Intel and Microsoft extend pre-pay model to PCs for emerging markets

The purchasing power of people in emerging markets looking to join the rest of the world in personal computer ownership grew stronger through the efforts announced today by Intel and Microsoft, which have collaborated on a pay-as-you-go PC purchasing model using Microsoft FlexGo technology as a part of Intel's World Ahead program.

Intel has already committed $1 billion to its World Ahead program, which is focused on stimulating economic growth and opportunity by increasing PC accessibility, Internet connectivity and education to emerging markets. The 5-year objectives of the World Ahead Program are to extend broadband PC access to the world's next billion users while training 10 million more teachers on the use of technology.

"We believe that by educating the teachers and students, the developing world will continue to build their capacity and ability to contribute to their villages, their towns, countries and to the world," said Willy Agatstein, vice president of the Channel Platforms Group and general manager of the Emerging Markets Platform Group at Intel.

Microsoft's FlexGo software helps retailers and service providers make PCs more accessible by allowing a Pay-as-you-go model whereby customers pay for computers through subscriptions or as they use them with prepaid activation cards or tokens, much as they do for prepaid mobile service today.

Mike Wickstrand, director of FlexGo at Microsoft, said the initiative is the evolution of where Microsoft was 30 years ago when it envisioned a PC on every desk and in every home.

"As an industry, there has been amazing progress made in many segments of the developed world. But it's sobering to consider that while close to 1 billion people in developed markets have experience the social, economic and entertainment benefits of owning a personal computer, there are hundreds of millions of people in the emerging markets that have yet to realize the power of a personal computer," Wickstrand said.

Microsoft has been developing the FlexGo product for about two years and began with its partners a trial in Brazil in April 2005 for 1000 users of mid-range PCs. "The amount of pre-paid card business the retailers are seeing and the satisfaction we are seeing with customers is giving us the confidence to expand to new markets that share the same social and economic characteristics," Wickstrand said.

The trial in Brazil will be expanded to 14 cities as well as introduced to seven cities in India and to China, Russia and Mexico.

Intel will support Microsoft's FlexGo technology, which runs on a special version of Windows XP Home Edition, initially on its Discover the PC platforms by which Intel recently introduced its Intel-powered Community PC in India, both of which are part of Intel's World Ahead Program.

FlexGo supports two business models: pay-as-you-go and subscription. The first model calls for a small upfront payment which gives the user a set amount of usage, which when notified it there time was running out would have to buy more with a pre-pay card. The subscription model would be paid through a service provider as part of its broadband service.

"There are few people better suited to sell systems that have connectivity and computing and a mechanism and business model for payment than telecom companies," Agatstein said. "The low-cost platform and FlexGo technology open an opportunity for service providers to get into a business model they have not been in or have been afraid to get into."

So far, service providers who have come on board for the initiative include Telefonica, Vietnam Data Corp, T-Com in Hungary and VSNL in India.

"They have an interest in growing their businesses and the key to growing is to have that PC in the customers' homes," Wickstrand said.