RALEIGH, N.C. — Lenovo is teaming up with Microsoft to help bring down the upfront costs of personal computers by launching a “pay-as-you-go” plan.

Lenovo, which is moving its headquarters to North Carolina and is built around the former personal computing division it acquired a year ago from IBM, is making the announcement today along with Microsoft in Seattle, WA.

A Microsoft application called “FlexGo” has already been used for a trial in Brazil, limiting the number of hours a PC can be used. Special prepaid cards equipped with codes are used to unlock more time on the machines. The software giant is lining up partners around the globe for the pay-as-you-go effort.

Lenovo and Microsoft will launch market trials in China and India.

“Lenovo is working with Microsoft to create innovative new business models and technologies tailored for the needs of different markets around the world,” said Philippe Davy, vice president of strategic alliances for Lenovo, in a statement. “This program creates new options for people whose access to personal computing would be limited otherwise.”

Lenovo and Microsoft are not alone in seeking to broaden PC use around the world. Nicholas Negroponte, founder of the Media Lab at the Massachusetts Institute of Technology, is planning to offer laptops for $100 or so in several countries next year. Among his partners is Raleigh-based Red Hat.

Next year, MIT Media Lab founder Nicholas Negroponte plans to start distributing a $100 laptop through his “One Laptop Per Child” initiative in countries including China, India, Brazil and Thailand
Lenovo and Microsoft are embracing the pay-as-you-go program utilized globally by wireless telephone companies.

“Today there are already more than 1 billion prepaid mobile phones used around the world, so we know FlexGo enables a familiar and comfortable pay-as-you-go model that works for people with variable or unpredictable income,” said Will Poole, senior vice president of the Market Expansion Group at Microsoft. “Offering unprecedented flexibility of PC ownership will bring high-quality personal computers within the reach of hundreds of millions of families and small businesses in emerging markets so they too can enjoy the many benefits PCs bring in education, entertainment, communication and productivity.”

According to Information Week, a PC running Windows XP with a 17-inch monitor would cost between $250 and $350 up front and include 10 hours of operation time. Mike Wickstrand, a director in the Microsoft expansion group, said additional hours would cost about 75 cents. The total cost of the PC is around $600.

Lenovo plans to sell prepaid usage cards. The programs in India and China will be launched over the next three months.

Lenovo’s joint effort with Microsoft using FlexGo pay-as-you-go computing will bring high-quality PCs within the reach of millions of families for use in education, communications, and entertainment,” added Poole, the Microsoft executive. “We are pleased to be embarking on this new initiative with a leading and innovative partner, Lenovo, starting with market trials in China and India.”

Lenovo is the top PC seller in China.

By cutting down upfront costs, Lenovo said consumers could avoid the need for financing and then manage time use of the PCs in order to meet family budgets.

The deal expands on a growing relationship between Lenovo and IBM. Lenovo has launched efforts to combat software piracy in China and also worked with Microsoft in developing a table PC that utilizes Microsoft software. Lenovo also works with Microsoft at innovation centers in the U.S., China and India.

Microsoft conducted a yearlong pay-as-you-go trial in Brazil along with Magazine Luiza, a national retailer. Microsoft also plans trials in China, Hungary, Mexico, Russia, Slovenia and Vietnam.

For more information about the Microsoft program, see: www.microsoft.com/whdc/flexgo/default.mspx

Lenovo: www.lenovo.com