Since the election of President Luiz Inácio Lula da Silva, Brazil has gradually become a beachhead for Open Source, and consequently a thorn in Microsoft's side. Soon after his election, President da Silva appointed Sergio Amadeu, an academic and Open Source enthusiast, to head Brazil's National Information Technology Institute.

Amadeu gained a modicum of fame in Brazil by launching a network of free computer centers running Open Source PC software in Sao Paulo. He is now extending this idea, as Brazil launches its PC Connectado initiative, which is aimed at encouraging and subsidizing PC usage in the home, in schools and in small businesses. The goal is to reduce the cost of PCs and proliferate their usage - and Amadeu is of the opinion that Open Source is crucial to achieving this.

This opinion is seconded by Walter Bender, Director of the MIT Media Lab, who advised, in a letter to the Brazilian government: We advocate using high-quality free software as opposed to scaled-down versions of more costly proprietary software. Free software is far better on the dimensions of cost, power and quality. (quoted by Reuters).

The PC Connectado initiative aims to cut the cost of PCs by about 50% (to around 00). The three major telecom companies in Brazil are also participating in the initiative by reducing their Internet access charges to around for 15 hours of surfing per month. The initiative is part of a broader program which involves all government ministries and state run companies gradually switching to Open Source. President da Silva has also mandated that software developed by companies or research institutes that receive government funding, must be released as Open Source.

In an effort to stay relevant, Microsoft promised significant price cuts on its software, but this failed to impress the Brazilians and it looks as though Microsoft will not be participating in PC Connectado in any way. Microsoft faces an increasingly difficult situation as a growing number of governments across the world back Open Source. The simple fact is that Microsoft has been gradually pricing itself out of emerging markets and thus the difference in cost between its software and Open Source is now a very compelling factor in these markets.

In The Road Ahead, Bill Gates himself wrote enthusiastically about the software ecosystem that surrounded Microsoft in its early years. It made a huge contribution to the success of Windows, by creating an application-rich environment. The same kind of ecosystem now surrounds Open Source and it is growing quickly. I am amazed by its potential. It could completely undermine Microsoft's monopoly, and it probably will.