Personal computer (laptop and desktop) prices may have crashed. The low price tags, however, can be misleading � especially for first-time buyers.

Consider this. All low-cost laptops and desktops come pre-loaded with a Linux OS or a DOS version (obsolete on desktops).

The installation of a legal Microsoft operating system (OS) and office suite (for word, excel, etc) will increase the price of the desktop or laptop by 20 to 35 per cent.

What's wrong with a free Linux OS and office suite like openoffice.org, one may ask? Linux is free but has no support unless one gets it installed from Red Hat or Novell (that charge for support and maintenance, since the OS is free).

This increases the cost. Besides, analysts aver, 95 per cent or more of the current 22 million users in India use Microsoft OS and Office on the desktop.

Of this, it is estimated, over 70 per cent of Microsoft OS, and over 90 per cent of Microsoft Office, is pirated. With Microsoft clamping on piracy, getting a legal OS becomes imperative.

"While the mid- and low-range PC market is growing, how much impact the introduction of low-cost PC/laptops has on the market is too early to predict. While the hardware players have done their bit of reducing cost, it is now up to the other players to come up with solutions that will make consumers adopt the technology," says Piyush Pushkal, Assistant Director, Research, IDC.

The cheapest laptop from HCL Infosystems [Get Quote] � 'MiLeap', for instance, comes for just Rs 13,990. It sports a flash drive, free Linux OS and a seven-inch screen.

The ACi Ethos 7 model (from Allied Computers International, Asia) for Rs 14,999, on the other hand, comes with DOS. The cost of the system increases substantially when you think of a larger screen and additional features.

The HCL [Get Quote] high-end Y series, for instance, would have multiple navigational features such as a touch screen, thumboard, stylus, keyboard and touch buttons, with Windows Vista (Home) as the OS.

However, it will cost anywhere between Rs 29,990 and Rs 39,990 � more than double the price of the basic version. Users would also either have to upgrade the DOS version of the ACi Ethos model with the free Linux OS or Microsoft XP or Vista.

This will add Rs 1,500 to Rs 7,000, depending on whether it is a starter, home or student version. Microsoft Office will set a user back by another Rs 8,500 to Rs 15,000.

Acer was one of the few early manufacturers to introduce low-cost products. "Hardware prices have surely come down but OS prices, when compared to this fall, have not followed the trend," said Harish Kohli, chief sales officer, Acer India. But he does feel that people are much more conscious about upgrades and the pitfalls of buying illegal OS copies.

"I think the starters edition has made good inroads. Compared to this, Linux usage has been very marginal," he said.

Raj Saraf, chairman and MD, Zenith Computers [Get Quote], felt that software prices not keeping pace with hardware pricing would lead to piracy. Industry players thought Microsoft, with the largest market share in OS, is aware of the market condition.

"In countries like India, China and other markets there is a clear message coming out that the cost of software has to come down," said George Paul, associate VP-marketing, HCL Infosystems.

The price of a desktop or laptop that runs a legal Microsoft OS (XP or Vista) and Office suite increases 20 to 35 per cent, admitted Doug Hauger, chief operating officer, Microsoft India.

The prices, he explains, "are not as high as users think they are. We give rebates to our channel partners who pre-load the branded computers. This helps reduce the street price. We are seeing a dramatic increase in the adoption of legal software in branded laptops".

A few prominent vendors do propagate Microsoft Starter Edition (a stripped-down version for emerging economies).

R Manikandan, Business Group Head IT, LG, said: "If you compare products at the launch time, and after the lapse of a year, the price difference will be 8 to 10 per cent. The moment hardware prices drop, the configuration of the product goes up one layer."