Up to 76% more: Australia’s raw Office 365 deal

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Global software behemoth Microsoft has jacked up the prices of its flagship cloud productivity suite Office 365 for the service’s launch in Australia, listing local prices up to 76 percent higher than the exact same service will cost in the United States.

Office 365 is Microsoft’s answer to Google Apps. For a small monthly fee on a per-user basis, customers will be able to access a host of online services which mirror Microsoft’s desktop software, ranging from a popular online version of its Outlook/Exchange collaboration suite, to online versions of Microsoft Word, Excel, SharePoint, Lync and more.

However, Australians will pay a great deal more than US customers for the exact same software.

In the US, Microsoft will charge US$6 per month per user for the software — or US$72 a year. In Australian dollars, at current conversion rates, that fee would be AU$5.70. However, in Australia, Microsoft will charge customers AU$7.90 — a fee 38.5 percent higher than the equivalent US fee. And the markups increase if you buy more complete Office 365 enterprise packages from Microsoft — with the third-tier package going for AU$40.10 per user per month — or 76 percent more than the US$24 version.

A Microsoft spokesperson could not immediately comment on the price hike.

It’s not the first time Microsoft has upped its prices for products which are sold in exactly the same models in the US and in Australia. For example, when the company launched its Windows 7 operating system locally in late 2009, locals paid between AU$50 and $150 for the exact same software.

“Our prices vary by region and are determined based on a variety of market specific factors including, but not limited to exchange rate, local taxes, duties, local market conditions and retailer pricing decisions,” a Microsoft spokesperson told ZDNet.com.au at the time.

Locally, Office 365 will be delivered through Microsoft’s partnership with Telstra, which will be the exclusive reseller of Office 365 to all Australian customers other than those which have an Enterprise Agreement with Microsoft. Those enterprise customers will be able to order Office 365 directly.

The move positions Telstra and Optus squarely against each other when it comes to office productivity suites delivered online, with the SingTel subsidiary having recently inked a partnership with Google to sell the search giant’s Google Apps product to customers.

Two companies which have already signed up for Office 365 are local recruitment company Rookie Recruits, and broadcaster SBS Australia.

“Our recruitment company has uniquely tapped into the stay-at-home-mum workforce, which wouldn’t have been possible without cloud technology” said Andy Springer, Co-Founder and Talent Director, Rookie Recruits, in a statement distributed by Microsoft. SBS IT manager Klaus Schelp said the organisation had required a new collaboration platform — including email — that could be delivered quickly and with “minimal disruption”.

“We chose Office 365 as it provides us a tight integration and collaboration and was already familiar to our employees,” he said in Microsoft’s statement. “It also freed up the IT department’s valuable time allowing them instead to focus on business critical projects.”

Microsoft appears to be signing up a number of local partners to help it support Office 365 in Australia, with local companies OSC, Ensyst and Paradyne issuing statements in support of this morning’s launch of the package. It remains unclear to what extent local large Microsoft resellers such as Data#3 and Dimension Data will be involved in supporting the software.

Image credit: Microsoft

16 COMMENTS

  1. ““Our prices vary by region and are determined based on a variety of market specific factors including, but not limited to exchange rate, local taxes, duties, local market conditions and retailer pricing decisions,” a Microsoft spokesperson told ZDNet.com.au at the time.

    Translation: “We’re going to rip people off, just because we can.”

    • Any statement which starts with “market rates” or “what the local market will bear” equals rip-off. And the argument that it costs more to support Australians (with our dispersed geography) or to deliver the goods means nothing when the software is delivered over the internet and you can just as easily set up a 24×7 call centre for Office 365 in India.

  2. Gouge! Why is it that multination companies have this perception that Aussies just love to be gouged financially? Now can we show Gerry Harvey why Aussies love to shop overseas on the Internet?

  3. “Locally, Office 365 will be delivered through Microsoft’s partnership with Telstra”

    ^– Now you know where the price difference goes to :)

    • Well, it is likely that Telstra will be taking a chunk of the pie. You have to wonder though … why MS feels the need to partner with Telstra in this regard — it’s not like Microsoft lacks a solid Australian distribution channel, and it’s not like Australian businesses actually need to buy extra services from Telstra to use Office 365.

    • I’m sure this deal made sense in an executive board room somewhere.
      I wonder if MS realise how far some people would go to not have to deal with Telstra?

      As for the markup, I believe I’ve had my say there.

  4. I have been a massive and public supporter of Office365.
    The product is great.

    This pisses me off.

    And as a potential small business user (did the beta), they just lost my business.

  5. “Telstra, which will be the exclusive reseller of Office 365”

    That explains it all right there. Not likely to be going with office 365 now as I’m trying as best as I can to avoid using telstra as I don’t like being transferred around 5 or 6 different departments every time I need a small change made or have a fault.

  6. The Australian public may have woken up to how bad price discrimination is in the last 6 months but if they keep rewarding companies who practice it then there is no reason for them to stop doing it.

  7. They’re not building a mother-ship like Apple – what’s the need to screw the consumer I wonder?

  8. I get the feeling they’ve been doing this for ages, it’s only so obvious now because our dollar’s worth more.
    Microsoft isn’t the only one either – Asus charges $200 (%50) more for the Transformer here.

  9. This is awesome. The more Microsoft screws the customers then the easier it is for me to promote open solutions to them. My business certainly appreciates Microsoft’s tactics.

  10. This is why I signed up with Microsoft BPOS (now Office365) directly in the USA.

    1. It was cheaper than exactly the same offering sold through Telstra (T-Suite)
    2. It had the full features which T-Suite does not offer
    3. I deal directly with Microsoft and don’t have to deal with Telstra

    I’ve been using BPOS for 2 years now and never had an issue with it. It is great value for money with enterprise grade features, functionality, management tools and support.

    How anyone can say the price difference is because of “…a variety of market specific factors including, but not limited to exchange rate, local taxes, duties, local market conditions and retailer pricing decisions…” with a straight face is beyond me!

    I’m about to close 2 major deals with international SaaS vendors right now and they quote in U.S. dollars and use the current exchange rate at the time of signing the agreement (which is great for me now due to favourable AUD exchange rate) and should be the same for all other SaaS offerings like Office365.

  11. Maybe they hedged their currency exchange in AUD some time ago.

    The variability of AUD/USD means that relying on day-to-day market rates is very bad business practice. A business like Microsoft would have hedged a lot of Australian dollars at some point in the past, and they still have to use that conversion point (or, they still can use that conversion point, because it’s better for them!).

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