Feeds

Microsoft, Adobe, wilt during Australian price gouge grilling

Local leaders struggle with 'price what the market bears' charge

Adobe and Microsoft's Australia's managing directors have both struggled to answer hours of tough questions from Australia's Parliamentary inquiry into IT pricing.

Apple's Tony King was the first witness to front members of parliament for ninety minutes today of MPs today, and acquitted himself well.

Adobe's Paul Robson was rather more flustered, struggling to explain why the Standard Edition of Creative Suite 6 costs Australian buyers $AUD2,172.01 while those who shop in the USA $1299.

The Australian price includes a ten per cent goods and services tax while US jurisdictions add another five to ten per cent to retail prices thanks to local taxes. Yet at the current exchange rate of $US1.04/$AUD1.00, a direct conversion of the SC6 price should see CS6 cost Australians about $AUD1249, plus tax of $AUD125 for a total of $AUD1374, still far cheaper than Adobe's Australian pricing.

Adobe Australia Managing Director Paul Robson appears before Australia's IT pricing inquiry

Adobe Australia Managing Director Paul Robson appears before Australia's IT pricing inquiry,
but with many fewer observers than Apple's Tony King attracted

Robson's theme was that Adobe's cloudy offerings cost the same in the USA as Australia, but that local costs push up prices.

But the only cost Robson was willing to identify is that incurred to offer a “personalised and local” experience on the version of the company's website offered to visitors from an Australian IP address. The forums and custom local content there, he said, are the substantive thing Adobe does differently in Australia compared to the rest of the world.

Robson was also unable to convince the inquiry's members why the Teacher And Student editions of its products are sold for much less than the price of other editions. At one point members of the inquiry, all Australian members of Parliament, explored the cost of the boxes in which Adobe products ship and whether the packaging used for education editions is materially different to those used for the vastly more expensive “full” versions of the product in ways that would impact prices.

At one point questioning even suggested that the high cost of Adobe products could be one factor in making the cost of doing business so high in Australia that Adobe needs to charge more for its products.

By the time that circular argument emerged Robson appeared a little worn down by proceedings.

Microsoft's Marlow monstered

Microsoft's Marlow didn't hold up quite as well as she presented her case that while Microsoft may charge more in Australia than it does in either the USA or Singapore, it is competing lawfully, faces colossal competition and feels consumers would vote with their wallets if Microsoft products are felt not to represent value.

Marlow's point that Microsoft does not operate with a single global price, illustrated with an admission that developing nations cannot afford to pay the same as richer countries, went down rather badly.

Microsoft Australia's Managing Director Pip Marlow at Australia's inquiry into IT pricing

Managing Director Pip Marlow at Australia's inquiry into IT pricing

Marlow also refused to accept the committee's calculations of price differences, saying that as she was not privy to their calculations she felt it inappropriate to comment. She fought back when confronted with a bundle of Visual Studio and MSDN membership sold at $US12,000 costs over $AUD20,000 in Australia, saying the source for that comparison did not understand the nature of the product and that the product is not sold in a comparable bundle in Australia.

Inquiry members then pursued Marlow, suggesting that small businesses have little choice but to use Microsoft Office in order to preserve investments in files created using the suite. High prices for upgrade, it was suggested, are possible because few alternatives exist. Another line of questioning suggested Microsoft is a contributor to the high cost of doing business Australia.

"We do want to sell our products, we do want to delight our customers and if we price too high we will see sales fall," Marlow replied. "Supply and demand and those competitive forces will absolutely play out.”

The inquiry will next consider ways to give Australian consumers access to the same prices available overseas. Geoblocking was mentioned repeatedly during today's hearings, and at one point an inquiry member suggested the possibility of outlawing it so Australians can download software at cheaper prices.

Whether that is possible given on a technical level is one thing, as the likes of Microsoft and Adobe could easily comply with Australian law while still leaving servers overseas refusing to accept Australian credit cards. Australian politics also make anti-geoblocking legislation unlikely, as an election in September will likely see a change of government. The current opposition hasn't displayed quite the same enthusiasm for the issue of IT prices and is unlikely to make it a priority. ®

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.