What Happened In The IT Pricing Inquiry Today?

The first and only scheduled hearing (so far) for the long-awaited IT Pricing Inquiry took place today. Companies came from near and far to plead their collective case as to why Australians are paying more for their tech and games. Here's a wrap up of everything that went on.

Before MPs had even taken their seats this morning, controversy was already brewing about the empty seats where Apple and Microsoft should have been. Why were these seats empty? Well, Apple has already had a closed-door, off-the-record hearing before parliament, while Microsoft opted only to make a submission (PDF) rather than an appearance.

According to The Australian Financial Review, Apple shifted the blame for highly priced iTunes tracks onto record labels and copyright holders, who reportedly set the prices for the content that Apple on-sells. Apple also blamed taxes and local warranty requirements in Australia for the price discrepancies between local products and those sold in the US.

Adobe also gave the inquiry the cold shoulder, despite the fact that the company has been named as one of the biggest offenders. It hasn't even made a submission, instead just pointing at the submission made by the Australian Information Industry Association (PDF) and saying that it agrees with it.

Federal Member for Chifley Ed Husic took the opportunity to slam Adobe for price gouging Australians while geo-blocking them from cheaper software prices.

The AIIA's chief Suzanne Campbell labelled a report by CHOICE saying that Australian's pay 50 per cent more for their tech than US counterparts as "fallacious", adding that Australia's consumer warranty policies drive prices sky-high.

Other companies and industry groups went before the public hearing today, including the Australian Retailers Association, the Australian Performing Rights Association (APRA and the Australian Publishers Association, all of whom blamed a combination of high taxes, warranty requirements and the cost of doing business in Australia for price discrepancies.

Image: Cimexus / Flickr


Comments

    Warranty definitely doesn't effect software.

    With Adobe being one of the highest offenders, you should get a local Aussie on the phone when you call them for support. Otherwise they can shove their geoblocking digitally distributed international call centre software.

    I was literally just about to come here to whinge about Adobe.

    Photoshop CS6 in the US: $699
    Photoshop CS6 here: $1168

    Someone explain to me why it's almost double the price to buy it in Australia...I don't know of any other companies that put THAT much of a premium on international products, especially when it's just software.

    I discovered last year that a VLSC license for Windows 7, which costs ~175.00 in the US costs more than 400.00 in AU. Unfortunately I had created my proposal around the US pricing. When I questioned MS about this they were not able to give me a definitive answer. They don't really have the excuse of logistics since the product and license are intangible.

    I thought it was illegal for the distributor to set the pricing at a retail location? Surely that causes problems with competition?

      The majority of the time the Distributor says it will cost you this much to buy the item from us and we recommend that you sell it for this much. The store will then either set the price around that RRP give or take.
      So the Distributor doesn't directly set the price, but they provide a highly inflated RRP to the seller who will stick with it most of the time. Plus depending on the product the Distributor may just be charging a ton for the product to the seller so they don't have a say in setting it higher.

    It's like VMWare licensing. I get the choice of currency but if I pay in Australian you pay 100 more

    And the result,.. as if anyone had a doubt... Zip, Squat, the big goose egg, nada....
    Who actually thought that something would be achieved here, anyone..?

    And they wonder why there are torrent files and piracy......

    Lol... this is happening for ALL products distributed globally....
    - examples of non IT Geo locked product..
    Northface Outdoor Gear - Up to half price in US
    Nikon - Cheaper in US then Japan ... huh! by ALOT up to 30%

    Online media geo control...
    - Blocked access to website content ... e.g.: MTV, YouTube
    - Subtle and scary... ever accessed your favourite web site overseas and discovered new news content...
    ... more
    Airline tickets...
    Its an endless list of control and inequality...
    The common theme though... the US consumer seems endlessly subsided by the rest of the globe...

      Actually your Nikon case is a classic example of price discrimination which in the Japanese market has existed pretty much forever. In the past goods were often more expensive in the country of origin (Japan) to partly subsidise export pricing.

    What Noddy and Jeff just said.
    They make a killing off of us, then lie through their teeth and when we find "creative solutions" to these problems they show us a shocked face. =0
    Come the revolution MS, Apple and Adobe will be the first in a long loooong line with their backs against the wall.

      It doesn't stop at IT.
      Eg: Thermal wear
      both 17.5 micron
      both 360 gsm
      Both Australian Merino wool.
      Aus $ 365 for a top alone.
      USA $ 90 for the top alone ...
      " Both Australian Merino wool"

    And they wonder why piracy is so big in Australia.

    it also includes products made in Australia...
    I bought a Resmed CPAP machine for my sleep apnea this year that is made in Australia, it's RRP here is around $2500 but is available for around $2000... in the USA the same machine (the one that is made in Australia) is around half the price!! The masks for it cost around $300 (also made in Australia) but I got one from the USA that cost me about $120 including postage!!
    I would really like this one explained!!!!

      Classic case of price discrimination in the home country. In the past you couldn't do what you can now - ie ship stuff across the world from the US relatively cheaply.

      I had the same with a PWR radiator. Made in QLD, shipped to texas and back, $700.

      From QLD, $1100.

    Does America not have warranties or something?

      Blaming warranties on the cost difference!!!
      Exact same power tools from Hitachi about 50% cheaper in the states, American warranty 5 years (on some products lifetime) compared to OZ 12 months.
      Milwaukee USA 5 years - Oz 2 years
      Makita and Dewalt 3 years USA - Oz 12Months
      All exact same power tools considerably cheaper and much better warranty????

    Amazing how appalled these tech companies are at piracy, and how they refuse to even try to address what on the surface looks to be at best price rigging and gouging, at worse, some illegal behaviour that they know all too well they can get away with since Aust. has governments (past and present) with better things to do.

    We seem to be getting ripped off. As simple as that. If not, can someone offer explanations?

    Having been a product manager for their main australian distributor it kind of works like this with adobe retail box products. Price list is in USD and retail boxes are shipped out of Singapore. My understanding (and trust me I asked this question of my account manager) is that world wide adobe retail box price is the same to all countries!!! Then you have to start taking into account local distribution costs...etc. Local cost pricing to australian resellers fluctuates monthly with exchange rate as the distributor buys usd in advance in bulk once a month which locks in an exchange rate. Adobe does not set or state an RRP like so many other brands do for retailers. Prices on the adobe web site typically are set at an inflated amount for box products so they dont piss off resellers by undercutting the channel. I have been out of the game for a while so my 'inside info' is a bit stale now... But adobe are interested in selling (in no particular order) 1. Retail boxes 2. Licenses to companies 3. Subscriptions to use their software rather than outright ownership. I dont think they give two hoots about people buying their software as a direct download from their web site even though it would be higher margin. I think in adobes case the comparison between digital downloads on the aus and usa web sites are bogus. What is the street price for box software? Adobe X pro student edition. Adobe aus web site: us$119 bestbuy us$99, software time (local australian reseller) aus$89. There are loads of other examples both more expensive and less expensive. There is definitely a problem with prices being paid that are more expensive in australia and it stinks. The point I am trying to make is that comparisons need to be made based on how people buy products. This will vary from brand to brand. In adobe's case, it is stupid to compare artificially inflated prices on adobe's web sites but instead it should be done via reseller retail box, subscription and volume licensing prices. I can't comment on the way microsoft does business but i suspect that there are ibtric

    Having been a product manager for their main australian distributor it kind of works like this with adobe retail box products. Price list is in USD and retail boxes are shipped out of Singapore. My understanding (and trust me I asked this question of my account manager) is that world wide adobe retail box price is the same to all countries!!! Then you have to start taking into account local distribution costs...etc. Local cost pricing to australian resellers fluctuates monthly with exchange rate as the distributor buys usd in advance in bulk once a month which locks in an exchange rate. Adobe does not set or state an RRP like so many other brands do for retailers. Prices on the adobe web site typically are set at an inflated amount for box products so they dont piss off resellers by undercutting the channel. I have been out of the game for a while so my 'inside info' is a bit stale now... But adobe are interested in selling (in no particular order) 1. Retail boxes 2. Licenses to companies 3. Subscriptions to use their software rather than outright ownership. I dont think they give two hoots about people buying their software as a direct download from their web site even though it would be higher margin. I think in adobes case the comparison between digital downloads on the aus and usa web sites are bogus. What is the street price for box software? Adobe X pro student edition. Adobe aus web site: us$119 bestbuy us$99, software time (local australian reseller) aus$89. There are loads of other examples both more expensive and less expensive. There is definitely a problem with prices being paid that are more expensive in australia and it stinks. The point I am trying to make is that comparisons need to be made based on how people buy products. This will vary from brand to brand. In adobe's case, it is stupid to compare artificially inflated prices on adobe's web sites but instead it should be done via reseller retail box, subscription and volume licensing prices.

      Disties of Adobe products like Ingram Micro and Express Data used to have to purchase from Adobe in US$. That changed close to 2 years ago. All pricing from Adobe is now in AU$.. The disties no longer have to pad out their prices and pre-purchase US$..

      That said, the cost prices that Australian retailers and resellers recieve are significantly higher than the RRP on the US sites.

      " I think in adobes case the comparison between digital downloads on the aus and usa web sites are bogus."

      How so bogus? I wanted to upgrade my Lightroom because I had a new model camera. I was prepared to pay the USD99 asked for on the Adobe website. When I entered an Australian address they changed the price to AUD150. Nothing bogus about that. It's real.

      I found an alternative solution.

    A local bike shop wanted to charge me 300 AUD for pedals, when I said I would just buy from the UK for ~150 AUD. They happily sold them to me for 150 AUD. I can only guess that they where still making a profit. Electronics is another good example, if you aren't somehow haggling for 20% off at JB, HN or good guys, your paying too much.

      Pretty much everything you see on sites like Chain Reaction Cycles is lower than wholesale price here in Australia.
      Sites like CRC are killing our bike stores since it's cheaper to buy from sites like CRC.

      As for topic on hand it's not just software giants like Apple, Microsoft and Adobe have a look at price of game clients like Steam and Origin in most cases on popular games like C.O.D there's at a 45% price bump for digitally delivered content.

    There's a remedy for geoblocking. It's called Torrent.

    It basically comes down to what the market will pay for.
    It's the same reason that groceries in shops in the wealth suburbs are a lot more expensive than those in the cheaper ones.

    Besides, the US is the only market these tech companies really care about. Why would they care about a tiny, miniature market that's almost exactly half a world away?

    Looking at sennheiser hd 202 headphones. Under $30 in US, $65 at JB

    If Australia deregulated / removed 'importers exclusivity' then there would not be as big as problem. The intended quid-pro quo was that the importers would set up significant local R+D industries here which has not really happened. The protective legislation is doing more harm than good, and current account deficit swells. Time to chop this racket. Also note PBS is also paying 35% to much for drugs. Seems .gov won't admit to paying through the nose.

    What a vile reprehensible bunch of profiteers. Surely the free trade agreement should prevent this situation. Also, surely the government could legislate against geoblocking. I'm going to try a proxy to fool their systems. Do software licencing agreements prevent the use of software in different geographic locations.? I normally don't encourage software piracy, but these software giants certainly deserve it.!!

    How many of these f&cking inquiries do we have to sit through? This government has once again waisted money on an "inquiry" that pointed out the glaring obvious and has resulted in no outcome whatsoever. This government in ridiculous.

      Absolutely. Does anyone really think that something will come out of this? What can the government really do? It doesn't matter who's in power - it's about the fact that the government cannot control pricing. The inquiry is just a smokescreen to divert your attention from the real problems.

      The only way to get these guys is through punitive fines (and when I mean punitive, try starting at % of sales rather than a dollar amount to make it relevant) for excessive pricing. Or force them to break down the price in all advertising and be audited against that.

      It's posturing, "Look at what great leaders we are, see how much we're doing to try and improve things for you?". I'd be highly surprised if any genuine effort was actually put into trying to apply pressure to any of the companies involved. Hell Microsoft, Apple, and Adobe, have all basically laughed in the face of the government. All they can do is make hollow threats, and the companies know it.

    I have worked with Apple’s (Since 1979) but Apple’s price gouging is just rude and offensive!
    And their excuses fall into exactly the same category “rude and offensive”.

    In EU Countries Apple must give a two year warranty, here we get one.

    Physical Products
    All Apple stuff is made in China, used to be Cork, Ireland… We are actually closer and cheaper to ship to than the states and we pay more.
    Software Products
    Mountain Lion = $19.99US = $18.74AU : we pay : $20.99AU = $22.39US : difference : $2.40US / $2.25AU which goes into the new BMW or take over the world fund.
    Adobe just falls into the category “rude and offensive” including “highway robbery”. sort of like the CS5.5 upgrade to CS5. I also like how CS6’s GUI changes haven’t been applied to all the suite applications, and they are again recycling products from CS5.5; Unfinished and charging us the whole world for it!

    I buy tons of stuff internationally, I buy and ship (5-10 Days Delivery) which is cheaper than purchasing here 70% of the time; 25% is usually cheaper because it’s actually old stock that they don’t want overseas and they are just unloading it on Australians for more $ or same prices; while they get the newest products for cheaper than the old ones.

    Also frustrates me— like higher product pricing & unloading; is Australian postage/shipping in-discrepancies; In the states for the prices we pay here for postage/shipping; gets you stuff over night. Here I can get office furniture shipped sometimes for the same price as for shipping shoes or hard drives, it’s bizarre! Overseas, most of the time the price your purchasing stuff for, usually gets you free good & fast shipping.

    Warning the following is just more true rambling!
    It's a disgrace really; that our wonderful politicians who are looking out for us and making sure Australians get a fair deal, who are doing such a good job, like they are with our wonderful National Broadband, that most of us won't see, till I'm old and grey or I/we/most of us move into the right electorate (preferably labour for cabled broadband services or a liberal electorate for extremely expensive unstable wireless broadband). The people who have the power to make a difference just don't give a hoot! (They rather haggle and oppose everything the other side introduce)..

    It's all so typical unfortunately, it's like the problem of plastic being extremely toxic for human beings, the answer is simple as; but they would rather agree on a carbon tax so none of them will pee-off the petroleum industry.. Answer how?: don't use petroleum based oil, use hemp seed oil, (1 ingredient changed) and you have bio-degradable, non-toxic to human beings plastic; all our politicians have to do is make it illegal to use petroleum based plastic, heck it will probably also do more for reducing the carbon footprint of Australia than the carbon tax will!

    ANyHooT; Peace Out!

    At the end of the day, our entire population, can fit into just ONE of their major cities. Quite simply, they don't give a crap. MS, Adobe, n Apple, supply global standards of product, and it's not like Australian consumers can just turn around and choose a different operating system, or office software suite, if they want to be able to communicate with the rest of the world (Word docs, PDF docs, Excel docs...). Sure, there's Open Office, but how many of your average Joe consumers are even aware of it? Or Linux... but then it's not exactly a widely known brand, or readily accessible, to your average consumer. The real problem, is that these companies have no real competition, and they know it. We're a tiny TINY portion of they're profits, and if we sit there and go "we're going to hold our breath and not buy your products until you lower the prices" they're response will simply be "ok". They don't care, never will. We can sit here and be as indignant as we want, but nobody else besides us gives a crap, and we're a minority group. Big companies don't bow to pressure from minority groups.

    Am I happy about it? No. But I also know that holding my breath isn't going to do any good, so I simply order my crap from over-seas. You think IT has it bad? Trying being a hobby collector. Warhammer 40k? 100% mark-up on prices, compared to over-seas, sometimes more. Yet I can buy stuff from the US, for not only 1/4 of the price they'll sell it to Australians, but for 1/2 the price they sell it to Europeans.

    Corporations are about making money, as much of it as they can, and at the end of the day that's all they care about. Short of us actually being able to bring into play enough pressure to severely hurt they're pockets, they're never going to change they're tune.

    Why were Adobe and MS absent? Because they DO NOT GIVE A TOSS.

    Australia is a small market to them. Always has been and will be for the forseeable future. What could the Inquiry possibly do to them, tell them to piss off? Water off a ducks back as far as they are concerned. Their position is they're here out of indulgence and not out of necessity, and as long as we have big multinational corporates reeking of arrogance like this, then you will never see change.

    Australia is stuck between a rock and a hard place; we either lay down for the bigwigs and their markups, or we face an Australia that doesn't have Windows or Photoshop on store shelves. The latter is, of course, impractical and impossible because of demand, so MS and Adobe are laughing all the way to the bank.

    Piracy folks; Stealing from Thieves.

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