Microsoft Unveils Pay-As-You-Go Personal Computing Designed for Emerging Market Consumers

May 22, 2006; 02:24 AM
Microsoft Corp. announced the industry’s first pay-as-you-go personal computing offerings powered by Microsoft^® FlexGo™ technology, enabling more-flexible Microsoft Windows^®-based PC purchasing options for customers in emerging markets. Customers can get a full featured Windows-enabled PC with low entry costs that they can access using prepaid cards or through a monthly subscription.

The pay-as-you-go business model makes PCs more accessible by dramatically reducing the entry cost and enabling customers to pay for their computer as they use it, through the purchase of prepaid cards. Market trials are starting first in emerging markets where inadequate access to consumer credit, unpredictable income and high entry costs prevent many consumers from purchasing a computer. The FlexGo technology supports Microsoft’s global commitment to help people realize their potential through the benefits of personal computers.

“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. “Offering unprecedented flexibility of PC ownership will bring high-quality personal computers within the reach of hundreds of millions of families and small businesses in emerging markets so they too can enjoy the many benefits PCs bring in education, entertainment, communication and productivity.”

Microsoft’s innovative business approach brings together leading partners spanning the hardware, telecommunications, retail and financial services industries to make pay-as-you-go personal computing a reality for the first time, and expand subscription computing to a wider audience. The company recently completed a successful year-long market trial of pay-as-you-go offerings in Brazil with leading national retailer Magazine Luiza. Partners including Advanced Micro Devices Inc. (AMD), HSBC Bank Brasil S.A., Infineon Technologies AG, Intel Corporation, Lenovo, Phoenix Technologies Ltd., Transmeta Corp. and more, 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. Together 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 the most affordable terms for lower-income consumers. Microsoft’s FlexGo technology will create new and profitable opportunities for Microsoft’s global hardware partners as well as for local original equipment manufacturers (OEMs), banks, telecommunications providers and retailers in emerging markets.

“Microsoft FlexGo will be revolutionary for us in the way we sell and finance PCs by making this new flexible pay-as-you-go model possible. Our lower-income customers are excited to finally buy their first PC with minimal upfront investment, paying for time as they need it, and owning a computer with superior features and genuine software,” said Frederico Trajano, sales and marketing director for Magazine Luiza. “Magazine Luiza is very pleased to be working with Microsoft to bring this to the people of Brazil.”

To make pay-as-you-go computing possible, Microsoft pioneered FlexGo technology, aligning hardware, software and service solutions to 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. The technology informs users of time used, showing them how to add more hours by simply typing in a number from a prepaid card. If time is not added, the PC gradually moves into a “reserve tank” or limited-access state until customers purchase more time either online or at local vendors. The PC is owned outright after a set number of hours are purchased. Using FlexGo enables providers to reduce the entry costs of PC ownership by 50 percent or more, and to provide a flexible approach to paying for the remaining costs of the PC, company officials said. 

“Microsoft’s trials in Brazil are a small and a significant step in democratizing technology. The experiment demonstrates that by making computing affordable, through innovative business models, we can convert the ‘digital divide’ into a ‘digital dividend,’” said C.K. Prahalad, distinguished university professor at the University of Michigan and author of “The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits.” “It is my hope that Microsoft will rapidly diffuse this understanding and approach from Brazil to markets like India, Mexico, China and South Africa. There is an opportunity at the bottom of the pyramid and global firms can ‘do well and do good’ by activating this new category of consumers.”

In addition to launching a second market trial in Brazil this week, Microsoft will expand pay-as-you-go computing with FlexGo technology to India, Mexico, Russia and China over the next several months.

Expanding the Possibilities for Subscription Computing

Along with the new pay-as-you-go model, Microsoft 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. With the availability of Microsoft FlexGo technology, it will be possible to expand the potential of 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. Telecommunications partners around the world have worked with Microsoft for more than a year conducting successful commercial offerings under this business model. Over the next few months, Microsoft will roll out subscription PCs with FlexGo technology with Videsh Sanchar Nigam Ltd. (VSNL) (India), T-Com (Hungary), Vietnam Datacommunication Co. (VDC) (Vietnam), SiOL doo (Slovenia) and Telefonica Brazil (Brazil).

More information about pay-as-you-go and subscription computing enabled by FlexGo technology can be found at http://www.microsoft.com/whdc/payasyougo.