Price Gouging Microsoft At It Again With 76% Office Price Hike

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US Company Microsoft who has a reputation for price gouging Australians with high priced software and hardware is at it again. This time they have partnered with Telstra to launch their cloud based Office Suite that is up to 76% more expensive in Australia than in the USA.What Microsoft has failed to explain is how a cloud based service which uses the same servers to service their US customers as their Australian customers suddenly becomes 76% more expensive when being sold in Australia. 
 
The launch of a new Office 365 system turned sour yesterday after the software giant was accused by journalists of overcharging for its new Office 365 cloud computing service.

In the US Microsoft CEO Steve Ballmer launched the new service at an event in New York, and said more than 20 service providers including Bell Canada, Telefonica, and Vodafone as well as Telstra would be used to provide hosting worldwide.

Both Telstra and Microsoft are trying to strip customers away from retailers and hundreds of solution providers who currently sell packaged versions of Office.

However in Australia, eyebrows were raised over the prices Australian users are being asked to pay – as much as 76 percent higher than US prices. Microsoft has referred to the pricing system as offering Australian users services at a “predictable monthly subscription” and “roughly the price of a sandwich”.

Prices actually range from A$7.90 to $40 per user per month: the latter covering a pretty substantial sandwich – more like a Tony Bilson main course, some observers suggested.

The $7.90 basic rate applies to small-business users and covers Office Web Apps, Exchange Online, SharePoint Online, Lync Online (which offers services like video calling, instant messaging, virtual meetings and desktop sharing) and an external Web site. North American users will pay US$6 (A$5.70) for the same service – a mark-up of 38 percent.

 

 

Enterprise versions of Office 365 come in three “tiers”. The E1 tier at A$15.70/month compares with the US price of $10 (A$9.49), a 65 percent mark-up. The top E3 tier is A$40/month, compared with US$25 (A$22.79) in North America – an uptick of 76 percent.

Australian prices – unlike American – presumably include GST. And Web site ZDNet recalled the local management’s defence of similar price hikes in the past: “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.”

Other observers have suggested the mark-up may partly reflect the size of the cut being offered to Telstra, whose T-Suite operation will be the exclusive reseller of Office 365 to all Australian customers other than large organisations who have an enterprise agreement with Microsoft and hence deal direct.

Small businesses can sign up via Telstra for a 30-day free trial, covering up to 10 users.

  • In New York, Steve Ballmer unveiled Office 365 at an event for media and analysts. “Office 365 levels the playing field, giving small and midsize businesses powerful collaboration tools that have given big businesses an edge for years,” he said.

Analysts at investment research firm Morningstar had mixed thoughts about that. “We expect that the transition [to the cloud] will damage the Windows PC franchise, transform Office into a bigger, less profitable franchise, and open the door to large new revenue and profit pools with Microsoft’s Azure cloud-computing platform,” they wrote.

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