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¶ … age of globalization, we must ask ourselves if any companies truly have the need to segment the markets into tiny pieces as they did from 1960-1990? This is particularly true with software products -- especially those that neither requires a printed manual (online access) or a hard box and CD for delivery. Movies, games, and other software are priced 50-60% higher in Australia than they are in the United States and Canada, and Australia's parliament is launching an investigation because it simply does not believe that the costs are so much higher outside the U.S. Time will tell about the consequences, but certainly for Australians, Microsoft and Apple are not the most popular brands on the computer or entertainment center right now.

Introduction

It appears that two American multimillion dollar companies, Microsoft and Apple, are pricing their products at different rates for Australian customers than many other global clients -- particularly regarding music and games. For instance, Microsoft's Office Suite 2010 Professional costs American's about $350, while Australians pay $849; with similar issues in Apples Services and games. Even with the exchange rate, it looks like these companies charge Australians about 60% more. Australians and consumer watch groups are incensed by this discrepancy. Microsoft and Apple say that the costs are justified because they must set up support centers in Australia, pay local taxes, duties, and support the products (Ngak 2012).

Analysis

The problem with these pricing issues has become so severe that the Australian Parliament is involved. Apple and Microsoft will be among several technology companies asked to explain their pricing behaviors directly to Parliament. Stephen Conroy, Minister for Communications, believes that just because these companies innovate in technology, does not mean they innovate in business models -- and clearly, those presented in Australia are unethical and unfair (Peating & O'Rourke 2012).

What is most disturbing and puzzling is that both Microsoft and Apple are global companies with tremendous market share in Europe and Asia -- why is Australia specifically targeted for these types of price issues? It costs no more from the bottom line to set up a technology center in Australia than it does anywhere in the world. Moreover, why do support centers need to be brick and mortar? In this age of technology, we know MS and Apple both have a number of support centers in India and other countries that simply accept toll free calls 24/7. The size of the Australian market is also not a viable excuse for price gouging. Australia has about 23 million people who are just as technologically wanting and savvy as Americans and Canadians. Even if we placed a conservative estimate of a market needing 10 million pieces of software, movies, or games, that is hardly a small market for either company -- particularly when the materials do not need to be repackaged or retranslated into another language (Population Clock from the Australian Bureau of Statistics 2012).

All software is not created the same, however. For instance, organizations in Australia who want to subsribe to a corporate version of Office, Office 365, must do so through Microsoft or Telstra. Subsrctipions require 250 destops and a more full featured enterprise system. Given the exchange rate, and the technology needed to support these services, a price difference is reasonable (Strant 2012).