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  • News - Written by on Thursday, August 18, 2011 14:10 - 24 Comments

    Markups a wider issue for Aussie industry: Adobe

    news Global software giant Adobe has responded to criticism in Federal Parliament of markups on its products in Australia by stating the issue wasn’t one for the technology industry alone — claiming it was a wider problem affecting other areas such as the automotive sector as well.

    Last night in Parliament, Labor MP Ed Husic widened his earlier complaint about price markups on Apple products in Australia to include other vendors, specifically calling out companies like Adobe, Microsoft and Lenovo and raising the possibility that an enquiry could be held into the matter by the Australian Competition and Consumer Commission.

    Despite the relative parity of the US and Australian currencies, Adobe currently charges significantly more for its products in Australia than it does in its home country of the US. For example, its Australian store currently lists the Master Collection version of its Creative Suite 5.5 software for AU$3908.25, while the same software in the US costs US$2,599 (AU$2,469) — a difference of more than $1,300 for the exact same software download.

    Speaking in an interview this morning, senior director of APAC marketing at Adobe, Mark Phibbs, declined to comment on whether Adobe would welcome an investigation by the ACCC into software pricing, although he did note that Adobe would “obviously cooperate” with such an initiative.

    However, the executive said the issue was one which wasn’t solely facing the IT industry. “I don’t think it’s an issue unique to the software industry — I think it’s an overall issue across the economy,” he said. “Look at cars in Australia — they’re far more expensive than elsewhere in the world … I don’t think you can single out one industry and do an investigation there.”

    The executive added that there were a number of issues specifically related to the Australian market as a whole which impacted on pricing. For example, he noted that Australia didn’t have a large and dominant online retailer such as Amazon.com in the US, which competed strongly with existing retail channels and helped change thinking around price. If there was such an online giant in Australia, it would likely “change the market” locally, Phibbs said.

    The lack of such a strong online player may have the potential to allow local retailers to charge prices which stronger competition would obviate in markets such as the US.

    Phibbs pointed out that the majority of Adobe’s software in Australia was sold through channel partners — and so the prices listed on its online store may not reflect competitive pricing in the market. In fact, the price through its own online store would reflect a price towards the upper end of the range which its channel partners were charging.

    “We don’t want to undercut the entire channel in Australia,” the executive said, noting that if price parity in Adobe’s online store existed between Australia and the US, it would destroy the company’s local channel market. “The fact is, the channel is not as efficient in Australia as it is in the US,” he said.

    Asked what potential there was for Adobe to avoid selling through the channel and provide a more equal price direct to consumers, Phibbs said there was “some scope” for that, but stated also that many consumers wanted more of a complete package than could be bought through Adobe’s own store, which only sells its own software.

    As for the channel itself, Phibbs said Adobe couldn’t dictate to its channel partners what prices they charged, with margins on products sold through retailers varying around the world.

    The issue of price markups has come to the fore over the past year especially, with the Australian dollar reaching parity with the US. Phibbs acknowledged this but said pricing was “a complex topic”, and Adobe wouldn’t want to change its prices multiple times during the lifecycle of a product — as it would get confusing. Prices could therefore lag currency fluctuations, he said.

    In general, the company sets its prices based on a number of different factors, such as the cost of doing business and research into customers. “Our view is that we deliver mission-critical software — prices appropriately for the value that’s delivered,” he said.

    opinion/analysis
    Phibbs is right — the issue is a wider one for Australian industry — and I’ve heard complaints about other imported products, ranging from bicycles to clothes to a heap of other things. In addition, he’s right in that a more competitive retail market in Australia would solve some of these problems.

    However, the argument he’s making is an attempt to divert attention from the real issue here. The fact remains that today, customers are paying up to $1,300 more for some Adobe products if they choose to buy them from Adobe in Australia, compared to if they buy them in the US. That difference may be smaller if they buy Adobe software from one of its channel partners. But it will still exist, and Adobe has a prime role in shaping it.

    As a leader in the software industry and a significant online retailer in its own right, Adobe would generate a lot of goodwill from its customers by harmonising prices across different regions, and updating them maybe once every couple of months to take into account currency fluctuations. Apple appears to have started down this path with its own store.

    It is possible, of course, to argue that Adobe doesn’t need that goodwill. With a virtual monopoly on the market for creative design software … right now, unless a regulator like the ACCC intervenes, Adobe can virtually do as it likes with regard to pricing. There’s simply not that much to stop it.

    Image credit: Adobe

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    24 Comments

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    1. snerd
      Posted 18/08/2011 at 4:15 am | Permalink |

      Ah, the famous ‘channel’ paradigm. A lovely euphemism for ‘rent-seeking body’. Absolutely no value-add whatsoever, just an opportunity to skim some cream and avoid any responsibility.

      • Posted 18/08/2011 at 6:38 am | Permalink |

        I think there is some validity to the channel argument, but perhaps not as much as Adobe is arguing there is ;)

    2. snerd
      Posted 18/08/2011 at 4:15 am | Permalink |

      Ah, the famous ‘channel’ paradigm. A lovely euphemism for ‘rent-seeking body’. Absolutely no value-add whatsoever, just an opportunity to skim some cream and avoid any responsibility.

    3. Nicholas Constantinidis
      Posted 18/08/2011 at 5:04 am | Permalink |

      I think it’d be useful to know the difference in wholesale prices of Adobe (and other) software between regions, rather than retail – or consumer-available – pricing.

      It also comes off as glib when we’re told to get better competition, when some distributors won’t allow online stores to offer us lower pricing, eg Steam.

      • Posted 18/08/2011 at 6:32 am | Permalink |

        I would also be interested in a wholesale pricing comparison, but I would guess that would be pretty hard to come by ;)

    4. Jeff
      Posted 18/08/2011 at 7:53 am | Permalink |

      “multiple times during the lifecycle of a product. Nice try cs5.5 is only 2 months old

    5. Posted 18/08/2011 at 11:23 pm | Permalink |

      There needs to be more pressure and focus on this issue. Hardware companies like Dell charge something approaching double the american price. Yamaha and other musical electronic products appear to be a typical 60% more expensive. The rule of thumb seems to be a markup roughly approaching the individual shipping costs in the case of electronic goods

    6. Posted 18/08/2011 at 11:23 pm | Permalink |

      There needs to be more pressure and focus on this issue. Hardware companies like Dell charge something approaching double the american price. Yamaha and other musical electronic products appear to be a typical 60% more expensive. The rule of thumb seems to be a markup roughly approaching the individual shipping costs in the case of electronic goods

    7. Posted 18/08/2011 at 11:26 pm | Permalink |

      Sorry, I didn’t finish before clicking post …
      Clearly they would never be shipping to Australia in individual units, unless they are not really interested in selling here. In the case of software there is really little excuse for it. Opportunistuc price gouging I say.

    8. Posted 18/08/2011 at 11:26 pm | Permalink |

      Sorry, I didn’t finish before clicking post …
      Clearly they would never be shipping to Australia in individual units, unless they are not really interested in selling here. In the case of software there is really little excuse for it. Opportunistuc price gouging I say.

    9. I_power
      Posted 19/08/2011 at 2:54 am | Permalink |

      “Look at cars in Australia — they’re far more expensive than elsewhere in the world … I don’t think you can single out one industry and do an investigation there.” This statement is either incredibly naive or it is insulting, assuming we are morons who are not aware that the entire business, cost and pricing model of selling cars is different from software. There are no downloadable cars, the laws and taxes governing the automobile industry are miles different, we buy our cars from showrooms, there is a second-hand and auction market, there is the accessories and auto-service part of the busienss… how anyone could say, “Well, cars are more expensive here too” is just ridiculously stupid

    10. Ashul
      Posted 19/08/2011 at 3:43 am | Permalink |

      Agree with I_power we have the highest taxation in the developed world on “luxury cars” and also attempts to protect the local manufacturing industry. Adobe can be competitive but chose not to as the market still sadly buys their product.

      • toshP300
        Posted 19/08/2011 at 9:49 pm | Permalink |

        *Adobe can be competitive but chose not to as the market still sadly buys their product.*

        they are EXTREMELY COMPETITIVE. that’s why you bunch of whingers are whinging about paying a PREMIUM for a PREMIUM product. (and yes, that “premium” varies according to each market – get used to it – nothing wrong with that – happens with every other product around the world.) and that’s why the “market buys their product”.

    11. Daniel
      Posted 19/08/2011 at 5:54 am | Permalink |

      It’s clear all these vendors just don’t get it. The world is global and all vendors are competing globally. So to say Australia is smaller market and bla bla bla doesn’t fly anymore.

      I don’t think they understand they are losing customers by being unfair. For example I wanted to purchase Apple’s Logic Studio. So I had a look at prices – Apple US $499, Amazon $450, Apple Australia $749!!!

      I was that annoyed I went and downloaded it off a pirate website. They lost my business.

      • Posted 19/08/2011 at 6:09 am | Permalink |

        True, and it’s particularly apparent in the software market. If a developer in Australia can sell their software for the same price globally over the internet, so can US-based companies like Adobe and Apple. There is simply no excuse.

      • toshP300
        Posted 19/08/2011 at 9:42 pm | Permalink |

        *I was that annoyed I went and downloaded it off a pirate website. They lost my business.*

        correction:

        you realised you’re a cheap b****** and downloaded it off a pirate website. You stole their product.

    12. Posted 19/08/2011 at 6:43 am | Permalink |

      Let me comment on Apple! I have used Apple computers since System 7 (three generations) and have watched this company, in my opinion, pay only token attention to the Australian Market.
      Even to the point that all stock, I am told by a reliable source, as well as parts are warehoused in
      Singapore. When I have had to have either of my two Apple® Computers repaired under Warranty
      there is always a delay of about 4 to 7 Business Days delivery to the Melbourne Apple® Stores
      which would indicate a “Just in time” delivery from Singapore by freighter airline delivery.

      We must not however just take the USA Apple website to compare prices converted to US$ value. Our prices here include GST BUT the USA Prices are calculated on the delivery point in the USA as some States- mostly all- charge State Sales Tax and some Cities charge a City Sales Tax. EG New York State and New York City
      please see this link http://www.nyc.gov/html/dof/html/business/business_tax_nys_sales.shtml
      Please note that the above is my OPINION only and you should read it carefully.
      Sincere Regards
      Brian

    13. Justin
      Posted 19/08/2011 at 7:08 am | Permalink |

      Adobe’s response doesn’t hold water on many levels but blaming the “channel” is ridiculous. Wholesale pricing of Adobe products in Australia is higher than US retail, how is that the channel’s fault?

    14. AM
      Posted 19/08/2011 at 10:36 am | Permalink |

      I feel the rage…….

    15. Mgezz3
      Posted 19/08/2011 at 11:51 am | Permalink |

      Stop ripping off Australians with overpriced goods!

      https://www.facebook.com/pages/Stop-ripping-off-Australians-with-overpriced-goods/207954432594342?sk=wall

    16. Whynot
      Posted 19/08/2011 at 1:16 pm | Permalink |

      Adobe’s pricing in Australia is repugnant. Their service is equally bad. Have you ever tried contacting Adobe? Almost impossible to get an Australian on the phone. So, what are we paying for? I stopped upgrading my CS years ago. Now I use Gimp or CutePDF etc. Its a rort!

    17. Michele
      Posted 10/01/2012 at 1:26 am | Permalink |

      I just downloaded a trial of Photoshop CS5, from the USA site.

      The US pricing is $699, the Australian pricing is $1168.

      If I choose to buy I’d be paying Australian prices for a USA version of the software – there would be nothing “Australian” about my copy of Photoshop, as all I need to do now (after purchase), is type in a registration code.

      The only “Australian” component involved in the software download from the Adobe server in the USA, was my Australian ISP and if I purchased the software, my Australian bank. I pay my ISP monthly and I’m more than happy to pay my bank the 3% (or so) exchange rate fee if I buy in US dollars.

      To charge me $469 more for the exact same downloaded product that my American friends can download, is criminal. What exactly am I getting to explain this $469 difference? Not a thing. And with our Australian dollar being higher, in some situations when buying things from the USA, I’d be paying less, not more.

      We need to stand up and start yelling. Our Australian dollar is on par, or better than the American dollar, and for many things, like downloaded software, we are being ripped off, just because they can. The excuse of small market, extra costs involved etc, is a blatant lie when we are talking about software downloaded from a central location.

    18. BJ
      Posted 16/01/2012 at 7:07 pm | Permalink |

      This is completely rubbish. I have been considering buying the Adobe Master Collection for the past fortnight, and wondering how I could afford to justify the $4300 or so it would cost (this is with GST). After exploring the net I found resellers selling the same product for 30% the original… fair enough, you see this with TVs and computers. So I called Adobe to see if there was a difference between their product and that of the resellers. After talking to the “sales team” (who I had a very hard time understanding due to the language barrier) I understood that there was no difference between the resellers product and buying from Adobe directly. Fair enough… resellers are often cheaper than the original retailer. But then to find out that the Adobe US retailer is selling EXACTLY the same product, which can be distributed over the internet for almost double is crazy! I could fly to the US buy a copy and bring it back for the Adobe’s Australian price!

    19. Neeta
      Posted 10/05/2012 at 5:52 pm | Permalink |

      let us all get together and protest about it –
      https://www.facebook.com/pages/Why-Abode-software-prices-in-Australia-are-why-more-than-prices-in-USA/298931636855054




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