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PCs for the poor: Which design will win?
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That's basically the idea behind FlexGo, Microsoft's latest attempt to make PC ownership more accessible to people in emerging markets.
Under the idea, which Microsoft is introducing this week, people would be able to get a PC for their home with a mechanism that charges them depending on how much computing they use. Consumers would pay for about half of the PC upfront and then, say, 50 cents or 75 cents per hour of use. After several hundred hours of paid use, they would then own the PC outright.
The exact finances of the program would vary, depending on a number of factors. These include the cost of the software and hardware being used, as well as the country's prevailing lending interest rate. Microsoft has already tested the idea in Brazil, but plans to expand that program in coming weeks, alongside new trials in Russia, India, China and Mexico.
Microsoft has been grappling with the challenges of emerging markets for some time. The company has offered a lower-priced operating system option, its stripped-down Windows XP Starter Edition, as part of low-cost PC programs across the globe. But total shipments of Starter have been modest, with the company having sold 100,000 copies as of last July.
Microsoft
But while Starter is aimed at people who may never have used a computer, Microsoft said the target customer for FlexGo is someone who has used Windows before--at work, school or an Internet cafe, for example--but has not been able to afford a similar machine of their own.
That way, Wickstrand said, consumers are "paying for a PC that they want and not a PC that they had to settle for."
"The real goal of FlexGo is to make that dream of owning a full-featured PC a reality," he added.
In many cases, Microsoft has already worked with local governments and businesses to offer financing programs in which consumers pay a monthly fee for their PC. But one of the things Microsoft said it has learned is that many people in developing countries do not have a steady income. With FlexGo, consumers can scale back their PC use in months that they have less money, rather than having to default on their purchase.
"One of the learnings that we've had is that it's not just that families in emerging markets have modest budgets," Wickstrand said. "It's the irregularity and unpredictability of their income."
In many places, people want to use PCs, but can't afford it, and there are insufficient financing options, said Willy Agatstein, general manager of Intel's emerging markets platform group.
"If you go to Brazil, people buy movie tickets on credit, but the PC infrastructure is not that developed," Agatstein said.
WinHEC in view
Wickstrand said that the idea behind FlexGo is to make computing more similar to the way other technologies are bought in emerging markets. More than three-fourths of cell phones are bought using prepaid minutes, he said.
He pointed to India, where five years ago there were only 5 million cell phones. "Today there are 90 million, (and the number is) growing at 5 million a month," he said.
"Certainly the cost of handsets coming down is one component," of the growth, Wickstrand said. "We believe the much bigger component was this prepaid model."
Intel, which has considerable emerging markets efforts of its own, is among the chipmakers helping out with some of the secure hardware needed to make the system work. For example, the PC should have a secure clock and other circuitry to ensure that the system can bill for use and shut down if it's not being paid for.
Rival Advanced Micro Devices said it intends to develop processors designed specifically to support FlexGo, and Transmeta said it, too, has a processor and reference design that are aimed at such PCs.
In addition to the financing challenges, there has also been considerable debate over what the best design is for a low-cost PC, with the Massachusetts Institute of Technology touting its $100 PC and others pitching alternative PC designs or even cell phones as possibilities.
Unlike Intel's existing low-cost PC for emerging markets, which has all but the computing essentials stripped out, a system tailored to FlexGo needs some hardware added in.
Agatstein said that Intel is still trying to put an exact price tag on the added requirements, but said "it's in the dollars range, not in the tens of dollars range."
Although much of the effort behind FlexGo centers on the prepaid model, Microsoft is also going to see if it helps with subscription PC sales, where people pay a fixed monthly fee. With the FlexGo technology, the PCs of those that stop paying could be shut down, not an option when traditional PCs are financed.
The company said it plans to try out subscription-based approaches for FlexGo in Vietnam, Hungary, Slovenia, India and Brazil.
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reality
business going. They are a software company, not a bank or a
finance company and this is a financing scheme.
In point of fact, this will require them to get specific licenses,
fulfill specific training requirements and have their agents
bonded in several states, just for starters, once the State finance
regulations boards get wind of this scheme.
Another way for Microsoft to show its ignorance of real world
operations, from the look of it.
Sheesh!
Lee Darrow, C.H.
Chicago
What the world (and especially the developing world) needs is a simpler, robust, thought-out-from-scratch computing experience. Apple, but simpler.
MS is just looking for a nice way to tax the rest of the world.
How about chop shops, where you can have your flexgo PC hacked and stip out all the protection ? Just replace the software, or BIOS, or intel mobo, or CPU or whatever ( we al know there's no such thing as unhackable code - unless you have a quantum computer of course:) , pay a few dollars on time, and voila! a brand new PC.
How about MS mafia that will hunt down hackers and users that modify their PC ?
How about social activists campaigning agaist MS that's turning people into addicts and pushing them further into debt paying monthly for something they dont really need ( but have been brainwashed to think they need ) ?
Finally how about, the scheme works perfectly, MS makes tons of money, and wastes it on years of developing Pista 2015, or IE8 (where they stip out tabbed browsing because research shows that feature just confuses most users anyway)
*end of stupid rambling*
sorry, but if Tabbed Browsing confuses you, you don't need to be using a PC.
I don't think so - its MY money and MY time....
Yet another half formed idea from Microsoft...
Instead of pay as you go people would more happy with open source OS that is free!!!!
The overall cost of a pc consist of 3 portions, the hardware, the software, and the maintenance and support needed. So if it is going to fly or not is probably not so much dependent on open source or not. It is rather going to depend on people with great ideas and a bit of money being able to execute it.
People will be happy with something they can afford and use. Now who is really going to give away free hardware and support on a mass scale?? The first world? The open source community?
If you really want to help developing counties, there would be a recycle area in US, this recycle area would refurbish these PC that would otherwise end of on landfill. Clean them up, install OS, Linux or perhaps MS would donate a starter XP for free.
That would solve the computer problems, not sure about the net connectivity.
Oh, my. I can barely catch my breath for laughing so hard. Isn't one of the principal rules for anything to be pay-as-you-go, whether it be a leased car or a computer, is that it has to keep working for longer than the term of the lease?!?
The idea of paying 1/2 the price of a system and then making installment payments isn't a bad idea and certainly not anything new. Many places call it 'layaway' and you pick it up when you've got it paid off. Being able to use it in the mean time is nice, more like an auto loan and yes, all your payments go towards paying off the total purchase price.
For developing countries, this isn't a bad notion since they may not be able to afford a computer all in one shot otherwise. I don't see the $100 laptop ever actually being produced. That sort of cheap product will likely be bought out by a competitor if only to stop it from being produced and lowering the costs for everyone.
Will MS eat up all your online time with software updates? That would be incredibly ill-advised and I would expect that the meter would be turned off for those updates just like it is with most proprietary ISP's (AOL for example). I don't see that as being a problem.
If Macintosh is the best product out there, then Apple is more than welcome to do the same thing. Really. Go ahead and do it. Right now. Let's see some action. Again, I don't see that happening. Heck, I don't even see this MS plan actually happening and it will likely quietly disappear like most plans to give computers to emerging countries.
If they could make laptops as cheaply and commonplace like cell phones are now in these countries, then that might be something to consider. Heck, even a clamshell mini PC like we had with the early CE devices running on a cell phone might be the way to go. The cell phone infrastructure is in place already so...
And
"If Macintosh is the best product out there, then Apple is more than welcome to do the same thing. Really. Go ahead and do it. Right now. Let's see some action."
Does it count if you start it yourself? :D
Think about it, you pay 1/2, go home all excited, and then the thing starts to crash, freeze, and one can only hope it won't have a critical crash.
Who would want to continue to pay on these PCs with the problems that plague the Windows OS currently. I used Windows for a long time, since day one, every version there is, employuer paid for it, I would never have had.
I just bought not too recently the G5, and this beats anything MS put out as far as Operating Systems goes. I hope it's as reliable as that or this will turn into a nightmare.
1) I bet Safe Mode will be available regardless of payment.
2) Most fixes do not require a reboot today, and in the future, with the work being done in Longhorn (apparently not in Vista's initial release, though) few will. And even for fixes that do require a reboot, shutting down the computer and powering it up the next day counts as a reboot, so no time lost there.
3) Only logged on time should count. Power up and power down time shouldn't count.
4) Microsoft wants you to USE those minutes, so they better make the system useable and reliable.
1) I bet Safe Mode will be available regardless of payment.
2) Most fixes do not require a reboot today, and in the future, with the work being done in Longhorn (apparently not in Vista's initial release, though) few will. And even for fixes that do require a reboot, shutting down the computer and powering it up the next day counts as a reboot, so no time lost there.
3) Only logged on time should count. Power up and power down time shouldn't count.
4) Microsoft wants you to USE those minutes, so they better make the system useable and reliable.
The devil is of course in the details and you have to deal with things like fraud/theft etc. But this thing actually has a reasonable shot at success. Having lived in a third world country, I can say there will be takers for this if implemented properly.
normal retail price the consumers are getting ripped off. The
ONLY way this is at all acceptable is if the price is right.
Pay per use in Cybercafes provide a lot more than just computer use, implicitly they also provide for the maintenance of the computer, the airconditioning, the comfortable seating space, and the broadband.
Computer maintenance is already a deal killer with this idea. Most home users don't want to bother with the maintenance of the computer.
Airconditioning and comfortable seating are also another service customers implicitly avail of. It's cost parity with running the airconditioning at home (if they have that at home).
Another final point is that many third world computer users, being in the upper bracket of the knowledge worker class, are mobile (they'll transfer to a larger city or another country given the chance) and don't want to make an investment in a capital asset such as a computer. They'd rather buy a refrigerator or a large TV set.
And this idea has a fatal flaw. What's to stop the buyer from reformatting the hard drive and reinstalling another non-pay per view operating system?
Having been to the "third world", I know that
not everyone has electricity (and sometimes,
those that do don't get it legally). If you have
electricity, there's a good chance the supply
might be "noisy" (e.g., spikes and brown-outs
that would damage the equipment). And, depending
where you are, you might even live somewhere
where a computer might not survive long in the
ambient environment (heat, humidity, things
making homes in the case).
Most of all, though, even if I couldn't plug-in
or operate the PC, I might eye it as something I
could sell or exchange for something useful --
perhaps food, medicine, or shelter (I suspect
you'd see the same thing happen even in the
"first-world").
Electricity, ambient conditions, and the
temptation for fraud aren't much of a problem in
cyber-cafes, but at home -- that's a different
story.
You're right about the implementation, though. I
would assume there'd be a software component --
and were this the case, it will be circumvented.
It's not likely you'd let yourself be billed
unnecessarily.
You see this a lot with places that say they make getting a computer easy. Just a checking account, a job and $19.95 a week for 2 years and its yours. The problem is you get a PC worth $700 and end up paying almost $2000 for it and by the time it is paid off it is obsolete. It isn't worth it. But, then the poor I am sure suck it like sugar water.
Personally, I would never use such a program. I think one would be better off buying a peice of hardware here or there until you have everything to put a computer together. But, thats me.
I can seed greed and customers getting the shaft with this program coming very easily and quickly. The only reason Microsoft is interested is it allows them to make more money than if they just sold the computer and software like they are doing now. Greed!!!!
Robert
to keep running to the store - fix this, fix that, buy software to
replace the bungled software... yes, I mean bungled -
And now MS want to Nickel and Dime me to use Word etc?
Should have bought a new Intel iMac instead - and give my wallet
a break...
And about the bundled software: Microsoft does not bundle software with the OS (maybe the Antivirus is an exception with some packages), the hardware manufacturers do.
And do you REALLY think you would be giving your wallet a break by buying an iMac? Please, check your numbers well.
I like the idea because it offers a tiered entry. However, computers in the US are so inexpensive, I would really rather buy someone a new computer than fix their old one as it takes about the same amount of time to build one than to reformat and reinstall someone who is the victim of an MS security flaw. Are the folks in the 3rd world going to get their stuff hacked and wind up paying for their computer in an effort to fix these attacks? Kind of like me checking my voice mail? I see how it could devolve into that.
The point here is that Microsoft is testing and perfecting a way to force YOU to pay for the OS monthly or yearly or they will turn it off.
No more school kids getting free copies of Windows either. If it isn't "genuine" they'll turn it off.
You people better be helping Linux get a toe-hold - or you will regret it sooner than you think.
I wonder how they'll deal with the mother that sues to get her photos off the locked out PC?
If Microsoft is giving away Windows to someone today, there's no reason (certainly none related to this announcement) to stop it doing it.
You don't know anything about the system and you are already ******** about it.
How will they deal with the mother that sues to get her photos off the locked out pc? They'll tell her to plug it to a network and access them from the disk. Or tell her to start safe mode. Or tell her to access a backup. Or tell her to pay ten cents of Windows time to access them, which they have the right to.
reading material at online sites. But, one rarely sees this degree
of ineptitude. There is no excuse for even an amateurish
reporter failing to include the 5Ws and an H in a story. (Who,
what, when, where, why and how.) Yet, completely missing
from this article is any information about what the total cost of
the rent-a-puter would be. That is an important because rent
to the poor schemes are usually ripoffs. The buyers may end up
paying several times the retail cost of the items they buy.
My reply: Statements like this display an amazing ignorance of basic economics. For more on that, see my two replies above, both entitled "disagree." But another reason to disagree is that your statement implies that poor people are either
a) too stupid to realize they are being cheated, or
b) helpless to do anything else, or
c) deserving of special treatment, just for being poor.
Has it occurred to you that maybe poor people KNOW that they are paying extra but they CHOOSE to pay simply because they want it now rather than later? Should Big Brother not let them have that option? Or should we instead subsidize everything for poor people -- food, housing, heat, electricity, medical care, day care, and now computers and internet access? Where will it end? Why bother working?
- This Will Go Nowhere, Just Like All of MS's ...
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by Joe Blow
May 25, 2006 7:58 PM PDT
- feeble attempts to grow their business outside Bill's "vision" of "putting a computer on every desktop" back in 1977 (I haven't seen an update to their strategic plan that can be summarized as succinctly, and that has a reasonable chance of succeeding). The original goal was met in the First World somewhere in the late 1990s, when everyone and their brother was doing on-line trading, buying books on-line to learn on-line trading, and selling all of the crap in their garage on-line so that they could waste more money via on-line trading. I'm guessing that the Second World got there sometime around 2001, just as The Bubble started to go flat, and now it's the Third World's turn, if Microsloth has anything to say about it. What they do fail to see is that, even at pennies a minute, people are not going to be able to afford to do much useful work on a computer. Certainly, access to anything educational shouldn't be charged for, so maybe a model that doesn't charge for .edu (and, maybe .org) access would be a way to start. That way, when the older generations in a Pay-As-You-Computer household discovers porn and the on-line equivalent of soap operas (chat rooms and C|NET forums? OOPS! :) ), they will spend enough to send all of the kids to MIT, Harvard, Berkeley and Stanford!
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See all 55 Comments >>The rapid obsolescence of the hardware makes the cost-over-time too high - people will likely still be paying off a system long after it's obsolete. As for the maintenance costs, fuhgeddaboudit. Microsloth isn't going to spend a dime on anything like remote access to individually fix a machine - it's gonna be just like it is here for low/no-cost service - wipe the OS partition slick, reinstall from a protected partition of installer programs (which would hopefully include the latest updates already downloaded before). Hopefully, the users' data would be on a protected partition, too, but I doubt that Microsloth can (a) think of that, and (b) implement it reliably, especially in a way that prevents viruses, worms, Trojan horses, etc., from re-infesting systems that failed precisely because of them.
As for how they will retain control of the computer even if you could figure out how to reformat the drive, the answer is just like XP and Vista can be configured to do - nothing will run until the machine has talked to the Mother Ship in Redmond (or its regional proxy overseas). Remember, these are not your old-fashioned PCs with the same-old BIOS - they will have hardware surface-mounted on the motherboard that performs encryption/decryption when communicating with the Mother Ship and burned-in serial numbers in on-board ROM (the same way TiVo, cable and satellite companies maintain control of their boxes, no matter what you do with the hard drive). They will also be single-configuration, so you won't be able to easily just add hardware to do all sorts of nefarious things - they most likely won't even have any slots, since most motherboards have enough built-in that the slots go unused, except for the highest-end things like high-performance gaming, scientific computing, and other power-user things that most poor people won't need to do.
As for the communications costs, pay-as-you-go is the model in Europe and most places they colonized, and it sucks, big-time. The governments used to be the big winners in that game, and now it's the governments and their big business partners who finance it all and carve out a fat kick-back slice for their bureaucrat buddies. Why would they want to sacrifice that gold egg-laying chicken for a bunch of poor people?
Poor people who need the education that networked computers can bring are going to be in a Catch-22 when it comes to providing their own support. Yes, it can be done over a period of decades of training, learning, and reinforcement, but it's not going to happen as fast as the problems are going to mount. Things have a way of being misappropriated in the First World, and it's generally orders of magnitude worse in the Third World because the supply is so limited and the demand is so much greater (and corrupt governments, businesses and individuals, in any World, don't help things at all - dictatorships, autocratic monarchies, Enron, etc., all the way down to local thugs, all have common DNA). I wonder how much of a cut Microsloth is willing to pay the pipers in Third World countries to allow them into these countries to make money? And what repressive government is going to allow widespread WWW communications that are antithetical to top-down controlled regimes, anyway, unless Microsloth helps them maintain power, as they're doing in China right now (along with Google, Yahoo, et al, to be "Fair and Balanced")?
I hereby don my turban, gaze into my crystal ball, and proclaim FlexGo is already FluxedGone on arrival. Next brilliant DOA idea, Microsloth.
All the Best,
Joe Blow