Microsoft selling Windows XP and Office for $3 (that's three bucks for both)?

I don't know whether or not to believe this report that has Microsoft selling a bundle of Windows and Office for $3 in developing countries to thwart piracy and crush the spread of free Linux operating systems around the world:

The Microsoft suite, which will be sold to qualifying governments for US$3, includes Windows XP Starter Edition, Microsoft Office Home and Student 2007, Microsoft Math 3.0, Learning Essentials 2.0 for Microsoft Office, and Windows Live Mail desktop.

Interestingly, the package, which will be be offered in the second half of 2007, includes Windows XP instead of Vista, suggesting that it is aimed at lowly configured and perhaps recycled computers.

Microsoft, which has a massive piracy problem in developing countries, is caught between a rock and a hard place in poorer nations. Most consumers cannot afford its premium priced software and the only way to access Microsoft products is to buy cheap pirated copies. The problem for Microsoft is if it cracks down too hard on piracy in poor countries it risks pushing consumers into the arms of open source alternatives such as Linux.

That's one way to boost your user base and crush competition -- pretty much give it away. Not like it hasn't been tried before -- hell, that's what the Linux community is doing now. If the report is true, this could work for MS in a big, big way. While they wouldn't get as much revenue as if more people paid what the software costs now, being able to control their users and crush piracy while locking in market share around the might just be worth it.