Microsoft to Offer Low-Cost Windows in Asia

Microsoft(MSFT Quote) will launch a one-year pilot program to sell a cheaper version of its Windows operating system in three Asian countries.

The launch of the Windows XP Starter edition, a stripped-down version of Windows, is an effort to tap emerging markets and combat competition from the free Linux operating system in those regions.

Starting in October, Windows XP Starter Edition will begin shipping on new, low-cost PCs in Thailand, Malaysia and Indonesia, with language versions available in Thai, Malay and Indonesian. The company plans to announce a similar rollout in two other countries later this year.

Microsoft declined to disclose the cost of the operating system or PCs carrying it, but said it will be the cheapest operating system offered to date by the world's largest software maker. It will offer several special features for first-time PC users, including a detailed guide to getting started, a supplemental CD with local language instructional videos and preconfigured advanced settings.

PC household penetration is high in the U.S. at 60% -- Microsoft is now trying to convince families they need two PCs -- so the opportunity remains large in other parts of the world. For instance, penetration in India sits at less than 2% and in China and Russia at less than 5%, according to IDC estimates gathered by Microsoft.

Shares of Microsoft recently declined 45 cents, or 1.6%, to $27.27.