The Wall Street Journal documents Microsoft's efforts to profit from developing markets while battling piracy.

As I've mentioned before, Microsoft's response over the past decade to a piracy-prone market has been to simply ignore that market. That is, until Linux came along. Now Microsoft is selling a scaled-down, less expensive operating system referred to as Microsoft Lite. According to the article, Microsoft has begun rolling out Microsoft Lite in Thailand, and plans to launch it in Malaysia, Indonesia, India and Russia in early 2005.

According to the article "... the software offers fewer features for a lower price and is designed to appeal to first-time computer users. Microsoft isn't selling the software separately from PCs, nor disclosing how much it is charging computer makers for including it with their models. The company expects the PCs with the slimmed-down Windows to be priced as low as $300, hundreds of dollars less than low-end PCs equipped with Windows sell for in the U.S."

If Microsoft had invested the energy in truly understanding how developing markets operate, it would have released Microsoft Lite five years ago, well before Linux ever became a threat. The question now becomes -- is Microsoft Lite full-featured enough to compete with Linux? I still believe that $300 is too expensive to be successful in most developing markets.

However, to Microsoft's credit, it does have a mobile OS that could end up being the real success story in these markets. It won't provide the type of per-unit revenue that Microsoft is accustomed to, but volume could easily make up the difference.