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In South Africa, a legal copy of the Professional version of Microsoft Office can cost more than $700. That makes the software beyond the reach of many personal-computer users, and even small businesses. So Microsoft South Africa has launched a “Pre-Paid Edition” of Office that comes bundled with new computers. A buyer can choose to pay $30 for three months of usage, and then resubscribe to the service every three months after that.

“This is part of Bill Gates’s vision to get more people around the world using computers,” says Cyril Belikoff, a business group executive at Microsoft South Africa. “We’re asking, ‘How can we make technology affordable, so that the next one billion users of personal computers can be more productive and add value back into their local economies?’”

The company began piloting the prepaid program last year and, based on positive customer feedback, formally launched it this month.

Microsoft didn’t have to look far for a business model for prepaid software. In South Africa, more than 90 percent of all mobile-phone users pay for their service this way. “It’s a simple model to adopt,” Belikoff says. “Explaining to customers what ‘prepaid’ means isn’t really required.”

Microsoft is also trying the prepaid approach with its Office software in Romania, another country where Microsoft feels that the cost of its software is beyond the reach of many potential customers. It’s also a country where pay-as-you-go cell-phone use is popular.

Pay-as-you-go isn’t Microsoft’s only approach to tackling the difficult markets of the developing world. Microsoft’s FlexGo program, which was launched last year, allows buyers in the developing world to purchase new computers, loaded with Microsoft software, on credit. Users then buy access to their own machines with either prepaid cards or a monthly subscription. Brazil, China, India, and Vietnam are among the countries where FlexGo has been rolled out.

“The concept of paying in small amounts for what you’re going to use makes some sense, especially in South Africa, where Office is prohibitively expensive,” says Jaxon Rice, a Web developer based in Johannesburg. “And the thing is, once you subscribe, it’s hard to unsubscribe when all your documents are in that format.”

Others are more pessimistic about whether South Africans will pay as they go for software. “I’m not sure South Africans will go back to the shop and buy a recharge voucher just to carry on using Office,” says Alastair Otter, the editor of Tectonic, a website devoted to technology news out of South Africa. “People are more likely to spend their money on cell phones or other mobile devices, rather than on a piece of software.”

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Credit: Microsoft

Tagged: Business, Microsoft, software, financial markets

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