TECHNOLOGY SPECTATOR: Adobe's pricing smokescreen

Adobe's acknowledgement of regional rate concerns this week was not a win for the IT price inquiry but rather a calculated media ploy to divert the issue.

Technology Spectator

Adobe has finally broken the cone of silence surrounding its exorbitant Australian pricing regime with global chief executive Shantanu Narayen seemingly open to the idea that the likes of his company, Apple and Microsoft will have to start giving Australian consumers a fairer deal.
However, it would be a mistake to think that Narayen’s comments are a result of the sterner tone adopted by the IT price inquiry.

Adobe may be talking, but what it’s not telling us is what we want to know. We want to hear about your pricing, Adobe, not your Creative Cloud.

Indeed, this latest round of spin from the internet giant isn’t the big confession we were all hoping for, it’s just the next phase of Adobe’s media plan. It has stopped stonewalling and started smoke screening – with a touch of product promotion thrown in for good measure.

Adobe’s cone of silence

To fully debunk Adobe’s latest strategy shift, it’s important to understand how the company has previously dealt with the issue of its pricing and the IT price inquiry in the past.

As we explained last year, Adobe is a brand that has somewhat of a monopoly over the global design software market. Many of its products are the industry standard and are used in firms around the world. As a result, Adobe can really charge what it wants in any country, but it’s particularly cruel when it comes to its Australian price points.

It’s been joked that it would be cheaper to purchase a return ticket to the US and buy Adobe software overseas than it would be to buy it outright in Australia. Sadly, this jest isn’t far from the truth. For example, Adobe’s CS6 Master Collection costs Australian’s $4344, whereas it costs US customers $US2599 ($2511 if you factor in the current exchange rate).

Such an extravagant price difference for a product that is now primarily distributed via the internet made Adobe a prime candidate for the ongoing IT price inquiry to Australia.

Rather than try and justify the pricing itself, Adobe let its industry body, the Australian Information Industry Association, do the talking. The company stonewalled many requests for further information on its pricing with referrals to the AIIA’s statement.

It kept chugging along like this until last week when the MP championing the IT price inquiry, Ed Husic, announced that Adobe would be one of three companies subpoenaed to face the parliamentary committee running the inquiry.

The move curiously coincided with Adobe’s planned launch of its new Sydney offices, the reason why Narayen came to town.

All talk but little explanation

It’s here that we see a noticeable shift in Adobe’s strategy.

Before Narayen could cut the ribbon on its new office, Adobe surprisingly announced that it was cutting the prices of some of its products. As it stands, the majority of Adobe’s subscription products are now slightly cheaper (given the exchange rate) than what its US customers would pay.

The move was initially well received, but was then quickly realised as a pricing smokescreen. The price tags of Adobe’s non-subscription products – the one’s which have been pointed out time and time again to have the biggest discrepancies in international pricing – remained the same.

The pricing move didn’t sate consumer rage, but it did do one thing: it gave Narayen something to talk to the media about when he opened Adobe’s new Sydney offices yesterday.

In fact Narayen spent most of his time with the media plugging the Creative Cloud. Here’s an extract from Gizmodo:

"When we look at what happens with Creative Cloud the goal is rapid adoption and we’ve seen that. We grew units over 10 per cent and the barrier to entry to allow next generation of creative professionals to the platform is a key part of our strategy, it’s one of an ongoing and continuous ways to get people to the platform. We’ve used Australia in the first region in which we’ve done detailed pricing studies," he said.

"The Creative Cloud is really the future of the creative process. The benefits of the Creative Cloud and having that access to innovation and the ability to get new products in imaging and video [suites to customers faster]. The future of the creative [customer] is the Creative Cloud. It’s all about Creative Cloud in future. The pricing moves [with Creative Cloud] are where we set the future of the company."

In his interview with The Australian Financial Review, Narayen was keen to point out that the shift to online distribution and the cloud will inevitably change the way tech giants price their products.

However, when it came to Adobe’s products Narayen had this to say to the AFR:

"You always have to look at different pricing in different regions and we do the research just like other companies," he said.

"We look at the appropriate pricing and the value associated with products everywhere.”

Adobe charges what it thinks the Australian market will bear so perhaps it was wishful thinking to expect that Narayen would flat-out admit it.

Opportunity lost?

As Narayen jets away from Australia, many following the IT price inquiry probably can’t help but think that this is an opportunity lost. It’s likely that Adobe won’t say anything else to anyone about its pricing until the inquiry hearing on March 22. And even then it’s not really impelled to tell the committee anything.

What we did hear about this week is Adobe’s Creative Cloud suite. Not that we’ll ever know, but it would be interesting to see if subscriptions have gone up as a result of all of the press it’s gotten this week.

Don’t be fooled. While the past week could be painted as a win for the Australian IT price inquiry, it is in fact a win for Adobe.

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