Linked by Andrew Youll on Tue 18th Oct 2005 16:24 UTC, submitted by Rehdon
"In response to a question on the role of open source software in Africa, Gerald Ilukwe, the general manager of Microsoft Nigeria, said that cost is not important, even though he admitted that the average annual salary in the West African country is only US$160."
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Member since:
2005-07-06
There is no way that Microsoft is going to go in to Africa and sell Windows for $100. Why not? As has been mentioned, they simply can't afford it. Same reason Microsoft doesn't sell Windows for $10,000 here in the U.S. It's simply not viable.
Software is mostly a craftsman style product. The cost of software is basically labor plus some infrastructure. There's very little actual material cost. Selling software in a poor country made in a country with a higher cost of living (and thus higher wages) is basically folly, as you'll be priced out of the market. Given time, the local market's labor pool can produce "cheaper" software and get much better margins on it. In Ye Olde "Build vs Buy" equation, "build" is a no brainer.
But, MS has the capital and resources to go in with loss leaders, they could "dump" software on the market. In fact, this is basically the argument behind pirated MS software, it is effectively being "dumped". "We may be losing money, but we're gaining marketshare!"
The real power will be from local resources writing local software, either from scratch, leveraging pirated Windows, or using Free Software for foundations.
It's one thing to start up a manufacturing facility to make stereo's or TV sets or a chip fab. But it's quite another to set up a local software shop, train your workers, and provide them with machines. All things considered, that has a prettly low start up cost.
So, the cost of software is basically the cost of the local labor pool. The large software houses know that. Software is the perfect commodity.