IT pricing: Choice says industry statements don't "stack up"

Choice has called on the industry to produce data and analysis to back up their claims that there are unique costs to doing business in Australia.

Matt Levey, head of campaigns at Choice, told Computerworld Australia that yesterday’s Federal Government hearing for the inquiry into IT pricing saw a lot of statements by industry which don’t “stack up”.

“I think they’ve made a lot of assertions without a lot of evidence … The extraordinary thing from our point-of-view is that they haven’t actually [presented] any evidence to support those claims,” he said.

The Australian Information Industry Association (AIIA) yesterday stated at the inquiry that research and development, product development, advertising, marketing and support costs all add to the cost of IT products in Australia.

"Costs models reflect the specifics of each business model, but in any event the cost of a good is only a small fraction of the investment the company has made in developing a product or service," Suzanne Campbell, CEO of the AIIA, has stated.

"The price also reflects the investment by the company in developing its underlying intellectual property.

"In addition, the channel through which the product is sold affects its price.”

These costs reflect the cost of IT goods in Australia, the AIIA said.

However, research by Choice for the inquiry revealed Australian consumers are paying around 50 per cent more than US consumers for music downloads, computer software, hardware and games and console games.

Campbell yesterday stated price comparisons by Choice between different countries for digital products, such as music downloads, “are not useful as prices differ from one country to another for a range of reasons”.

However, Levey stated industry is yet to put forward its own figures and its reasons for price differentials are unjustified.

“To raise consumer protections and warranties as a reason why Australian consumers would pay more than consumers in the US just doesn’t stack up from our point-of-view. The implication is that Australia’s consumer guarantee is too onerous when all they do is guarantee that a good is of acceptable quality and meet consumers’ reasonable expectations," he said.

“If industry is selling such a large volume of faulty products in Australia [and] that’s adding to their cost of doing business here, then we’d suggest the problem is in them selling fault products, not in the fact that we have consumer protections.”

Levey also stated it was disappointing large technology companies are refusing to appear at the inquiry and back up their claims with actual data.

“It’s equally disappointing that industry has chosen to reject claims about price disparity without actually providing any analysis along with that,” he said.

“At this point in time all they’ve done is made up a whole bunch of assertions with no evidence to back it up.

“The preference to hide behind an industry group rather than come out and justify yourself as an individual brand owner – it’s disappointing … I can only assume that there’s reputational concerns to why they don’t want to come forward.”

However, with international companies such as Apple appearing unlikely to budge and take part in public discussions, Levey said Choice would like to see the inquiry delve further into the IT supply chain to pinpoint why Australian consumers pay more than overseas consumers for digital products.

“Unfortunately we’re at a point at the moment where we’ve done some analysis showing Australian’s being ripped off and the industry’s response has been to simply [say] ‘there are reasons for this but we’re not going to explain exactly what they are’,” Levey said.

At yesterday's inquiry, the Australasian Performing Rights Association, the Australasian Mechanical Copyright Owners Society and the Communications Alliance also put forward their views on why Australian's pay more for IT products than overseas consumers.

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

Take part in the Computerworld conversation: LinkedIn: Computerworld Australia

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

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