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IT Price Inquiry: Microsoft, Its The High-er Costs, Stupid

By Oonagh Reidy | Monday | 25/03/2013

Microsoft,Apple fob off price gouging accusations, blaming higher operating costs here for up 70% price discrepancies

Speaking before the IT pricing inquiry Friday, Pip Marlow, Microsoft Australia Managing Director blamed higher labour and rental costs for the huge price differences between software in Australia and the US, reports Computerworld.

Now is "the most competitive time" in its 17 year history in Australia, Microsoft's MD claimed, adding the software giant prices to compete, but doesn't operate a single global pricing model or 'standard prices.' 

If consumers believed they were being ripped off, they wouldn't buy its products, which includes Windows 7, the new W 8,  Microsoft Office.

"If we price our products too high, our customers will vote with their wallets", said Marlow, as she excused her company's geo-blocking priactices as a need to monitor the business locally and licencing arrangements.

Research by consumer watchdog Choice found the price disparity with one Microsoft software development product so high that, "you could fly to Los Angeles return to buy the software and still save thousands of dollars." 

Marlow also refused to comment on a confidential email one Microsoft channel partner sent to vocal anti-price gouging campaigner Labor MP Ed Husic, which stated it was paying 50% more for identical software downloads compared to its US equivalent - adding $33,000 to costs per month.

"It seems what you put to us, you're charging what you can get away with in any market" said committee deputy chairman Paul Neville, who also said the lack of standard pricing wouldn't wash as a sufficient excuse for up to 70% higher pricing in OZ compared to US. 

In fact, Choice rubbished the higher operating costs claims of three tech giants Microsoft, Apple and Adobe who stood before the IT pricing enquiry in Canberra on Friday last, saying "most of their claims don't stack up."

"The tech companies have complained that labour costs in Australia are too high and often point to our supposedly "high" minimum wage.  

"Research from the Productivity Commission has shown US and Australian retail wages to be more or less the same - while Australian retail staff are generally paid the award wage, American staff often receive commissions in addition to their minimum wage."

Apple's VP for Australia, New Zealand and Asia, Tony King who also stood before the IT pricing inquiry Friday churned out a slew of factors behind higher prices for iPhones, iTunes and Macs: "currency and tax rates, freight charges, channel economics, competition and local laws regarding advertised prices" to name but a few. 

Choice rubbished Kings reasoning as to why we pay (up to 60%) more for iTunes, which he blamed on higher wholesale prices for content in Oz, set by "record labels, movie studios and TV networks."

"If movie studios and record companies are determining the high prices Australians pay for their copyrighted works, we'd like them to come clean."

Considering many of these tech companies make enormous profits here yet pay hardly any tax either, it seems they are screwing the Australian public at both ends.

"The claims put forward by these companies confirm our suspicions - they are discriminating against the Aussie consumer using geo-blocking to charge higher pricing..because they can," Matt Levey, Choice Head of Campaigns, told CN.

All three tech giants had three different approaches to the IT Pricing Inquiry, he said.

Apple "came very prepared to blame some one else", Adobe were "evasive" while Microsoft were "very blunt - if you don't like it go elsewhere".

There is "no justification for it, we need action" in particular on geo-blocking practices used by Microsoft. Apple and other global companies, where Aussies are prevented from buying goods cheaper on US websites via technology, saying it wants an examination on the ligitimacy of these practices which may be anti competitive.
Tech companies argue it provides a specalised, localised product, but "give Austalian the choice" to select either and allow them save up to $1200, if they dont want the customized product, says Levey.

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