IT pricing committee fingers channel

Channel partners have been singled out for blame for the higher prices Australian consumers and businesses pay for technology. 

The finding, from the report published by the IT Price Inquiry committee, At what cost? IT pricing and the Australia tax (pdf), indicates the end prices paid by technology consumers are often not set by the technology company, but by the channel partners they do business with. The report also found the Australia-tax is real, and that Australians generally pay more for technology - both hardware and software, and regardless of whether it's delivered directly or through the channel - than consumers overseas.

However the channel wasn't completely left out to dry. Individuals called before the committee, including local Microsoft managing director, Pip Marlow, and Adobe managing director Paul Robson, defended the role of channel partners.

According to Marlow, channel partners provide value-added services to end-consumers, while Robson said because Adobe largely does business through the channel, the costs incurred are local and in local currency.

The Australian Information Industry Association (AIIA) told the committee many of its members do not set their own prices, leaving that task to channel partners. These costs are set according to domestic market factors and cost pressures.

When it came to digital distribution, however, Adobe’s Robson justified the cost difference as a tactic to ensure the equitable treatment of channel partners – that is, the costs are identical, regardless of whether the goods are purchased at retail or digitally downloaded.

Apple’s managing director, Tony King, had a different take on the channel. According to King’s testimony, Apple’s hardware prices are largely set in the US, with some input for local factors. Overall, prices are comparative when issues like the GST are taken into account, he said.

Apple’s channel partners are free to set their own prices, he added, noting that within any given week there are competitive offers taking place within the channel.

Microsoft and Adobe, on the other hand, do not set global prices. Adobe’s Robson said if customers didn’t like Adobe’s pricing, they were free to go elsewhere. Microsoft’s Marlowe noted the company essentially sets the price that a particular local market will bear. Like Robson, she said customers were free to go elsewhere if they were unhappy with the local prices.

One of the recommendations of the committee was to investigate amending the Competition and Consumer Act, so Australians can have access to overseas content and software that would otherwise be geoblocked.

The committee also recommended a right of resale for digital goods, as well as the lifting of remaining laws governing parallel, or grey imports.

Finally, it also recommended the Australian government implement a whole-of-government accessible IT procurement policy. There were no general recommendations when it came to monitoring or modifying channel pricing and conduct.