Adobe: Fly to US for cheaper software

Buy cloud, buy a plane ticket or buy a competitor's product, Adobe ANZ MD tells pricing inquiry

Australians can go to the US if they want lower American prices on boxed Adobe products, or buy the company’s cloud-based offering, an Adobe official told a Parliamentary panel today.

In a hearing about higher IT pricing in Australia compared to other markets, Adobe managing director of ANZ, Paul Robson, dodged and slapped back a flurry of volleys from the House Standing Committee on Infrastructure and Communications.

Robson stressed that the Australian price of Adobe’s Creative Cloud, $49.99 per month, is similar to the US price. He said that most of Adobe’s customers are moving to the cloud versions of the company's software.

The Adobe official added that Australia’s student rate for many pieces of Adobe software, including Photoshop CS6, is 24 per cent less than in the US.

But committee members asked repeatedly how Adobe can charge that way for cloud and student versions while at the same time charging 41 per cent more compared to the US for the regular boxed versions of the same software.

The US and Australian versions “are effectively the same product,” said MP Ed Husic, a Labor member who has led the charge on IT pricing.

“It’s not really much different, so I don’t know why Australian consumers are charged over $1000 more for your product here for what doesn’t seem to be much localisation.”

If Australian customers don’t see the value of Adobe’s software, they can buy another company’s software, Robson said. Alternatively, they can take a trip overseas or import the American version.

“They can choose to go to America and buy it from local American businesses [or] they can choose to import it from local American partners,” Robson said. Adobe’s US software can be used in Australia but not covered by warranty, he said.

If the Australian customer would rather stay at home, he or she can download software from Creative Cloud, “which is significantly cheaper as a value proposition,” he said.

Robson said the cloud-delivered software is cheaper because it doesn’t have to go through traditional distribution and retail channels. He added that Adobe would prefer selling products over the cloud.

MP Paul Neville needled Robson on his argument that students pay less in Australia for Adobe software than they do in the US.

“I’m equally bewildered by the fact that you charge so much for some products and so little for others if your argument's about cost and freight and operating in the Australian market as distinct from others,” Neville said.

“If that is a constant, how in heaven’s name can you take your educational material to market ... under the going rate for a comparable product?”

“If with the rest of your products you’re charging on average about 50 per cent more and then you can come down to charging 21 per cent less, you must have a pretty hefty profit margin around 70 per cent floating around in that equation.”

MP Stephen Jones grew visibly agitated when Robson refused to answer—for reasons of confidentiality—whether Adobe makes money on the discounted student version in Australia.

“On the basis of what you have told us and what you’re not willing to tell us, the only thing the committee can do is treat as completely irrelevant any submissions you make in relation to the Photoshop student edition.”

Apple blames record labels

Earlier in the hearing, an Apple official said higher prices of digital music and other content in Australia reflect rates Apple must pay to rights holders.

“Apple must pay the rights holders of the digital content, being the record labels, movie studios and TV networks to distribute content in each of the territories in which the iTunes store exists,” said Tony King, vice president for Apple Australia, New Zealand and South Asia.

“The pricing of this digital content is based on the wholesale prices which are set through negotiated contracts with the record labels, movie studios and TV networks,” King said. “In Australia they have often set a higher wholesale price than the price of similar content in the United States.”

Adding that iTunes pricing for digital content is similar to retail pricing for physical copies of music and movies, King urged the committee to ask the rights holders why they charge more in Australia.

As with Robson on Adobe software, King attributed higher prices for Apple software and hardware to distribution costs.

“Apple must consider differences between countries in product costs, freight charges, local sales taxes, levies, import duties, channel economics, competition and local laws regarding advertised prices,” he said.

-- Additional reporting by Stephanie McDonald

Follow Adam Bender on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

Tags hardwareApplecreative cloudadobedigital musicsoftwarephotoshopiTunesIT pricing

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10 Comments

Jess

1

I will be avoiding purchasing products from Adobe and Apple if I have to go overseas to get them at a reasonable cost.

Annie Street

2

Perhaps now the inquiry can look at all the accumulated costs, importing into Australia. As an importer, our on shore charges accumulated to 15% on top of purchase and freight costs.

adam

3

wow- the arrogance, meanwhile what development to apple and adobe do here..NOTHING, they are just a sales front, at least Google hires developers

Colin

4

And you wonder why Torrent sites are still doing so well...
Apple and Adobe are both far more aggressive than MS and Apple is, in my mind the most egregious privacy violator in the world. I would never buy an Apple product, for exactly that reason. I want to own what I pay for, not be told how to use it and sanctioned for any infringement.

Keith

5

Which is why I have buy and import a whole range of stuff from all around the world. "Free Trade" ask far as I am concerned applies to the citizens of the countries too, not just the corporates.
For example, by getting a friend to buy an Apple extended warranty in the US, emailing me the code I saved 50% over the NZ price.
I buy LED lights from China, saving more than 50% of the cost of buying them in NZ
I buy books from Amazon in the UK, they offer free shipping and again I save heaps over the cost here in NZ.
I wait until someone has iTunes cards on sale, often 20-30% off before I buy, that way I get everything on the Apple stores discounted too.
I have a US postal address via a forwarding company so I can buy from the US and get things shipped.

I hear all the time from corporations how its a "global economy", and they are right, and I will use it to MY advantage too.

KAnuck

6

About Adobe prices in Australia, Robson should simply tell the truth:
"We charge more in Australia because we can!"

Dan

7

@adam - In all fairness, as someone in software development, there's frankly no reason at all for an OS tech company to invest in development here. It costs more to set that up here than almost anywhere else in the world.
Unless the government here takes steps to add incentives for investment in the tech industries, this won't change - Most of our best talent will go OS to work for a company that makes an impact.

Hydrans

8

Why is this a surprise to anyone? Australia has the highest paid citizens in the world, I mean if McDonald's people are getting paid $18 per hour, for a school kid, that is the same rate as an engineer in the US. Why would you not charge what ever you want to Australian's? It is not a rip off, people have the ability to say no to the price and source it from other locations, they simply don't.
Good on Apple for charging $1.99 for a song, compared to $0.99 for a song in the US, it is only a rort if you are not involved.
To fix it, get a VPN, get a forwarding US address, apply for a US Credit card with it and use it in the US, as almost everyone with half a brain does.
Next we will be complaining because things are too cheap, imagine if Milk was a dollar a litre (oh it is)? However that is not cheap, Milk in the UK is 1.29 for 2.2L (about $2 for 2.2L) at supermarkets.
Australian's cannot have the government hold their hand for everything, people you are paid very well, use some of that money for education, and get off your arses and cause change, don't let others do it for you, or you will never be happy with it.

teddles

9

Long live torrent sites. Wait until the lads get their messy little fingers in the adobe cloud.

Kat

10

I have a copy of Photoshop 6, and the retail upgrade to PS 7. These were supplied (legally) by my (then) employer for work purposes, so cost me nothing, personally. However, after the above outburst of arrogance and greed by Mr Robson, he's blown any chance of me considering an Adobe product when/if I find the need to upgrade. At any price. There are many programs (I despise the term 'apps') out there which do the same things for much less, or even for free. PS is nothing special, and Mr Robson certainly isn't. With an attitude like his, he has no right to whinge when his software gets pirated. I have no sympathy whatsoever.

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