CDs containing software Microsoft has code-named ''Longhorn'' are on sale for six ringgit ($1.58) in southern Malaysia.
Microsoft's current version of Windows, XP, sells for more than $100 in the United States.
The software is an early version of Longhorn demonstrated and distributed at a conference for Microsoft programmers in Los Angeles in October, Microsoft Corporate Attorney Jonathan Selvasegaram said.
Longhorn promises new methods of storing files, tighter links to the internet, greater security and fewer annoying reboots, Microsoft has said.
"It's not a ready product," Selvasegaram said from Malaysia. "Even if it works for a while, I think it's very risky," to install on a home computer, he said.
Chairman Bill Gates has said Longhorn, which is not expected to be released before 2005, will rank as Microsoft's largest software launch this decade.
"It's not a ready product. Even if it works for a while, I think it's very risky to install on a home computer"
Microsoft Corporate Attorney
The software is on sale in the largest shopping complex in Johor Bahru, the Malaysian city bordering Singapore, alongside thousands of pirated programmes, music CDs and DVDs.
Discs in plastic covers hang from racks in more than a dozen specialised stores in the Holiday Plaza centre, even though it has its own police station.
Such piracy is rampant in Asia, although the United States praised Malaysia for seizing thousands of illegal discs since May. US trade losses due to piracy in Malaysia fell to $242 million last year from $316 million in 2001.
Selvasegaram said pirates would shut their shops whenever Malaysian authorities launched a clampdown, only to reopen within days or even hours.
He said software companies were working with the authorities on the problem, but the police were more concerned about controlling pornography.