After reading the wsj article about Microsoft gets revenue from China that amounts to about only 5% as that of U.S revenues, I got an idea for a new business model that Microsoft should consider(See Ballmer Bares China Travails). The abysmal revenues from China is mainly due to the high piracy rate. The windows and any other software could be found sold in the streets for $2-$3.Microsoft Windows Home premium for 1 PC costs about $70 in U.S. Per capita income of China is about $4900 while that of U.S is about $46000. With about 1/10 th of the per capita income of U.S, can Chinese people afford Windows at the same price. With about 1/10 the purchasing capacity, Chinese people would buy the product only if the price is also 1/10th that of the price at U.S. In other words, the price of Microsoft Windows should be $7. Even though this is not the accurate way to think about it as other factors are being neglected, this comparable approach atleast makes the problem evident.
Now how to sell Windows for $7 and make a profit?
A hybrid business model could be considered.
Implement a hybrid of subscription based model and an Ads based model.Desktop wallpaper and Folder backgrounds are premium Ad-real estate that could bring in high ad revenue. May be you could even offer a free OS just based on Ads. Steve Ballmer, Think about it!! It is not the innate nature of people to cheat if the price is right.
Update to the post: 4/26/2012
Today I saw the article on how Steve Jobs was considering an Ads based business model for Mac OS 9.0 and that it was a viable one. It is worth mentioning this, given the context of this post. An excerpt from the article:
"In his new book, Ken Segall says that Steve Jobs and his team at Apple explored the possibility of shipping a free, ad-supported version of Mac OS 9."
http://www.theverge.com/2012/4/26/2977478/steve-jobs-ad-OS
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