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Monday Grok: Price inquiry — what can the government really do?

Don't get your hopes up too high

Australian software consumers have been getting royally corn holed by vendors like Microsoft and Adobe for years and still are. There’s one simple reason why the suppliers price gouge — because they can.

In the days of shrink wrapped software, the discrepancy between local and international pricing was more opaque, and of course the mighty Aussie dollar was for many years the amusing pacific peso, so that provided an element of cover.

But both those factors have evaporated, leaving suppliers exposed for what many consumers may believe they really are — a gang of rapacious, greedy price gougers.

Now, the Federal Government has launched another inquiry into pricing that will generate headlines but ultimately go nowhere for the simple reason that the government has no constitutional control over pricing — and nor should they.

This inescapable reality is summed up in the first two paragraphs of The Age’s report : “Computer giants Apple and Microsoft will be asked to defend their pricing policies at a federal parliamentary inquiry into why Australians pay far more for music and game downloads than overseas customers. Labor MPs hope publicity generated by challenging the companies will result in lower prices and put an end to local consumers being fleeced.” Keep on hoping.

The local tech media is getting itself suitably worked up over the story — and so it should. It is making a good fist of demonstrating what’s at stake.

Smarthouse gave the following comparisons yesterday on its site: “Adobe Creative Suite in Australia currently costs $3,908 when buying from the Adobe online store, but if you enter your Country as the USA the price suddenly drops to $2,599. The only problem is that Adobe will not ship a low cost version to Australia. The Professional version of Microsoft Office can be purchased from the Microsoft store in the USA for $349. The same software purchased via the Microsoft online store in Australia is $849, some 145 per cent over the US price.”

So at least it will be fun following the industry’s mealy mouthed defence of the indefensible in the coming days.

For its part, ZDNet says Senator Stephen Conroy set up the inquiry after prompting from (marginal seat) MP Ed Husic. “Husic told parliament last month that companies like Microsoft, Adobe, Apple, Canon and Lenovo have failed to address consumer demands and inquiries about the high cost of both hardware and software in Australia compared to other territories.”

The inquiry is gold plated bull****. It’s hard to believe it will achieve anything more than what it was designed to achieve — some helpful headlines that will soon be forgotten but might at least prove a momentary distraction from the soap opera that has usurped Australian governance in recent months.

Instead, if the gouging is to eventually end, it will do so because the pricing disparity between different national markets is now so egregious that a clever entrepreneur will find a way to make a buck. And Microsoft, Apple, Canon Lenovo, Sony, Adobe and sundry others will have no one to blame but themselves. They certainly won’t need to blame Senator Conroy and his inquiry, because it will not make one jot’s worth of difference.

Web 2.0 just ended, in case you weren’t paying attention

There’s a long ‘thinky’ piece over at PandoDaily that’s worth the time it takes to drink a cup of coffee. It suggests that Facebook’s acquisition of Instagram marks a neat inflection point in the development of the industry, what author Hamish McKenzie calls the “Great Shift”.

The author wrote: “We are now starting the Age of Mobile. Google and Facebook’s Internet dominance is no longer guaranteed. They face a threat from below and an army of smartphone-touting masses that sees little distinction between the piece of hardware in their hands and the Internet world it opens up.”

Underpinning it all are a set of trends that have become entrenched — the shift of audiences from desktop to mobile, the ascendency of smartphones in the west and the fact that giants like China and Indonesia are just getting started.

There is much more. Read it here.

Andrew Birmingham is the CEO of Silicon Gully Investments. Follow him on Twitter @ag_birmingham.

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