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Gates: China may not get cheap Windows

Microsoft chairman says he's not sure his operating system will be tailored and discounted for China's huge PC market.

Although Microsoft has released cut-rate versions of Windows for Malaysia and Thailand, it may not do the same for China, one of the world's largest PC markets.

Speaking to reporters in China, Microsoft Chairman Bill Gates said he doesn't know whether discount versions of the company's software will be needed in that country. He also said that antitrust regulations being passed by the Chinese government will not particularly hurt Microsoft's business.

A number of companies are now trying to tailor their products to better fit the local economies of developing nations. Intel is experimenting, for example, with how to develop a cheap microprocessor for these countries.

Microsoft examines a number of local factors before deciding whether to come out with a discount version of its software for a developing country, including the size of the potential market, the prevalence of piracy and the geographic pervasiveness of the local language.

Thai, for instance, is mostly used in Thailand, a good situation for Microsoft because the company doesn't have to worry about the inexpensive Thai versions of Windows, called Windows XP Starter Edition, flooding the market in Singapore or Indonesia.

A country's willingness to experiment with Linux is also a factor. Thailand had launched a Linux push earlier. Windows XP Starter Edition for Thailand, which also doesn't contain as many features as the regular version, is already available on some PCs, along with a slimmed-down version of Office.

Windows XP Starter Edition will come out as a standalone product as part of a government-sponsored program in September. It will cost $36, far less than regular Windows XP.

China is a rapidly growing market, has a piracy problem and is promoting Linux--all factors that favor the development of a discount version in the local language. And, despite the rapid growth of the PC market there, PCs are mostly being bought by middle- and upper-class families in coastal urban centers like Shanghai and Beijing and not the country's poorer western plains.

On the other hand, there are millions who are fluent in Mandarin spread across the globe.

China isn't the only country with a piracy issue. Around half of the software in Korea is pirated, despite aggressive raids by the police.