a system that enables users to pay for their PC and software as they use it rather than upfront.
The key to the offering is Microsoft's new FlexGo technology. It has two key components: specially-built PCs and a provisioning server system that enables payment systems to add usage time to each PC with unique provisioning data.

The move has the potential to counter two potential major threats to Microsoft: the trend towards server based applications accessed via a browser on a pay as-you-go basis and low cost PCs developed for emerging markets that run open source software.

Importantly the FlexGo system enables telcos, finance providers and others to get a slice of the business of providing PC hardware and software at low or zero entry price that can be charged for securely and reliably on a usage basis.

According to Microsoft, FlexGo "aligns hardware, software and service solutions [so they] work in unison to meter and add time to the PC, so retailers, telecommunications providers, banks and OEMs can offer PCs to a broader community of customers. FlexGo technology enables consumers or small businesses to have a PC at a price they can afford, and pay for time only as they use it, an experience bringing the flexibility of an Internet cafe into the home."

Microsoft FlexGo PCs are standard PCs with modifications that make it possible to meter computer use time and allow customers to pay for their PC in increments over time. The PC's metering policy tracks computer usage and notifies the user when they need to add more time. It also limits access to the PC when there is no more time available or when the integrity of the PC has been compromised (for example, if the system CMOS clock has been set back in time).

Microsoft is starting market trials first in emerging markets where inadequate access to consumer credit, unpredictable income and high entry costs prevent many consumers from purchasing a computer. It believes that the prepaid cellular model vindicates its approach.

"Today there are already more than 1 billion prepaid mobile phones used around the world, so we know FlexGo enables a familiar and comfortable pay-as- you-go model that works for people with variable or unpredictable income," said Will Poole, senior vice president of the Market Expansion Group at Microsoft.

Microsoft has completed a year-long market trial of pay-as-you-go offerings in Brazil with national retailer Magazine Luiza. Partners including Advanced Micro Devices, HSBC Bank Brasil, Infineon Technologies, Intel, Lenovo, Phoenix Technologies, Transmeta will join Microsoft for the next round of pay-as-you-go and subscription trials in Brazil, China, Hungary, India, Mexico, Russia, Slovenia and Vietnam.

With the International Finance Corp (the private-sector investment arm of the World Bank Group), Microsoft is exploring ways to enable its financial partners to underwrite PC purchases and prepaid cards on terms that will be affordable for lower-income consumers.

Microsoft says it has also been working with major telecommunication companies around the globe on subscription computing offerings "that provide convenient and predictable monthly payments for a full-featured PC with broadband access and genuine software".

It says that FlexGo will expand the subscription model by enabling telecommunications providers to better secure the PC asset from default and offer this option to a broader range of customers. Over the next few months, Microsoft plans to roll out subscription PCs with FlexGo technology with Videsh Sanchar Nigam Ltd (India), T-Com (Hungary), Vietnam Datacommunication Co, SiOL doo (Slovenia) and Telefonica Brazil.