Redmond, WA, Saturday
In a press conference held at Microsoft headquarters in Redmond, Washington yesterday, Microsoft Corporation (MSFT) announced a new pricing scheme for its ubiquitous operating system, Windows XP, which will now be named Windows XFree.
"In future," a spokesperson explained, "we will not be charging customers for Windows XFree, which will become a free 15GB download from the Microsoft Web site. In addition, computer makers will no longer pay licensing fees to Microsoft when pre-installing Windows XP on their computers."
The new system will apply to all computers to be manufactured after February, 2006.
New source of revenue
The presentation continued with an explanation of how Windows XFree will contribute to Microsoft's revenues "in a new and exciting technologically revolutionary way". All computers using Windows XFree must be fitted with a credit card reader. A pre-authorized credit card must be inserted into the reader when the machine is booted, and a micropayment is automatically deducted from the credit card over the Internet as the computer starts up.
When the user starts to use the computer, 100 "WindowCredits" are available. Every time an application is launched, or a window on the desktop is opened or closed, or other "major user interface actions" are performed, a WindowCredit is debited from this total. When the initial 100 WindowCredits have been used up, a popup message alerts the user, and a further set of WindowCredits may be purchased online, with the purchase price deducted from the credit card. Until a further block of WindowCredits is purchased and installed, no further operation of the computer is possible.
The cost of the WindowCredits in different countries has yet to be determined, but it is envisaged that 100 WindowCredits will sell worldwide for "less than the cost of a hamburger and fries".
Industry Reactions
Jim McFurty, Chief Information Officer at Silverman Sacks, the major merchant bank, commented: "This is not the way we are going to move forward. We will continue to use our older Windows XP systems, and replace them with either Linux [the popular open-source operating system] or with Apple Macintoshes running OS X, both of which present extremely good price-performance factors, especially with regard to the total cost of ownership."
A European Union trade representative stated that "Microsoft is almost certainly breaking EU regulations with this proposal. We'll see them in court if they try introducing the system in Europe."
A major Japanese computer maker put out a statement that "our customers will not be happy with this. We will seriously consider pre-installing the Japanese-Korean-Chinese OS currently under development".
In the Third World, reactions were even more unfavorable. "99% of my customers don't have a credit card", said Mr. Dang Nguyen, a computer dealer in Ho Chi Minh City, Vietnam. "There's no doubt that I'll be selling Linux systems only from now on."
An industry association spokesman, who declined to be named for fear of reprisals, commented that "this is probably a trial balloon. Microsoft has floated such far-fetched ideas in the past, and backed down after public pressure has forced them to rethink. But anyway, as a Mac user, it doesn't affect me."
Microsoft share prices fell $2.52 on NASDAQ following this announcement.
Bill Gates, founder and Chairman of Microsoft Corporation, was unavailable for comment.
