People around the world have enthusiastically embraced the pay-as-you-go model for mobile phones. In fact, 72% of people in emerging markets pay for mobile phone service with prepaid cards on a pay-as-you-go basis because it is straightforward and intuitively fair. The flexibility of the pay-as-you-go model is also well suited to the economic realities of emerging markets where many people work in informal jobs with unpredictable paychecks. The popularity of the pay-as-you-go model is not limited to mobile phones - it is now used in everyday services like internet access, gaming, electricity, and water consumption around the world.
Microsoft has developed a new financing model with the goal of overcoming barriers to owning a PC with genuine Microsoft software - reducing the entry price and enabling pay-as-you-go installment methods to pay off the balance.
Sometimes great ideas are not feasible in practice, but the pay-as-you-go PC project proved quite the contrary. All the machines that we made available for sale in this initial stage were sold. In some cases we even had waiting lists! Even more important for the feasibility of the project, the level of PC usage by clients is meeting our initial expectations.
Frederico Trajano Director of Sales and Marketing Magazine Luiza
An example of how pay-as-you-go computing works:
1.
An individual purchases a PC by making an initial payment equivalent to one-third of the total cost. A third party financial institution pays the retailer the remaining cost of the PC on the buyer's behalf.
2.
The buyer agrees to purchase 800 hours of time on their PC at a low hourly rate - they can add time as frequently or as infrequently as they choose and take as long as they need to purchase the hours. The cost of the 800 hours covers the re-payment to the financial institution (including interest).
3.
Hours of PC usage can be conveniently purchased over time through a variety of distribution channels, including convenience stores (scratch cards), ATMs, Point of Sale networks and the internet.
4.
Once 800 hours of usage time is purchased, no additional payments are required to use the PC.
Market response has been extremely positive In 2005, Microsoft sold 1,000 pay-as-you-go PCs under a limited-scale trial with a leading Brazilian retailer, Magazine Luiza. The results of the trial were a resounding success, demonstrating the potential of the pay-as-you-go model to expand the PC market.
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Pay-as-you-go PC sales more than doubled the previous PC sales record in participating Magazine Luiza stores.
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Usage of pay-as-you-go PCs achieved the hurdle rates expected by financial institutions in Brazil
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Pay-as-you-go PCs grew the overall market for PCs -- 31% of pay-as-you-go PC buyers said they could not have purchased a computer without the pay-as-you-go offer.
Why so many people are buying pay-as-you-go PCs:
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They are already familiar and comfortable with the pay-as-you-go payment model - 29% of people in emerging markets already use prepaid mobile phones.
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They can get a full-featured, mainstream PC with genuine Microsoft software at an affordable entry price - without having to compromise on quality for their families.
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They can pay for the PC as they use it - an approach they consider to be both fair and flexible
