Gartner warned that users will quickly be frustrated by the limited functionality of the software, and that the release could actually encourage piracy.

Starting in October, Windows XP Starter Edition will ship on new, low-cost desktop PCs available through manufacturers and OEM distributors in Thailand, Malaysia and Indonesia. Microsoft said it plans to add two more countries to the pilot program by the end of the year.

"We've recommended, basically, that nobody buy these," said principal analyst Martin Gilliland. "[The product] has no value for anybody as this stands."

"[Microsoft is] talking to a bunch of very inexperienced users, who don't know better. It's hard for them to know whether something is good or not," Gilliland said.

In a press release issued on Friday, analysts took Microsoft to task for not thinking through the upgrade path for the newbie users it targeted with the product.

XPSE PCs will ship with tutorials and video demos to introduce customers to their first computer and first operating system. XPSE features a redesigned help system, called My Support, with a built-in Getting Started Guide. To help reduce confusion, advanced settings are pre-configured and task management has been limited to three programs and three windows per program running concurrently.

"There are a portion of people buying these computers in the market who have never used a PC before, but a very significant portion have had exposure to a PC, but never had one in the home," Gilliland said. "The largest group is likely to be a mixture of the two, parents who have never touched a PC, and kids who have played with them at school, cafes or a friend's house."

For example, with XPSE, only three applications can run at any one time, and all users share a single desktop. Therefore, family members sharing a PC must be careful to log out of e-mail and chat applications. XPSE won't recognize hardware upgrades, such as adding more memory, Gilliland said.

He also said experienced users will be immediately disappointed and the new users will catch up to them in a couple of months.

A bigger problem, according to Gartner, is that there's no upgrade path for XPSE. As customers get used to the software and want to do more, their only options will be to pay the full retail price for XP Home or buy a pirated version.

He said that in Southeast Asia, consumers typically buy a low-cost PC loaded with Linux from a retailer, then, in an immediate but separate transaction, fork over about US$4 for an illegal copy of Windows. The retailer installs it on the PC and will even provide some level of technical support.

Gilliland said that besides pirated versions of XP, XPSE-loaded PCs will compete with low-cost Linux computers available through a Thai government project begun mid-2003. The computers can be configured with XP Home and Office for an additional US$35.

But Gilliland said more than half the computers in the governments program are sold with Linux. His theory is that rather than pay the extra $35 to have an official copy of XP, buyers take the Linux machines to their local stores to get pirated XP installed. He estimates that less than 2 percent maintain the boxes as Linux systems. "People still see value in a $4 copy of XP with no support, versus a $35 copy with support," he said.

Gartner advised both businesses and consumers to steer clear of this XP-Lite. And that's a shame, Gilliland said.

"We have a digital divide that really needs to be closed, with companies like Intel, AMDand Microsoft driving it." He emphasized that Microsoft has characterized the rollout as a pilot program. "They had the best intentions. They just haven't executed them very well. Yet."

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