My trial licence of Office 2013 has expired and I’ve decided it has enough features to warrant purchasing. Besides which, you can’t actually buy copies of Office 2010 anymore, so that’s pretty much that.
Having finally folded to the demands of my trial software running “pay now” banners and disabling basically every feature, I arrived at the Microsoft purchase page with credit card in hand and reasonably satisfied with the price of $139.00 for the full version of Office Home and Student.
A slight tangent here: I don’t use Outlook at home. It’s a bit overkill for my needs and the 2013 version of Outlook is such a visual violation that I can’t in good conscience use it on a regular basis (we’re still on 2010 at work, which is fine with me). For that reason, Word, Excel, Powerpoint and OneNote are more than adequate for my needs.
Clicking the “Buy now” button leads through to the store Cart Summary page, where the first thing that strikes me is the price: $239.00. That’s odd. Why the $100 difference?
When I go back to check, I find that the original price of $139.00 is the US price. New Zealand is being charged $100 more. But that doesn’t sound right. Our exchange rate is extremely strong against the US. In fact, the actual price should be closer to $165.00 so why the variation?
This doesn’t sit well with me. It’s a download and the cost isn’t affected by shipping, import tariffs or other duties and taxes. So why the difference? I asked Microsoft directly via their @MicrosoftHelps Twitter account and this was their response:
@MicrosoftHelps: @Phil_Wheeler Thanks for asking. Our prices vary by region. If you would like more info, contact the Microsoft Store at 0508149421. ^JVO
Fair enough. I’ll give them a call then and see if I can get a more specific answer. After all, there’s only so much one can expect by way of explanation in 140 characters or less.
International price discrimination is something that has been receiving a lot of unwanted attention in Australia recently and countries like New Zealand and parts of Europe are no different. Microsoft, along with Apple and Adobe was recently subpoenad in Australia to give evidence at official hearings on the issue. I’m not aware of any similar intentions here in New Zealand but it seems our government is content (since last year) to do nothing until Australia’s case has run its course. This may not be all bad, since it seems that major US software firms view Australasia as one country anyway, if Adobe’s recent decision to trim its pricing is any indication.
By way of explanation, Price Gouging is a practice where businesses charge a price for a service or product that is considered excessively higher than would be generally accepted as fair. It’s not technically illegal in New Zealand but there is a bill to amend the Commerce Act 1986 currently in Select Committee stage (at time of writing) that aims to address these sorts of issues (sections 30 – 34 deal with Price Fixing). Called the Commerce (Cartels and Other Matters) Amendment Bill, it tries to create an environment for more effective competition by driving more competitive pricing, strengthens the Commerce Commission’s ability to seek remedies and introducing tougher penalties for cartel behaviour. This is a very wide-reaching piece of legislation that affects broadcasting (Sky TV’s television content monopoly), fuel prices, telecommunications companies and the electricity market.
The issue appears to be something that’s being picked up here in New Zealand just in the last few months. Bill Bennett has already written a view on the issue, himself looking at Microsoft, Adobe and Apple. I tend to agree with his conclusion that outcomes from Australia will have an impact on New Zealand, but that’s taking a very narrow view of the situation.
So what about that phone call?
I phoned the Microsoft NZ support number here in New Zealand to see what answers I could get regarding the price difference. The call is routed through to the Philippines: the location of many of New Zealand’s larger corporate call centres.
The phone was answered by a woman named Alen. She was pleasant, polite and fluent and apart from a distinctive Philippino accent, was completely comprehensible. So we’re off to a good start. She asked how she could help me and I told her that I was looking at purchasing Office 2013 and before I did, I wanted to know what the reasoning behind the price difference between the US and NZ was.
What followed was an extremely hard to grasp discussion.
The initial conversation followed a thread where Alen suggested that the product and IP were different in NZ so commanded a higher price. I wasn’t clear what she was driving at here (for obvious reasons), so asked her to explain a bit further. Her clarification then led to the suggestion that the IP address that the downloadable product was being downloaded from (i.e. the distribution channels being used) were different, which was one contributing factor – but not the only one. Now I know something’s not right. I put this down to a mis-translation of perhaps something more technical and pressed again for greater clarity on the issue.
I then heard suggestions about product differences such as globalisation and different features specific to the Asia/Pacific region which were only briefly hinted at once but never backed up and were never reiterated. Indeed later she confirmed the products were identical across regions, with the same functionality, UI and regional settings.
At this point I’m starting to get confused and beginning to doubt my own right to question the pricing at all, but we finally managed to get a credible, sensible answer after 15 minutes of asking, “Sorry, but can you explain that bit again?”.
The conversation finally concluded on the concession that market-driven forces were the key deciding factor in price difference. When asked to elaborate, the suggestion was that the size of the market – i.e. the potential customer base meant there was greater scope to make up revenues in volume in the US market where this was not as achievable in NZ. Also the competition level in NZ was lower, which one would assume meant a greater ability to set higher price without credible alternatives in the market.
Not Just Software
I’m singling software out because that was what I wanted to purchase, but other people have questioned the same behaviour in other areas, such as mobile phone roaming and in particular music:
@aurynn: @expectproblems Song, twice as much as it costs in Canada. $0.99 CDN, $2.40 NZD. Twice as much in converted monies.
If companies were able to justify an increased price with a rational and reasonable explanation I’d likely be more accepting but Microsoft’s excuse (even though it was a lower-ranked staff member) and the apparent rampant gouging being inflicted on New Zealand consumers in the software, telecommunications, broadcasting and several other industries, make it impossible to be objective. Whatever reasoning provided by the offending companies is only ever going to come across as cynical and disingenuous.
Amy Adams’ “wait and see” approach to the issue can be understood on one hand in that Australia will provide a good case study to identify legal arguments and a basis to form our own legal challenges, but on the other hand it also seems lazy and indifferent to the rights of New Zealand consumers who are patently being overcharged for the same products.
New Zealand has pre-empted or parallelled Australia in legal reforms such as marriage equality and tobacco industry regulation so why should we not be mounting our own offensive here? All we need is a minister prepared to do the hard work and mount a challenge. It’s well overdue.