In a move that could lead to lower prices for Microsoft Corp.'s software in other countries, the Redmond, Washington, software company has cut the price of its Windows operating system and Office application suite in Thailand, according to a report released by market analyst Gartner Inc.
"Microsoft -- in response to a Linux threat -- recently reduced pricing to US$40 for an Office and Windows package it offered as part of a government initiative in Thailand," said the report.
"Microsoft may offer a similar package in China as an incentive to keep Chinese enterprises using its products," the report added.
Microsoft officials could not immediately be reached for comment.
While Gartner did not disclose the specific Linux threat faced by Microsoft in Thailand, Hewlett-Packard Co. is selling Linux-based laptops in Thailand for $450 as part of a program initiated by the country's Information, Communications and Technology (ICT) ministry to make affordable PCs available in the country. Those laptops went on sale in May and HP has described demand as overwhelming.
The Microsoft price cuts in Thailand represent a steep discount compared with the U.S. pricing for Windows and Office. The full version of Windows XP Home retails for $84 in the U.S., according to PCWorld.com's Product Finder. The full version of Windows XP Professional retails for $130.95 and Office XP Professional sells for $254, according to the site.
The country-specific price cut in Thailand, the second in Asia this year, represents a further break in Microsoft's long-standing policy of charging the same price for its software in countries around the world.
Pricing of Microsoft products has been a sensitive issue in many parts of Asia. In 2002, Taiwan's Fair Trade Commission opened an investigation of Microsoft's business practices here, questioning whether the company had abused its dominant position in the market to inflate the prices of its products.
After a six-month investigation that proved inconclusive, the two sides reached a settlement earlier this year, with Microsoft agreeing to cut the price of some of its software products by an average of 26.7 percent.
Under the terms of that agreement, the price of Windows XP Professional Edition in Taiwan was cut by 23.7 percent while the price of Office XP was cut by up to 16.9 percent. The greatest price reductions came for Windows XP Professional Academic Edition (54.5 percent), Office XP Academic Edition (50.1 percent) and Word (42 percent). Specific dollar figures for the price cuts, which became effective on March 15, were not released.