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Wednesday, November 13, 2002 - Page updated at 12:00 AM

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Microsoft prepares for battle in India

The Associated Press

NEW DELHI, India — Hoping to stave off a rise in the popularity of free, open-source software, Microsoft Chairman Bill Gates yesterday announced a $400 million investment in India to expand the company's operations and boost computer literacy.

The three-year initiative — part philanthropy, part business boost — would seek to entrench products of the world's dominant software company in schools, as well as among India's stable of talented programmers.

"We are very optimistic as to what will happen to information technology in this country," Gates said of India, whose strength he said lies in its education system, a fast-developing communications infrastructure and its vast pool of skilled labor.

India's software industry has bucked a global slowdown to post high growth in revenues and employment. Last year, its exports grew by 29 percent.

Microsoft will invest about $100 million in its software-development center in the southern city of Hyderabad, the company's only such facility outside the United States. Gates, on the second day of a four-day visit to India, said the center's staff would more than triple to 500 by 2005.

Gates said about $20 million would go toward training teachers and students on computers and software at government-run schools.

Microsoft aims to reach 80,000 teachers and 3.5 million students under "Project Shiksha," the Hindi word for education.

Microsoft also plans to set up 10 information-technology training centers in partnership with Indian states.

Gates sought to downplay India's growing enthusiasm for the open-source Linux operating system, noting that Microsoft's Windows remains far ahead of its competition in India and elsewhere.

Indian software companies are increasingly opting for Linux, whose users here say they prefer the system because its basic code is nonproprietary, can be freely modified and thus makes better sense for the developing world than Windows.

Indian companies have set up development centers to make Linux-based software. Indian subsidiaries of IBM and Sun Microsystems are also exploring software applications using Linux.

Supporters of the "free software" campaign in India argue that Gates' software giveaways and computer literacy training come at a price.

"His work is irrelevant to 95 percent of Indians. It could take several months' income for an average Indian to buy Microsoft's software," said Frederick Noronha, the founder of Bytesforall.org, whose group works for information technology access to poor people.

"Microsoft's software may be ubiquitous, but it restricts many freedoms of the users like any other proprietary software," Noronha said in Bangalore, India's technology hub.

Gates said Windows would remain a market leader in the country, dismissing such criticism.

"We are careful to cater our prices to what is appropriate to different segments," he said.

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