Computing can be an expensive past time, one way or another you're going to end up paying quite a bit to have a nice working pc and enough good software to make use of it.
The OS can be a big chunk of your budget if you want to go legit, a quick froogle search shows Windows XP is between £60 and £100.
There are other options tho, Linux for example has many open-source free distros for anyone to download burn and install, unfortunately Linux is not Windows. If you're a big gamer then its a no-go due to most modern PC games using Microsoft's DirectX so its a windows only affair, many other bits of software only work on windows as well, although there are free Linux alternatives.
The main problem is that for the main stream user, they know not of the world outside windows, nor how to get there. As many Mac fans know its not easy getting someone to switch to a whole new operating system, especially if its going to cost them time and money. Linux is not exactly user friendly either.
What we need is a "Free" version of Windows.
Not open-source, MS would never let that cat out, but a cut down simplified, freeware version of windows.
Just the operating system itself with reduced options and reduced included software too. What you would get after the installer is an empty desktop and start menu, no accessory's or fancy options just the bare file system and basic options.
Initially you would think that was crazy, Microsoft would never do that, where would they get their money from. With online content distribution systems like Steam and iTunes making huge sums of money thanks to the relatively low overheads, why doesn't Microsoft set up an "Application Shop" and include that with "Windows Free"?
Lets face it, half the people that know how to find, install and configure open source software probably didn't pay for the windows they are using now, and probably never will! Microsoft arnt making any money from them, they are making their money from OEMs buying thousands of copies to install on new machines to see at PC world. Those machines are sold to families, old people and, for want of a better word, n00bs!
These are the people that need help with their computers and what better way than to get every piece of software they need from an online shop.
There could be packages put together including popular or commonly used programs like notepad, calculator and internet explorer, all downloaded, installed and configured at the click of a button. For MS this would create a possibly bigger revenue than box sales as well as being able to reach out to the customers better, see whats popular and whats not and even open up the store to allow other companies to sell their products such as music and videos to the users via the shop (with a cut going to MS of course) much like Apple have done with their iTunes Music and video stores.
For the people that know where to find good free software they can use microsoft legally and freely allowing them to dual boot with linux and use just for gaming and windows only programs too.
It would improve Microsoft's image in the world of computing as well, many experienced users look down on MS for making bad software and charging too much for it, but if you dont have to pay for it then it instantly becomes less of an issue that there are a few bugs.
MS have been worried about the linux movement for a while now, especially with its low price tag this would be a good way to combat that movement by providing an alternative at a similar price.
So there you have it, a free version of Windows with an Online content distribution system selling Application, music and video to the user as and when they want it. Allowing new or inexperienced users to get the things they want setup or fixed without leaving the house at a reasonable price and giving more experienced users a platform for building their OS how they like it with free software or products bought from the "Shop" and still using MS products too.