woah - quite an intellectually stimulating discussion going on here !
point accepted : for developing countries, their products do appear expensive ! but for some reasons, ms just dznt want to consider a differential pricing policy for developing countries. maybe they have their reasons !
a great idea

for MS would be to
make WINDOWS 98 as FREEWARE !
its an old os, but with a little bit of sprucing-up work done, and by re-branding it as say 'Windows Basix', they should distribute it as a freeware (not open-source, as that could open up other sorts of proprietoral problems for ms) in the developing countries.
Let the students, schools, colleges have this version. it becomes win-win situation. those who cant afford, have an easy-to-use os; and
for ms, it will hook up the people to its windows platform. such a step would also curtail the tendency to go in for pirated software, which lets face it, IS VERY common.
those who want to upgrade can always pay for xp or vista !
ms experiment of introducing the starter edition here, seems to have failed, as people started considering it as crippleware ! but something like making W98 a freeware might just be the revolutionary goodwill-winning idea for ms, whose time has come !