Gates seeking to reach next generation of consumers.
Microsoft plans to offer a US$3 stripped-down package of Windows, Office and other software to people in developing countries.
The Microsoft Unlimited Potential programme, due to be announced in Beijing today by Microsoft chairman Bill Gates, is part of an ongoing global expansion by the software giant.
Microsoft aims to double the number of PC users worldwide to two billion by 2015.
The company's reach has been hit by budget constraints in developing nations such as Argentina, Brazil and Nigeria, which have turned instead to free alternatives such as Linux.
Under the programme, Microsoft will make its discounted software available on computers that governments can distribute to schools and individuals.
Microsoft said that the price of the PCs would depend on PC makers. Industry analysts told The New York Times that basic machines with the US$3 bundle were likely to cost up to US$300.
Software in the US$3 bundle, including Windows XP Starter Edition and Office 2007, retails at around US$150.
Orlando Ayala, senior vice president for emerging markets at Microsoft, explained that the initiative will also target low-income communities in the US and other developed nations.
"For Microsoft this is an investment in the long term. These are the consumers of the future," he said.
The move follows previous offers of US$30 Microsoft products to nations including Malaysia and Thailand.