Recently there have been a lot of complaints about the cost of Windows 7 in Australia compared to the USA and China.
One Microsoftie made the following comment in an article published on The Australian website on November 24.
A Microsoft spokeswoman confirmed that the Windows 7 software sold in China was “fundamentally the same” as copies sold in Australia.
Microsoft said its pricing decisions were influenced by a number of factors including exchange rates and local taxes and market conditions. But the main thrust of their argument appears to be that Chinese consumers can’t afford to pay more.
“It is worth noting that 2008 per capita income in Australia was $US47,498 ($51,643) and in China 2008 per capita income was $US3264. As such, they are very different markets. Creating a consumer price comparison between China and Australia is therefore not reflective of a like-for-like market analysis,” the spokeswoman said.
So how do you justify the price of $120 per copy of Windows 7 Home Premium in China against the price of around $300 in Australia without saying rich countries are subsidising the cost of Windows in poor countries? I don’t see how else you can translate the comments from the Microsoftie.
Mind you, just look at the cost of Microsoft Office — if you’re a student, Microsoft was running a deal where you pay $75 for the “top of the line” edition of MS Office as a download if you have an .edu.au email address. If you don’t, the boxed product has an RRP of $1,173. That’s pretty expensive packaging…
Does anyone reading this think that Microsoft is going out the door backwards at $75? Sydney University had 46,054 enrolments in 2008 (according to its website). If we assume that only half of them bought Office at $75 a copy, Redmond gave away (in round numbers) $32,000,000 of potential revenue out of the goodness of their hearts.
Gee that Steve Ballmer is such a nice guy.
Now I know that someone out there is going to come back with VLA this, educational discount that, street price against RRP and overall margin something else. You can jerk the numbers around anyway you like, but, something doesn’t add up here.
It just looks like a play to increase market share by reducing the cost to emerging markets and students by passing the impost on to business. Why should a business in Australia subsidise the price of Windows 7 in China, or that copy of MS Office available for a student who may end up working for your opposition?
Are you in the business of increasing someone else’s market share or are you in the business of increasing yours?
The 1% Spend is written by a prominent Australian I.T. consultant who is choosing to remain anonymous (and candid).
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Mr 1% Spend Reply:
December 11th, 2009 at 1:10 pm
Of course its a loss leader and from Redmond’s perspective it is a smart move and one you can make when you are a monopoly.
My point to this is that every business in Australia that buys MS products is effectively wearing the cost for this loss leader and taking the hit to their bottom line.
I’m just wondering why?
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