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

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