• The Frustrated State: How terrible tech policy is deterring digital Australia

    Written by Delimiter's Renai LeMay, The Frustrated State will be the first in-depth book examining of how Australia’s political sector is systematically mismanaging technological change. Click here to help fund it on Kickstarter.

  • No Brother: Science fiction, martial arts & Australia's darkest city

    Set in Australia's darkest city, No Brother is a vision of a future where martial arts discipline intersects with power, youth and radical technological change. It is the first novel by Delimiter's Renai LeMay. Click here to help fund it on Kickstarter.

  • News - Written by on Wednesday, August 24, 2011 16:25 - 11 Comments

    We don’t set Australian pricing, says Microsoft

    Microsoft has responded to parliamentary pressure about Australian markups on its products by stating that it doesn’t set final prices to local customers — and stating that it was difficult to make direct pricing comparisons between countries, given differing local conditions in each jurisdiction.

    The comments from the company follow a speech 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.

    In a statement issued today — a week after Husic’s comments — Microsoft said that it wasn’t responsible for setting local prices.

    “While Microsoft provides guidance on recommended retail pricing, the company itself does not set the final ‘to-the-customer’ price,” it said. “The market, in the form of its channel and value-added partners who deliver those products to customers, ultimately determines retail pricing.”

    “There are many factors that impact pricing decisions, including, but not limited to, channels or partner specifics, the size of the market, taxes, government regulations and costs. It is difficult to make a straight pricing comparison between countries given that the conditions vary between markets. In Australia, we also go to market with partners who add significant value to our local customers, such as localised customer service and support.”

    Husic’s comments came several months after he first raised the issue of markups on technology goods and services sold in Australia back in March, at the time primarily discussing products sold by iconic technology giant Apple. After the MP’s second speech on the issue last week, Apple Australia managing director Tony King has finally agreed to meet with Husic on the issue.

    Microsoft noted it was happy to do the same. “We respect Australia’s parliamentary process and we are always happy to have a dialogue with any Member of Parliament to discuss any views and concerns that they have,” the company’s statement said. Adobe has responded to the issue by noting that the problem was also seen in other industries such as the automobile sector, and listing similar complex pricing issues as Microsoft.

    While many of Microsoft’s products are sold through channel partners, the company does also sell a number of products and services directly. For example, the company maintains an online Australian store where customers can directly buy software such as Microsoft Office and Windows. In addition, the company sells services such as access to its Microsoft Developer Network platform, and also subscriptions to its Xbox Live platform, for example. And price differences exist in these areas as well.

    Following Husic’s comments, it has emerged that Microsoft is currently charging Australian developers about 83 percent more than their US counterparts to access MSDN services, for example. The company has yet to comment specifically on the MSDN pricing issue.

    Image credit: Microsoft

    submit to reddit


    You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

    1. Dean Harding
      Posted 24/08/2011 at 6:39 am | Permalink | Reply

      “There are many factors that impact pricing decisions, including, but not limited to, channels or partner specifics, the size of the market, taxes, government regulations and costs. It is difficult to make a straight pricing comparison between countries given that the conditions vary between markets.”

      If that were true, then how do Google get away with charging US$50 per user per year for Google Apps, regardless of which country you’re in? These are all excuses as far as I can see, and not very good ones at that.

    2. SMEMatt
      Posted 24/08/2011 at 6:48 am | Permalink | Reply

      This affects Technet as well and last invoice I got for that was from Microsoft so are we to believe Microsoft don’t set their own pricing.

      Technet professional $AU618 renew $AU437.
      Or for $US349 renew $249.

      This is for the download service the shipping involved is that they mail out a paper invoice so add a $1 for the stamp and a 10% GST and get at least an extra $250 per a new sub to run those 24hour Indian call centres to deal with extra load created in Australian business hours, of course it’s not like Australia doesn’t share time zones with bits of a Asia.

    3. Posted 24/08/2011 at 7:06 am | Permalink | Reply

      So Microsoft’s argument is essentially identical to Adobe’s. The channel. Strangely enough, though, other companies somehow manage to dictate what their channel partners can charge. Not to mention in the US this isn’t even an issue.

    4. Posted 24/08/2011 at 7:16 am | Permalink | Reply

      At least Adobe let you buy from their US Digital Download Store…. MS need to protect their DIstribution channel into Asia Pacific – which means setting RRP that allows their Distributors to make (estimate) double digit margins on top of MS’s wholesale markup.

      Take Expression Studio Ultimate 4 as an example – How can MS resonably expect that for a Digital Download product (no box or mailed out materials) we pay as follows:

      US Store http://www.microsoftstore.com/store/msstore/en_US/pd/productID.216451500/search.true $599.95 –> $AU = $575 + intl transaction fee from your bank – lets say $590. GST Free – or $649 GST adjusted.

      AUS Store http://www.microsoftstore.com.au/shop/en-AU/Microsoft/Expression-Studio-4-Ultimate $969. Shipping = $0, Packaging = $0

      Cost to distribute from ASEAN servers vs US servers – bugger all. Final Details:

      $590 vs $969 = 64.5% Markup. Even split 50/50, that’s a massive Distribution + Microsoft Wholesale over US price profit margin.

      Aussies = Getting Ripped.

    5. Marcus
      Posted 24/08/2011 at 7:32 am | Permalink | Reply

      Whole article can be refined down to “We charge what the market will pay provided it covers our costs, as does everyone else”

    6. Anonymous
      Posted 24/08/2011 at 10:04 am | Permalink | Reply

      Wouldn’t mind so much if they actually paid tax in Australia.

    7. Geoff
      Posted 24/08/2011 at 12:07 pm | Permalink | Reply

      You can’t really say the market determines retail pricing when you have a exclusive distribution relationship with a single retail provider.

    8. SAPaleAle
      Posted 24/08/2011 at 10:48 pm | Permalink | Reply

      If I go to Microsoft’s own online stores in the US and the Australian store and price a download version of Visual Studio 2010 Pro (Full)
      US Pricing $US799 (approx $AU765)
      AUS Pricing $AU1387 (approx $US1450)

      Who is setting the prices here Microsoft ?

    9. Anonymous
      Posted 25/08/2011 at 2:02 am | Permalink | Reply

      and that is why I will continue to pirate software.

      Hell if i could steal a car and get away with it I would. Bloody overpriced pieces of metal.

    10. Anonymous
      Posted 25/08/2011 at 1:58 pm | Permalink | Reply

      I’ve said it before and I’ll say it again.

      There is NO excuse for companies to charge more for goods and services delivered online.

      They should charge a flat fee (whether this is in USD, AUD, or whatever depends on the country the company is based in – it doesn’t matter where the customer is located). Let the customer’s bank take care of the “conversion fee.”

      That is the whole point of the Internet. Its a global economy. Stop putting up artificial barriers to validate ridiculous pricing schemes.

      If they want piracy to stop that will be a big step. If they insist on trying to milk people unfairly then piracy will not stop.

      Why do these companies find that so hard to understand? Sigh.

    11. Jack33
      Posted 27/10/2012 at 2:53 pm | Permalink | Reply

      Does the Microsoft US online store require a US based credit card or just a local postal address?

    Leave a Comment


    Get our 'Best of the Week' newsletter on Fridays

    Just the most important stories, one email a week.

    Email address:

  • Enterprise IT stories

    • Super funds close to dumping $250m IT revamp facepalm2

      If you have even a skin deep awareness of the structure of Australia’s superannuation industry, you’ll be aware that much of the underlying infrastructure used by many of the nation’s major funds is provided by a centralised group, Superpartners. One of the group’s main projects in recent years has been to dramatically update and modernise its IT platform — its version of a core banking platform overhaul. Unfortunately, the $250 million project has not precisely been going well.

    • Qld’s Grant joins analyst firm IBRS peter-grant

      This week it emerged that Peter Grant, the two-time former Queensland Whole of Government CIO (pictured), has joined well-regarded analyst firm Intelligent Business Research Services (IBRS). We’ve long had a high regard for IBRS, and so it’s fantastic to see such an experienced executive join its ranks.

    • Westpac dumps desk phones for Samsung Android mobiles samsung-galaxy-ace-3

      The era of troublesome desk phones tied to physical locations is gradually coming to an end in many workplaces, with mobile phones becoming increasingly popular as organisations’ main method of voice telecommunications. But some groups are more advanced than others when it comes to adoption of the trend. One of those is Westpac.

    • Ministers’ cloud approval lasted just a year reverse

      Remember how twelve months ago, the Federal Government released a new cloud computing security and privacy directive which required departments and agencies to explicitly acquire the approval of the Attorney-General and the relevant portfolio minister before government data containing private information could be stored in offshore facilities? Remember how the policy was strongly criticised by Microsoft, Government CIOs and Delimiter? Well, it looks like the policy is about to be reversed.

    • WA Govt can’t fund school IT upgrades oops key

      In news from The Department of Disturbing Facts, iTNews revealed late last week that Western Australia’s Department of Education has run out of money halfway through the deployment of new fundamental IT infrastructure to the state’s schools.

    • Turnbull outlines Govt ICT vision turnbull-5

      Communications Minister Malcolm Turnbull has published an extensive article arguing that the Federal Government needed to do a better job of connecting with Australians via digital channels and that public sector IT projects needn’t cost the huge amounts that some have in the past.

    • NZ Govt pushes hard into cloud zealand

      New Zealand’s national Government announced a whole of government contract this morning for what it terms ‘Office Productivity as a Service’ services. This includes email and calendaring services, as well as file-sharing, mobility, instant messaging and collaboration services. The contract complements two existing contracts — Desktop as a Service and Enterprise Content Management as a Service.

    • CommBank reveals Harte’s replacement whiteing

      The Commonwealth Bank of Australia has promoted an internal executive who joined the bank in September after a lengthy career at petroleum giant VP and IT services group Accenture to replace its outgoing chief information officer Michael Harte, who announced in early May that he would leave the bank.

    • Jeff Smith quits Suncorp for IBM jeffsmith4

      Second-tier Australian bank and financial services group Suncorp today announced that its long-serving top technology executive Jeff Smith would leave to take up a senior role with IBM in the United States, in an announcement which marks the end of an era for the nation’s banking IT sector.

    • Small business missing the mobile, social, cloud revolution iphone-stock

      Most companies that live and breathe the online revolution are not tech startups, but smart smaller firms that use online tools to run their core business better: to cut costs, reach customers and suppliers, innovate and get more control. Many others, however, are falling behind, according to a new Grattan Institute discussion paper.

  • Blog, Enterprise IT - Jul 5, 2014 13:53 - 0 Comments

    Super funds close to dumping $250m IT revamp

    More In Enterprise IT

    Blog, Telecommunications - Jul 5, 2014 12:12 - 0 Comments

    What should the ACCC’s role be in guiding infrastructure spending?

    More In Telecommunications

    Analysis, Industry, Internet - Jun 23, 2014 10:33 - 0 Comments

    ‘Google Schmoogle’ – how Yellow Pages got it so wrong

    More In Industry

    Blog, Digital Rights - Jun 30, 2014 22:24 - 0 Comments

    Will Netflix launch in Australia, or not?

    More In Digital Rights