Microsoft is charging Australian software developers about 83 percent more than their US counterparts to access subscription services associated with its Microsoft Developer Network (MSDN) platform, it has emerged in the wake of parliamentary criticism of the company over price differences between the countries.

MSDN is the platform through which Microsoft manages its relationship with external developers and testers — including hardware developers who use its software to run their devices, software developers who develop third-party software for Microsoft operating systems, and others who engage with the broad ecosystem surrounding the company.

To provide developer access to its software, Microsoft offers an annual subscription service, which allows external organisations access to various resources such as software repositories, technical support, online learning and education and even hosted platforms such as its Windows Azure cloud computing system. It is extremely common for large organisations, as well as software development houses and even individual developers, to maintain MSDN subscriptions as a normal cost of doing business.

None of the included benefits available through the various MSDN subscription plans appear to require dedicated onshore Australian assets. However, according to global pricing lists publicly available online, Microsoft appears to be charging Australians a standard 83 percent more to access the MSDN featureset.

For example, the top of the line MSDN subscription, ‘Visual Studio Ultimate with MSDN’, is listed as costing US developers US$11,899 per year (AU$11,343), whereas Australians pay AU$20,775 — a markup of 83.1 percent.

It’s a similar case with the ‘Premium’ version, which costs US developers US$5,469 (AU$5,214) but Australians AU$9,530, and the ‘Professional’ version, which costs US developers US$1,199 (AU$1,143) but Australians AU$2,084. In all cases – even ranging down to basic access to Microsoft’s operating systems — the MSDN markup is around 82 or 83 percent.

A representative of Microsoft’s public relations agency was not immediately able to comment on the issue.

The issue of MSDN pricing was raised by a number of Delimiter readers following comments made by Labor MP Ed Husic in Federal Parliament last week about price markups on a number of technology goods and services sold in Australia by multinational companies like Apple, Microsoft, Adobe and Lenovo.

Husic specifically mentioned Microsoft as one of the “culprits” in the issue, drawing attention to the company’s pricing on its Office 365 software as a service platform. “Microsoft’s flagship cloud productivity suite costs 76 percent more here than in the US,” he said. When Microsoft released Office 365 in Australia in late June this year, it didn’t respond to a request for comment on the pricing issue, and it has similarly not responded in the past week to Husic’s comments.

“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 in late 2009, upon the occasion of releasing Windows 7, with similar markups, in late 2009.

opinion/analysis
Microsoft’s a great company, with some great products. I’m personally a staunch Windows 7 desktop user, and I use a host of other Microsoft products — Office 2007 (although I’m thinking of migrating to Office 365), its Xbox 360 console (including Xbox Live) and more. And I’m a big fan of what the company has done recently with its Internet Explorer 9 browser and Windows Phone 7 platforms.

In the corporate sphere, there is no doubt Microsoft is as dominant a player as you get in Australia. The company’s whole stack — right from Windows Server, to SQL Server, Lync, Active Directory, Office, Exchange, Azure and so on — is used extensively and is only getting more popular.

That’s why it’s so hard to understand why the company keeps on gouging Australians when it comes to pricing. Every time the company releases a new product or service, Australians know they are going to pay anything between 30 percent and 90 percent more for the exact same offering. Frankly, when much of what Microsoft produces is software, and much of its support is provided from locations such as India, there are few excuses for this kind of markup.

It could be that this is just a case of a lack of competition. Unfortunately, in many of the areas in which Microsoft plays in, competition is wilting right now before its unified product stack and ubiquitous ecosystem. If there was more competition for Microsoft’s products, the price may have to come down. Of course, that presupposes that the competition didn’t slap the exact same markup on its Australian prices that Microsoft does ;)

Image credit: Microsoft

Related posts:

1. We don’t set Australian pricing, says Microsoft
2. Mac markup: Apple levies Aussie tech tax
3. Labor MP wants ACCC enquiry into Aussie tech tax
4. 92 percent of Whirlpool users against filter
5. Markups a wider issue for Aussie industry: Adobe

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1. Janedoe1215546
   Posted 24/08/2011 at 5:35 am | Permalink | Reply

   Wow, I can’t find the article from all the ads.

2. Dbremner
   Posted 24/08/2011 at 6:53 am | Permalink | Reply

   It’s been this way for 20 years. Why do only now take notice?
   Is it because these products are sold direct from Apple and MS?
   A lot of the markup used to be down to local distributors having exclusive importing rights and taking their rather large cut. They never rang any alarms bells then.
   I

   • Martin Eddy
     Posted 24/08/2011 at 11:39 am | Permalink | Reply

     I think people are really only noticing now because of the exchange rate. Before it was just assumed that we were paying more because our dollar was worth less.

3. Apolon
   Posted 25/08/2011 at 12:49 am | Permalink | Reply

   The price difference is the same on Microsoft sites if you compare microsoftstore.com.au prices to microsoftstore.com prices i.e. no distributors involved. There have been massive changes in the exchange rate over the last 5 years which means the US company will be getting more $US for every Australian sale they make, so there is no justification for not lowering the prices. Hence I believe Microsoft is in total control of the pricing – probably Microsoft Australia.

   The choice of keeping the pricing of developer tools high is absolutely insane strategically. Its probably the result of some small minded administrative type that doesn’t understand software or can’t see past their departmental walls. Higher developer tool pricing in Australia means more developers looking at alternatives (commercial and open source) which then means a slow consistent pressure to move away from Microsoft software within the Australian marketplace. Way to go keeping Australian developers onside Microsoft!

   • Dbremner
     Posted 25/08/2011 at 3:41 am | Permalink | Reply

     MS may not be able to offer it for cheaper in Australia because they have agreements not to undercut bricks and morter suppliers. This happens all the time. Not defending MS, more knocking the way Australian distributors work.

     • Apolon
       Posted 25/08/2011 at 8:05 am | Permalink | Reply

       Surely Bricks & Mortars suppliers care more about margin and number of sales than the final sale price i.e. the cost to the bricks and mortar suppliers should also go down. An 80% price difference between US developers and AUS developers is absolutely ridiculous. The markets are not that dissimilar.

       • Dbremner
         Posted 25/08/2011 at 10:13 am | Permalink | Reply

         Oh yes, they do care about margins. They also buy though Australian distributors who want there cut. In the US with the chain stores having much larger volumes they buy direct from MS. There are a hell of a lot of middle men getting their cut in Aus.