Microsoft Testing FlexGo Pay-As-You-Go PCs

At its Windows Hardware Engineering Conference 2006 (WinHEC) gathering today, Microsoft announced FlexGo, a program aimed to lower financial barriers to owning a PC in emerging markets by letting users pay for use of the machine over time, either through subscription plans or pre-paid cards.

“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.”

The basic idea behind FlexGo is that customers instead of paying full price for a computer and taking it back to their home or business, customers pay about half the price of the system, the purchase subscriptions or pre-paid cards to get hourly access to the computer. If the subscription lapses or the user runs out of pre-paid hours, the computer shifts toward a “reserve tank” offering limited functionality and access until the user buys more hours. Purchased hours count toward ownership: after the user buys a pre-determined number of hours, they own the PC in full. FlexGo requires the computers have at least occasional access to the Internet.

Microsoft says it is working with computer-maker Lenovo and others to implement FlexGo systems, and is launching a second FlexGo trial in Brazil today. In the next three months, Microsoft plans to introduce FlexGo trials in Russia, Mexico, China, and India. Initially, the program plans to offer mid-range computers running the home edition of Windows XP, but Microsoft may expand the program to the Starter Edition of its forthcoming Windows Vista, and says it is working with telecommunications and media operators to provide higher-end systems and Media Center editions to customers on a subscription basis.

Microsoft is touting FlexGo as a democratizing force, putting information technology into the hands of people to whom it would otherwise be out of reach. However, it may be worth noting that, over time, Microsoft makes the same amount of money on a FlexGo system as a traditional PC sale, and, depending on interest rates, finance charges, and other terms, consumers may wind up paying considerably more for a FlexGo system over time than they would if they bought the PCs outright, creating a new revenue channel for Microsoft and computer vendors in a new, lower-income market segment.


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