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  • Blog, Enterprise IT - Written by on Wednesday, July 25, 2012 13:34 - 24 Comments

    Adobe bucks IT price hike inquiry

    blog US software giant Adobe is fast emerging as one of the toughest nuts to crack when it comes to the IT price hike inquiry currently being carried out by the Federal Parliament. Despite the fact the company’s substantial markups on products like Photoshop and its Creative Suite were frequently mentioned in submissions to the inquiry by Australian consumers, and despite the fact that dozens of articles have been written about the issue over years and years, Adobe isn’t playing ball. The AustralianIT reported yesterday (we recommend you click here for the full article):

    “[An] Adobe spokeswoman said the company would send an observer to the parliamentary committee hearings but would not be appearing to give evidence.”

    A spokesperson for Adobe confirmed this position today in a statement to Delimiter, and added: “Adobe worked with the Australian Information Industry Association to participate in their industry-wide submission, which is now in the public arena. The AIIA is presenting at the first official public hearings in Sydney next week (July 30). An Adobe representative will attend the hearing with AIIA.” So it appears Adobe is seeking to work with the inquiry through the AIIA, as a number of other organisations are — rather than responding to it directly as Microsoft has, in its own submission.

    Knowing Ed Husic as we do, we suspect the Labor MP spearheading the inquiry will likely take Adobe’s approach of not taking questions directly from the parliamentary committee fairly hard. We suspect Adobe will face the brunt of his annoyance over the coming months. I mean, even Apple is rocking up to this shindig, although it will do so behind closed doors. It doesn’t seem too much to expect Adobe to do the same. As for those confused about just how much Adobe marks up its software for the Australian market, we commend you to this article Delimiter published in April this year detailing the latest price hikes. We wrote at the time:

    “Global software giant Adobe has continued a long-running tradition of extensively marking up its prices for the Australian market, revealing yesterday that locals would pay up to $1,400 more for the exact same software when they buy the new version 6 of its Creative Suite platform compared to residents of the United States.

    What a joke … the fact that Australians are able to download the exact same software from its website as Americans are — but pay up to $1,400 more for the privilege of living in a different country — makes the distribution argument moot. There is no justification for a 52% markup across the board on the same software delivered from the same Internet site. Fair go, Adobe. Fair go.”

    Image credit: Adobe

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    1. Posted 25/07/2012 at 1:53 pm | Permalink |

      It’s waaaay past time that people started using Open Source alternatives to Adobe’s products. For photo processing I recommend Darktable (www.darktable.org), and there’s also RawTherapee.

      The corporation knows but one penalty – lost sales.

      • Ben Zemm
        Posted 25/07/2012 at 1:58 pm | Permalink |

        Indeed. Our office is using a mixture of different CS versions (from CS3 to CS5.5) and we would like to standardise on one version (eg CS6 going forward) but we simple can’t afford it at the current prices. I also have GIMP and a few other programs installed, for various reasons.

        BTW Darktable has an Error establishing a database connection. :-(

        • Posted 25/07/2012 at 2:15 pm | Permalink |

          I’ve mentioned the website problem in the #darktable channel. Iirc the webmaster is in France or Germany, he should be online in a few hours. In the meantime, there’s info at https://en.wikipedia.org/wiki/Darktable which might be of interest.

          [Note, I'm the maintainer of the Solaris version of Darktable].

        • Ben Sand
          Posted 26/07/2012 at 12:08 am | Permalink |

          Use creative cloud. It’s only ~$66/month per user.

          • Posted 26/07/2012 at 12:21 am | Permalink |

            “It’s only ~$66/month per user”

            Yes … because that sounds fair and affordable.

            • Ben Sand
              Posted 26/07/2012 at 10:17 am | Permalink |

              Artistic tools cost a lot because not everyone is using them.

              Creative cloud is a pretty cheap way to stay current ($800/year, paid monthly) and a great way to buy the tools if cash flow is an issue. Look at the price of 3DS Max, Maya, etc. They will easily run you $5-10k. Final Cut (a great product that we also use) is an alternative to just one part of CS6 Master and costs $300 on its own.

              If no one is producing top quality full featured tools for cheap, it could be because it’s really hard to do.

              If you want to go open source, great, we use Blender for some things too, but it depends what your artists work best on.

      • Jack
        Posted 25/07/2012 at 4:48 pm | Permalink |

        Despite what non-photographers and Star Trek aficionados think, there is no ‘open source’ alternative to Adobe software.

        Points to the first person who brings up GIMP and proves my point.

      • Glenn
        Posted 26/07/2012 at 1:33 am | Permalink |

        Inkscape is not to bad for a vector graphics software, its open source.

        • midspace
          Posted 26/07/2012 at 1:56 pm | Permalink |

          Inkscape can’t even import a TIF or JPG image with DPI settings in the EXIF data, and place it with the correct resolution onto the page (which also has a set scale).
          Such a simple process, yet I’m forced to calculate the image dimentions manually, and apply it retrospectivly to the imported image. And this is for every image I have to import.

    2. Renato
      Posted 25/07/2012 at 2:04 pm | Permalink |

      It would be good to know how much tax Adobe pays in Australia. Following the revelation of Google’s tax returns, I wouldn’t be surprised if Adobe did the same.

    3. Trevor
      Posted 25/07/2012 at 2:45 pm | Permalink |

      Entirely different markets – Adobe sells software products, Google sells services (and at exactly the same prices worldwide, excluding currency conversion charges).

      I think Adobe (like most major vendors) are being very cautious because this isn’t just about them – it is about an entire industry of channel partners who are all doing the same thing. They will wait for the inquiry to find that the lions share of the price hiking is coming from Australian distributors and wholesalers, while their hands are tied with regards to their direct online pricing due to agreements in place with those distributors (who would be mortified if a vendor undercut them, thus agreements such as these and exclusivity are standard (indeed, it is extremely rare for such agreements to not be in use).

      Such agreements may very well include a NDA, so the parties involved cannot talk about them without breaching the agreement (and thus damaging their relationship and setting themselves up for civil action).

      • Trevor
        Posted 25/07/2012 at 2:47 pm | Permalink |

        Oops, closed a bracket with a comma.. *sigh*

    4. Jack
      Posted 25/07/2012 at 4:52 pm | Permalink |

      “There is no justification for a 52% markup across the board on the same software delivered from the same Internet site.”

      Just so we are clear, why is it you think that companies have to ‘justify’ the prices for their products? Especially those not operating in a natural monopoly (think: the Harbour Bridge or electricity networks) or some kind of ‘national interest’ thing like defence procurement.

      Keep in mind we are discussing Australia, not North Korea plzkthx.

      Senator Ed is on a popularity crusade, nothing more.

      • Goddy
        Posted 25/07/2012 at 5:02 pm | Permalink |

        So we just let Adobe get away with ripping Australians off, do we? What disgracefully submissive attitude.

        I work in IT and I’ll tell you one thing: Many Australians aren’t even aware they’re being shafted so badly, which works in Adobes favor. So as long as that ignorance remains dominant, the only group that can call Adobe to account is the Government.

        The fact that Adobe are fobbing off the inquiry the way they are is proof in the pudding that they think now, after so many years of succeeding, that they can get away with it. It is demeaning and it is insulting, and if the Australian Government had any balls, they would pull Adobe up and say “look, you either bring yourself into line or you can piss off out of our country because we don’t want you here”.

        When Corporations get out of line like this, a big fat slap with the humblestick is required.

        • Jack
          Posted 25/07/2012 at 5:10 pm | Permalink |

          How are you being ‘ripped off’? You either value it at the price they sell it and purchase, or you don’t. What it sells for on the other side of the world is irrelevant, unless you can purchase it from there – at which point, prices will gradually equalise.

          The only people being ‘submissive’ are those acting like the Government’s little theatre is going to result in any actual outcome for consumers. Private businesses are allowed to set their prices for their products at whatever level they choose; Ed Husic isn’t going to change that…. despite Alan Jones’ claims to the contrary, the Government aren’t *actually* communists.

          So, actually, they can ‘get away with it’… BECAUSE IT IS PERFECTLY LEGAL.

          And lol, the Government is going to say ‘you cant sell photoshop anymore!’? Good work, IT guy. I look forward to the day that the Government demands that Aston Martin cut the price of the Vanquish by 30% or ‘piss out outta me country!’.

          • SMEMatt
            Posted 26/07/2012 at 4:20 pm | Permalink |

            If we where the USA this would already be fixed for one simple reason these companies are actually breaking our laws they are just doing it in another country. Lets have a kim dotcom style take down of Adobe, microsoft ect.. ect.. excecs in the US because they are in breach of our Trade practices act who cares that these breaches are committed overseas, the US doesn’t with their laws.

            You have company A selling goods to company B and telling company B they can’t compete in other market areas, this would be a breach of Australia law and would likely result in a knock on the door of the ACCC, how ever company A and B are located overseas. Now A sells goods to company C located in Australia, Company C knows they don’t have to compete with company B so can charge a higher price. Company C is the only company in Australia and is not the one instigating the restrictions on company B and they have no such restrictions because of Australian trade laws.

            We can’t make company A sell to more than one company in a market but Australian laws do stop Company A telling company C who they can sell to.

            Why is apple getting involved most likely because with apple company A, B and C are likely more closely linked than other companies so they trail of collusion is likely easier to follow.

            These practice mostly work with products that dominate a market segment(microsoft and Adobe) or command significant brand recognition which which can demand a premium(Sony, Apple ect..).

            Looking specifically at consumer electronic goods the biggest thing hurting our pricing in this space locally that we sort of have control over is the amount of competition at the retail level. There is no big retailer that can say to the suppliers “you reduce your prices or we will stop stocking your product” and be taken seriously, where as in the US having your product rejected by a Best Buy over pricing would see a significant drop in market presence and a corresponding drop in market share. It is a trade off as having such large dominant retail players also makes it very hard for new products to enter the market.

      • Glenn
        Posted 26/07/2012 at 1:41 am | Permalink |

        “Just so we are clear, why is it you think that companies have to ‘justify’ the prices for their products? ”

        In my best John Howard voice;
        We will decide who trades in this country and the circumstances in which they trade.

    5. bob
      Posted 25/07/2012 at 4:59 pm | Permalink |

      Because we as consumers have the right to ask the companies we buy from about their products and decisions as part of the process in deciding where our money goes. Simple.

      • Jack
        Posted 25/07/2012 at 5:06 pm | Permalink |

        Sure, you have the ‘right’ to ask.

        And they have the ‘right’ to turn around and say ‘gee, clownshoe, I guess because we operate in a mixed market economy and not a command economy, we can charge whatever the hell we like and you can choose not to purchase it if you disagree with the price. That’s kind of how basic economics works, which anyone who has done first year micro will explain to you via the comments on a technology website.’

        It’s cute that ‘the general public’ think that the price something sells for has to be determined by the cost to produce it.

        • Trevor
          Posted 25/07/2012 at 6:49 pm | Permalink |

          I understand your argument, Jack, but pricing of these products isn’t being set at ‘what the market will bear’ in an unregulated market with low barriers for cross distribution and fair or ‘free’ trade between regions. This is not a cry from a small section of the market at the cost of a few items. This is the market region as a whole voicing its dissatisfaction at the pricing mechanisms put in place that solely affect that geographic market. This is economics at work, the market speaking up, demanding lower prices because we can see it is both affordable and profitable for vendors to sell exactly the same products at vastly lower prices.

          In theory, this is where other distributors could step in and offer these same products at discounted prices from that generally available, but that can’t happen here, can it? Because exclusivity arrangements prevent it. Because EULA’s prevent cross-border distribution and disable perfectly legally purchased products from being used outside the strict and onerous parameters set by the vendor. In some lights this arrangement might be called price fixing or collusion. We call it business as usual. But that doesn’t make it reasonable, and it’s certainly not the free market economy you’re suggesting is the equitable model we should accept and embrace.

    6. Barney
      Posted 25/07/2012 at 7:21 pm | Permalink |

      I bought CS5.5 via my brother who lives in the US and he mailed it to me and even after paying import duty I was like 8 or 900 dollars in front (warranty stands only trade-off is no phone support). I took a recent Adobe questionaire as to whether I would update to CS6 and just flat out told them that their pricing is ridiculous. I held off buying CS5.5 (and almost didn’t) because of it. They wonder why pirated versions get distributed on torrent sites, well that’s your answer. It’s price gouging, pure and simple. If they had a real competitor, it would be half the price. Surely they can at least come up with a commercial and domestic license arrangement where the average punter wasn’t slugged such an unjustified markup? As for “Jack’s” comments, I am not disputing the legality of Adobe’s pricing, believe it or not some of us have done Economics 101 too, but just like Australia’s policy to price dumping (which is also not illegal), amazingly enough the Federal Government can intervene and give a “please explain”, just like it has done so with Adobe.

    7. Mike Brown
      Posted 25/07/2012 at 8:49 pm | Permalink |

      That AustralianIT article is behind a paywall, Renai.

      To get around that, go to Google and enter “Adobe answers Husic on IT pricing inquiry” as your search then click on the article’s link in the search results. (Google doesn’t allow bait and switch articles.)

    8. Ben Sand
      Posted 26/07/2012 at 12:19 am | Permalink |

      Creative cloud (the CS6 master suite on subscription) is $66 Aus vs $50 US
      student edition is $25 Aus vs $29 US.

      Perhaps because students in Australia aren’t used to paying for the things the way US students are, but most people in Australia enjoy higher incomes?

      Adobe laid off 750 people about 7 months ago, they aren’t exactly doing brilliantly. The cost of managing overseas operations is high. This high? I don’t know, I don’t see their books.

      They’re actually a really tiny company compared to the other tech giants – <$20Bn market cap, so each overseas sales and marketing team probably represents a much more significant hit to them than it does for Google, Apple, and Microsoft.

      It's hard to understand what they hope to gain by being stand off ish with the enquiry.

      • Rhys
        Posted 27/07/2012 at 8:11 am | Permalink |

        You’ve forgotten to mention your phone number so people can buy the product your advertising…

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