AIIA takes the ‘Australian’ out of price-gouge concerns

As predicted by The Register, once the IT and related industries lumbered into motion to respond to the Australian Parliament’s inquiry into IT pricing in Australia, the rent-seeking would begin.

As has been amusingly pointed out by local publisher Crikey, some of the submissions read as if they were penned in imitation of Terry Pratchett or Douglas Adams. “Microsoft might grossly overcharge Australians, but it’s consistent and predictable gross overcharging”, Crikey notes.

However, it’s the Australian Information Industry Association that I’d like to take the blowtorch to.

Note that first word in the AIIA’s name? “Australian?” That means, among other things, that it purports to represent the interests of the industry here. And it would seem, from my simplistic standpoint, that the Australian IT industry stands to gain if international vendors are shamed into at least reducing the degree to which they soak the Australian consumer.

In short: those AIIA members in the distribution / resale business get to sell more stuff (without losing their margin) if the wholesale prices are set below the level of “make these idiots bleed”; second, as buyers of kit and software from international markets, their own costs would be reduced.

The AIIA, however, doesn’t see it that way.

Its arguments include:

• Vendors won’t sell product here if they can’t gouge – to quote the submission, “The alternative … is for suppliers to only do business in more favourable markets”. In those circumstances, I guess, Australians would be forced to source their products overseas – which, of course, retailers are already complaining about.

• ”Business costs in Australia are between 5-10% higher than any other” - to which all El Reg will note is that consumers here are suffering 100 percent to 200 percent markups on some products.

• ”Some members have brought to our attention the fact that they do not set the retail price of their products.” There’s a good reason for this, which the AIIA inexplicably fails to mention: price fixing is illegal. A vendor which did – which, for example, ditched a reseller for offering products at a discount – would be exposed to action from the ACCC.

• “The practice of price discrimination is a common business strategy necessary to maximize performance” - which looks somewhat like what everyone’s complaining about.

• “The service infrastructure to support [consumer guarantees], while possibly only incremental, are ultimately also reflected in retail costs” - because, of course, warranty support is not offered in markets such as America.

• “Vendors have also identified training and marketing costs” - which again we must presume do not exist in other markets.

• “Margins applied at each point and in the case of a number of our vendors, dictated by reseller partners” - apparently the supply chain in America operates without margins. Also note the blame-shifting here, which again ignores that it’s illegal for vendors to price-fix (even if you’re only telling partners what margin they can charge).

• “Importation costs due to the distance from manufacturing countries” - which is why it’s cheaper to buy something as a single item sent by mail from America, to which it travelled from China, than to buy it in Australia? As a teacher might say, “four out of ten, must try harder”.

• “The price of downloads will still reflect the margins required to ensure the locally based arm of the business is able to maintain its presence in that country” - in other words, suckers, even if you download your software, we’re going to bump up the margins to subsidise the bricks-and-mortar operations.

It almost seems as if the AIIA is speaking not for local IT companies, but outfits like Intel, CSC, Microsoft, EMC, Google, IBM, Avanade and Gartner – roughly half of the AIIA’s board, actually. ®