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Otter also points out that 35 percent of all software in South Africa is thought to be pirated. For comparison, China’s piracy rate stands above 90 percent, while in the United States, the rate runs at around 22 percent. In South Africa, it can be hard to get people to shell out for software that they can get much cheaper, or even for free–that is, illegally. But Microsoft’s Belikoff disagrees with Otter. “If you think about the end user, they don’t want to pirate software. If they can afford it, they’re happy to pay for it. We’re offering a way for people to play the game legally.”

There may also be another driving factor behind Microsoft’s decision to test a pay-as-you-go model: the rise in popularity of open-source software. In February, the South African government affirmed that not only would it implement open-source software solutions whenever possible, but it would also attempt to replace current proprietary software with open source.

Numerous public and private efforts are under way to roll out open source in South African schools. One of the biggest of these projects is tuXlab, which has already installed open source in more than 200 schools around the country. “Over the past three years, Microsoft has been trying to get its mind around what strategies to put in place to maintain the market share they have in South Africa,” says tuXlab founder Hilton Theunissen. He says that open source gives South Africans the opportunity to own and develop their own software, instead of relying on Microsoft.

Theunissen points out that open-source software is quickly becoming widely available to the general public in South Africa. “We have these vending machines in five public malls where you can go and get open-source software,” he says. “You simply take a blank CD, go to this unit, and pop in the disc. Five minutes later, you walk away with more than 890 applications. And it’s yours. You can even make a copy for the whole street.”

As the education program manager for Canonical, Richard Weideman works on the development of a Linux distribution called Edubuntu. Weideman, a South African, notes that “Microsoft’s traditional business model is now under threat from the uptake of open-source software that’s happening around the world. That’s why they’re exploring these service-based models.”

Microsoft’s Belikoff says that the company will evaluate the launch of its Pre-Paid edition of Office in a few months’ time.

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Credit: Microsoft

Tagged: Business, Microsoft, software, financial markets

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