Trying to meet its goal of doubling the number of computer users to 2 billion by 2015, Microsoft promised to cut its software prices to governments in developing countries that provide free computers to school children.
Microsoft Chairman Bill Gates announced the program at a news conference in Beijing on Thursday.
Microsoft said it plans to offer a software package called Microsoft Student Innovation Suite for $3 to governments purchasing and giving Windows-based computer to primary and secondary students.
The software bundle, which will be available in the second half of 2007, includes Windows XP Starter Edition, Microsoft Office Home and Student 2007, Windows Live Mail desktop and other programs.
Microsoft decribed the move as business, and not a philanthropic effort.
In many emerging markets, Microsoft has seen its software pirated and sold at a fraction of the price of a genuine product. Microsoft said the technology industry must also adapt business models to developing nations.
The company is working with retailers and computer makers in Brazil to test a pay-as-you-go system, because that model has been successful with mobile phones in the country.