Delimiter » adobe

Vendors unimpressed by IT price hike inquiry

Renai LeMay — Tue, 08 May 2012 05:30:36 +0000

news A number of global technology vendors likely to be hauled before Australia’s Parliament to justify their local price markups have grudgingly and briefly signalled their acceptance of the proceedings and willingness to participate, although some have completely refused to comment on the issue.

In late April, Communications Minister Stephen Conroy confirmed the Government would hold an official parliamentary inquiry into the issue of technology companies marking up goods and services for Australia, following a long-running campaign by Federal Labor MP Ed Husic.

Husic (pictured right) has been raising the issue in Parliament and publicly since the beginning of 2011 (he was elected in the 2010 Federal Election), in an attempt to get answers from technology giants such as Adobe, Microsoft, Apple and others as to why they felt it was appropriate to price products significantly higher in Australia (even after taking into consideration factors such as exchange rates and shipping) than the United States.

Just last week, for example, global software giant Adobe continued a long-running tradition of extensively marking up its prices for the Australian market, revealing 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.

After the inquiry was announced, Delimiter invited global vendors Adobe, Microsoft, Apple, Lenovo and Amazon, which are some of the most visible companies selling high-profile technology goods and services to Australians, whether they would commit to attending the parliamentary inquiry if invited, and whether they had any other statement to make on the matter.
The results were brief.

“Adobe Systems will co-operate with any parliamentary inquiry as required,” said an Adobe spokesperson. “We are not making any further statement at this time.”

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, and also charges higher prices for software products and cloud computing offerings.

A spokesperson for the Redmond, US-based company said: “Microsoft will review the Parliamentary Committee’s terms of reference when available and will respond to the Inquiry.”

Lenovo and Amazon are both represented in Australia by the public relations agency Text100. The company acknowledged the receipt of queries on the matter of the price inquiry, but did not respond with comments on the matter. Spokespeople for Apple did not acknowledge the receipt of Delimiter’s queries and did not issue a comment on the matter.

PC manufacturer Lenovo has in the past attempted to defend of its Australian pricing, despite in 2011 launching its flagship new ThinkPad X1 laptop in Sydney for$560 more than the same hardware will cost in the United States. Apple also commonly charges more for its products in Australia, although the company has made some moves towards international price harmonisation over the past year. Amazon’s prices are the subject of less complaints by Australians than the other vendors mentioned in this article, but price differences on the company’s extremely popular eBooks offerings do exist, despite the content being the same between jurisdictions.

The Australian Competition and Consumer Commission (ACCC), which has indicated that it is following the issues the IT price hike inquiry is raising, is also interested in the eBook issue. In mid-April, the regulator noted it was considering its options on the issue of eBook pricing, following a lawsuit filed by the US Justice Department against Apple and five global book publishers on the issue of price fixing.

opinion/analysis
I am disappointed in the muted reaction which we’ve seen from these massive technology vendors on the issue of IT price hikes in Australia so far. This is an issue for the entire technology sector to ponder, and we really need these companies to be open and honest about how they set pricing so the debate on the issue can be on an honest grounding.

It is possible that the parliamentary inquiry approved by Conroy will broadly find that vendors such as Adobe and Microsoft have been doing nothing wrong when it comes to their Australian pricing, and that their honest testimony will vindicate their actions. We need to keep an open mind with respect to this possibility. But the unwillingness of the vendors to comment on the issue will only lead to an impression that they have something to hide.

Image credit: Still from Gladiator

IT’S ON: Govt sets up IT price hike inquiry

Renai LeMay — Sun, 29 Apr 2012 01:21:34 +0000

news Price-hiking technology vendors are set to be hauled before Australia’s Parliament to justify their local markups, with Communications Minister Stephen Conroy confirming the Government will hold an official parliamentary inquiry into the issue, following a long-running campaign by Federal Labor MP Ed Husic.

In late March, after achieving some initial success in raising the issue with David Bradbury, Parliamentary Secretary to the Treasurer, and the Treasurer himself, Wayne Swan, Husic revealed he would write to Communications Minister Stephen Conroy (who is generally seen as having responsibility for the technology portfolio in Australia), asking for a parliamentary inquiry into the matter. In a letter to Husic on 10 April seen by Delimiter, Conroy responded.

“I agree that Australian businesses and households should have access to IT software and hardware that is priced fairly relative to other jurisdictions,” he wrote. “I also agree there is evidence to suggest that the innovative use of technology is not always matched with innovative new business models, in the case of products and services distributed online. The global digital economy is likely to make it increasingly difficult to sustain business models that are based on a geographic carve-up of markets.

“In light of your letter, I will consider possible terms of reference for the House of Representatives Standing Committee on Infrastructure and Communications to inquire into the pricing of software and other relevant IT-related material.”

Top-ranking executives from major companies are often invited to appear before such parliamentary inquiries into their sectors. In this case, it is likely that high-profile companies such as Adobe, Microsoft, Apple, Lenovo and so on, would be invited to attend, due to their existing position in the line of fire, as well as companies retailing video games for the local market, which has also been an area of focus for the criticism, and other companies ranging from top-end camera manufacturers to business software vendors.

In his earlier communications with Conroy, Husic had written that such an inquiry held by the parliamentary committee mentioned by Conroy could:

Determine whether a difference in pricing existed, as well as determining the extent of the difference
Examine why households and small businesses have to suffer the increased prices
Set out the impact of the price hikes on Australian businesses, households and even Government (“bearing in mind that $2 billion is spent on IT procurement by Government”)
Examine what might be done within the law to deal with this issue, which Husic said IT companies had failed to respond to.

The parliamentary inquiry may also be given a little more bite through the interest which the competition regulator, the Australian Competition and Consumer Commission (ACCC) has in the outcomes. In parliament last week fronting a committee on the NBN, ACCC commissioner Ed Willett was asked by Husic whether the regulator would consider pursuing the matter, “given that consumers rightly feel that they have been unfairly slugged for the prices that they are paying, particularly, as I mentioned before, on software”.

“Over time, information technology will mean it will be harder and harder for particular service providers to maintain higher prices for products in Australia compared to overseas,” Willett responded. “I think that model that we have seen in the past in a number of services has been exacerbated by the value of the dollar, and that has made those comparisons even more stark. I think those sort of practices will be harder and harder to sustain.”

“But certainly the Commission will be pretty keen to ensure that those sort of differences are not supported by contraventions of the Act.”

Technology vendors such as Adobe and Microsoft have in the past offered a number of reasons for why prices were set differently in Australia compared with their home country of the US. In August last year, Microsoft responded to Husic’s comments 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.

Adobe stated 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. At the time, the company said 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. The company didn’t want to undercut its channel partners in Australia.

PC manufacturer Lenovo has also attempted to defend of its Australian pricing, despite in 2011 launching its flagship new ThinkPad X1 laptop in Sydney for $560 more than the same hardware will cost in the United States. Apple also commonly charges more for its products in Australia, although the company has made some moves towards international price harmonisation over the past year.

The issue has also come to the attention of the NSW Government, with NSW Fair Trading Minister and Liberal MP Anthony Roberts adding his voice to the debate about price markups on technology goods sold in Australia in October 2011, claiming iconic technology giant Apple was “price gouging” the Australian public when it comes to digital goods such as films, music and software.

opinion/analysis
In 2012, it’s common to be extremely cynical about politicians, but I think we have to re-think this approach when it comes to Labor MP Ed Husic.

Despite being a backbencher who only entered parliament in the 2010 Federal Election, Husic has proven extremely successful already at representing the views of his electorate (I note his efforts regarding the National Broadband Network) as well as the wider community. In his ongoing campaign to highlight technology product price hikes in Australia, Husic has tapped into an undercurrent of dissatisfaction on the issue on the part of the Australian community. And now his tireless efforts have paid off, with the creation of a dedicated parliamentary inquiry to look into the matter.

In some ways, Husic reminds me of that other relatively new parliamentarian interested in the technology sector — Greens Senator Scott Ludlam. Their personal styles and political affiliations are obviously markedly different, but like Ludlam, Husic has been successful at using the structures and relationships set up in Australia’s Parliament to his advantage. The Committee system, the openness of ministers to discussing issues within the Government, the Government’s relationship with regulators, the importance of comment on the Parliamentary floor (even late at night) in getting issues on the record; Husic has worked all of these tools to his advantage to a remarkable outcome.

I don’t know, at this stage, whether the inquiry will have any impact on actual prices of technology prices in Australia. However, what I do know is that it will certainly do much to highlight the issue to the broader community, and make powerful corporations accountable to their customers. And that can only be a great thing. You can bet that there will be a bevy of journalists listening in as Husic and others question the likes of Microsoft, Apple, and Adobe on Australian IT price hikes.

So for now, let’s recognise that Australia’s political process, even for the often-low profile technology sector, sometimes isn’t broken. Sometimes, when individuals such as Husic show determination and passion, it can work and achieve real outcomes. In all processes, there is a time for cynicism. But for now, with relation to the issue of IT price hikes in Australia, there is an appetite and determination for positive change. It will be fascinating to see where it takes us.

Adobe’s biennial tradition: 50% Aussie price hikes

Renai LeMay — Tue, 24 Apr 2012 07:00:49 +0000

news 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.

The company issued a media release yesterday disclosing local recommended pricing for Creative Suite 6, which launches globally this week. However, as with the past two major releases of Creative Suite (version 4 and version 5, released in 2008 and 2010 respectively), Adobe has set its Australian pricing on average 52 percent higher for the full versions of its software.

For example, the Design Standard version of CS6, which includes Photoshop, Illustrator and InDesign but not some of the more advanced tools, will set Australians back A$1,975, 52 percent more than the exact same software in the US, which costs just US$1,299 (A$1,265 at current conversion rates). It’s a similar situation when you look at Adobe’s Design Web & Premium and Production Premium bundles, which will cost Australians again, 52 percent more than Americans — a markup of about $1,000. And for Adobe’s Master Collection, which includes all of its tools, the cost is the same 52 percent markup writ large — a markup of $1,418 for exactly the same software.

Articles chronicling the launches of Adobe CS4 and CS5 show that the software giant has been marking up prices for the past half-decade and beyond. Every two years, when Adobe releases a new version of Creative Suite, the cost is around 50 percent or more higher across the board for the same software when sold in Australia. The price hikes come despite the fact that it is possible for Australians to download Adobe’s software directly from its website, avoiding the need to go through local distributors and pay additional importation costs.

In 2010, when Adobe revealed its CS5 pricing, the company’s senior director of APAC marketing Mark 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. In addition, at that stage Adobe stated 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.

However, this line of reasoning may not buy Adobe much favour with the Federal Government, which has increasingly been signalling that it may investigate the issue of IT price hikes in Australia.
A little over a week ago, Crikey reported that as a result of a campaign by Labor MP Ed Husic, the government is considering undertaking a Parliamentary inquiry into IT price differentials and legal options for preventing them.

Husic has been constantly campaigning on the issue over the past year, and has raised it with a number of senior figures in government, such as Treasurer Wayne Swan. In October, Swan indicated the Government was keenly awaiting a report from the Productivity Commission which would detail the extent to which price hikes on imported technology goods and services were hurting Australian consumers.

“While the [consumer pricing index] data showed that Australian prices for computing-related equipment declined in the quarter, we’re still paying more for some products than consumers in countries like the United States,” Swan wrote in an economic note at the time. “That’s why the Government has asked the Productivity Commission to review the extent of IT price discrimination in Australia. The Government expects to receive this report next month which will be one small step on the road to providing a better deal for consumers of IT-related products.”

In the draft of that report published in August, the Productivity Commission had said it was aware of the “longstanding practice” by which some international product suppliers set regional prices which effectively treated consumers in one region as “willing, or able, to tolerate significantly higher prices than those in other countries”.

Some suppliers, the Commisison said, had attempted to defend such price hikes by attributing them to the cost of supplying “a remote and relatively small market like Australia”. However, it added, “these arguments in most cases are not persuasive, especially in the case of downloaded music, software and videos, for example, where the costs of delivery to the customer are practically zero and uniform around the world”.

opinion/analysis
What a joke. Adobe has been consistently marking up Australian prices on its software for more than half a decade now (that we know of) and probably longer. I could partially understand the situation if the company was suffering increased local costs as a result of importing and distributing its software. But 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. Your Australian prices are nothing short of disgusting.

Image credit: Adobe

‘You can’t ride this out’: Husic warns price-hiking vendors

Renai LeMay — Wed, 23 Nov 2011 04:51:01 +0000

news Federal Labor MP Ed Husic has warned technology vendors hiking prices for the Australian market that criticism and examination of their pricing strategies would not cease, despite the fact that they had so far been largely unresponsive on the issue.

Since the start of this year, Husic has been attempting to get answers from technology giants about why they feel it’s appropriate to rise prices significantly above those found in America — leading to the so-called tech tax — for Australians. The MP has raised the issue with the vendors themselves, in the House of Representatives several times and directly with senior figures such as David Bradbury, Parliamentary Secretary to the Treasurer.

Treasurer and Deputy Prime Minister Wayne Swan indicated in late October that the Government is keenly awaiting a report from the Productivity Commission which will detail the extent to which price hikes on imported technology goods and services are hurting Australian consumers, as part of the Commission’s overall report into the retail sector.

However, in a new speech in Parliament last night (the full text of which is available online), Husic expressed his disappointment at the lack of response from the technology sector to the Productivity Commission’s enquirt in general. “I understand from inquiries I made today that the Productivity Commission has submitted its overall review into the Economic Structure and Performance of the Australian Retail Industry – which the IT pricing discrimination issue will form a part of,” he said.

“When I scanned the submissions listed on the Productivity Commission website, something else became glaringly obvious: Not a single one of the major vendors took the opportunity to make a submission to the Commission. It’s staggering that with all the interest in this matter, the vendors and companies like Adobe, Apple, Lenovo or Microsoft didn’t take the chance to comment.”
Husic said he suspected the vendors believed they could “ride out this sustained public focus”.

However, he maintained the issue would continue to be in the spotlight, quoting a consumer who made a submission to the Productivity Commission’s review: “I believe these enforced price differentials, especially for online downloads, are baseless and exploitative of the average Australian consumer, who will not complain about the price for the sake of convenience and minimal hassle,” he said.

Adobe and Microsoft have stated that much Australian pricing for their products was actually set by the local distribution channel, and that the issue is a broader one that applies not only to the technology sector.

One new avenue for Husic in criticising the vendors may be through the Federal Government’s own IT procurement practices, which are largely carried out through departmental chief information officers and their IT departments, as well as centrally through the Australian Government Information Management Office.

Husic said he intended to follow up within the Government to see what measures were in place to ensure it was getting value for money and that the “inflated prices” that were affecting consumers were not being felt by the public sector.

“Frankly, I think that we need to ensure that there is value for money for government, for consumers and for small business,” he said. “If they think they can ride this out, I would beg to differ and urge them actually to be a lot more transparent in the way that they approach this issue.”

Image credit: Alpha, Creative Commons

Treasurer Swan awaits IT price hike report

Renai LeMay — Mon, 31 Oct 2011 04:36:00 +0000

news Federal Treasurer and Deputy Prime Minister Wayne Swan has indicated the Government is keenly awaiting a report from the Productivity Commission which will detail the extent to which price hikes on imported technology goods and services are hurting Australian consumers.

In late September, Labor MP Ed Husic revealed Parliamentary Secretary to the Treasurer, David Bradbury, had raised the issue with the Productivity Commission following the publication of its draft report into the Australian retail industry. The move came after Husic had escalated the issue in Federal Parliament several times.

In the latest of his regular economic notes, published yesterday, Swan revealed his own interest in the issue and revealed the Productivity Commission would shortly hand down a report exploring it.

“That’s why the Government has asked the Productivity Commission to review the extent of IT price discrimination in Australia. The Government expects to receive this report next month which will be one small step on the road to providing a better deal for consumers of IT-related products. The Productivity Commission would welcome the views of consumers and businesses via retail@pc.gov.au.”

Husic, the member for Chifley first raised the IT price hike issue in Parliament in late March with respect to Apple’s local prices. The MP linked the debate to the issue of online retailing, noting that many consumers knew that the instant they got on the internet, they could easily see the price differentials that existed between products bought in Australia and those purchased overseas.

However, in follow-up speeches, Husic also noted he was concerned about the issue of what he described as “glaring price differentials” with respect to other “culprits”, naming Lenovo, which slugged Australians with a $560 markup on its ThinkPad X1 laptop when it was released locally in May, Microsoft, which heavily marked up its Office 365 product in Australia when it launched several months ago, and Adobe, which has regularly marked up its Creative Suite products substantially upon launch in Australia, describing some of the prices as “incredible”.

Adobe and Microsoft have stated that much Australian pricing for their products was actually set by the local distribution channel.

In its initial report on Australia’s retail sector, the Productivity Commission sharply criticised international manufacturers for marking up their prices for the Australian market, particularly singling out iconic technology giant Apple in its examination of how so-called “regional price discrimination” affects local consumers.

In its report, the Commission said it was aware of the “longstanding practice” by which some international product suppliers set regional prices which effectively treated consumers in one region as “willing, or able, to tolerate significantly higher prices than those in other countries”. Some suppliers, the Commisison said, had attempted to defend such price hikes by attributing them to the cost of supplying “a remote and relatively small market like Australia”.

However, it added, “these arguments in most cases were not persuasive, especially in the case of downloaded music, software and videos, for example, where the costs of delivery to the customer are practically zero and uniform around the world”.

opinion/analysis
When Husic first raised this issue in Parliament earlier this year, I had doubts that it would get anywhere. Although the MP is passionate about the matter and has influence within his party, I knew he was a first-term MP and I wasn’t sure how far that influence would get him.

However, it appears that the Member for Chifley’s patient and ongoing work in this area is beginning to pay dividends. With Swan now commenting directly on the IT price hike issue, it is now squarely part of the national agenda, and I expect it to continue to be so until more multinationals follow Apple’s recent lead and start harmonising pricing across their international divisions. The issue of IT price hikes in Australia has been a long-running one. But I think ground is starting to be made here.

One further thing: This isn’t the only technology issue which Husic has begun engaging on recently. He’s also started to comment on the National Broadband Network and participate more strongly in parliamentary telecommunications committees. It is now clear that Husic’s interest in the technology sector is multi-faceted and not limited to pricing. Furthermore, in his political messages over the past few months can be witnessed a great deal of subtlety. He is not one to often wield the sledgehammer, although he can — normally he appears to prefer the scalpel.

To sum up: What we are witnessing here is the birth of a strong new federal political voice on technology matters in general.

And that can only be a good thing. Labor has lacked this kind of voice over the past six months, with Communications Minister Stephen Conroy having backed down a bit from the public eye as the NBN rollout gained pace and Senator Kate Lundy having virtually ignored the sector in general, apart from her acknowledged interest in the ephemeral area that is ‘Government 2.0′.

One is reminded of Conroy and Lundy’s entrances to the Senate back in 1996. At the time, both displayed a level of energy and enthusiasm for the technology portfolio which was praiseworthy. And both went on to achieve pretty substantial outcomes in that portfolio down the track. One wonders whether the capable Husic will have achieved similar, if we look ten years into the future.

Like other politicians who have been outspoken on technology matters — Malcolm Turnbull and Paul Fletcher come to mind, on the Coalition’s side of the fence — one wonders whether Australia’s technology sector will eventually be addressing Husic with that most august of honorifics: “Yes, Minister.”

Image credit: Office of the Prime Minister

Govt intensifies focus on IT price hikes

Renai LeMay — Thu, 22 Sep 2011 03:45:24 +0000

news Federal Government agencies including the Treasury and the Productivity Commission are further discussing the issue of Australian price hikes by companies including technology suppliers, Labor MP Ed Husic revealed in Parliament last night.

Over the past few months, Husic has stepped up his campaign on price hikes by technology suppliers importing goods into Australia, singling out companies such as Apple, Adobe, Lenovo and Microsoft with respect to the issue and raising it with other parliamentary colleagues. The issue was also highlighted by the Productivity Commission in its recent draft report into the nation’s retail sector.

Speaking in Parliament last night, Husic took the issue further, noting he had discussed the issue with the Parliamentary Secretary to the Treasurer, David Bradbury (the full text of a letter sent by Husic to Bradbury is available online).

“He advises that Treasury officials have met with the Productivity Commission to discuss issues relating to price discrimination,” said Husic. “The Commission is now further examining this issue as it prepares to bring down the final draft of its review into the economic structure and performance of the Australian retail industry and, most importantly, the Commission will welcome further submissions from the public on the impact of IT price discrimination on them, which can be emailed to retail@pc.gov.au”.

Husic urged technology suppliers — who, he said had been “notoriously slow or reluctant to deal with this issue transparently or publicly — to make a submission to the Productivity Commission as well. “These firms need to explain why they charge Australian consumers and businesses in a way that they would never dream of doing in their home markets,” the Labor MP said.

Husic added that since he had started raising the issue in public, a number of Australians had come forward with more information about their experiences with the price hikes.

Adobe and Microsoft have stated that much Australian pricing for their products was actually set by the local distribution channel. However, Husic said he had been contacted by a channel representative to provide the other side of the story. “The big tech companies tend to blame retailers or distributors, but I actually got an email from an IT sales and repair business in Sydney,” said Husic.

The email from the Sydney business stated:

“I agree with you about Australian companies charging more than the parent companies in overseas locations for the same goods. This is a constant gripe. We are constantly getting told by customers what their buy prices are for the same goods purchased overseas.”

“We are constantly sending this information thru to the sales managers and product managers say, say Canon and HP here in Australia — bugger all response — or some waffle about company confidential and trade practices act.”

Husic said the channel representative was scared to speak up on the issue, because they believed their company would be placed at a disadvantage from suppliers who would play favourites on the issue. “If this is true, it is an exceptionally serious claim,” he said.

In another example, Husic said he had been contacted by local post-production audiovisual company Famous By Tuesday which had been charged $12,000 more for buying Autodesk’s Smoke editing system through Digistor Australia, compared with prices in the US. “When [Famous By Tuesday staffer David Barrett] got the bill he was stunned to see that the package did not cost $25,000; it cost $37,000. This was a $12,000 difference at a time when the Australian dollar was valued at US94c — simply breathtaking,” said Husic.

Husic noted he would be continuing his campaign on the issue. “This is the fourth time I have raised this matter,” he said. “I think Australian consumers are shouldering an unfair pricing burden. And the tech company justification for this practice has either been non-existent or flaky.”

We don’t set Australian pricing, says Microsoft

Renai LeMay — Wed, 24 Aug 2011 06:25:06 +0000

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

MSDN markup: 83 percent slug for Aussies

Renai LeMay — Wed, 24 Aug 2011 05:00:08 +0000

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.

“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

Markups a wider issue for Aussie industry: Adobe

Renai LeMay — Thu, 18 Aug 2011 04:10:05 +0000

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.

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

Australian technology tax: Post your worst examples

Renai LeMay — Thu, 18 Aug 2011 01:53:42 +0000

thread of the day Over on the Delimiter forum, I’ve created a thread where people can post the examples of the worst pricing markups they’ve seen on technology goods or services imported into Australia. My personal bugbears right now are Lenovo (specifically, the X1) and Adobe, but I’ve also heard stories about incredible markups on cameras and other consumer electronics. As a gamer, the gaming issue also gets my goat — particularly on Microsoft Xbox Live.

So let’s hear — what’s the worst you’ve paid — and where?