Adobe chief dodges questions over pricing

Last updated 16:54 14/02/2013
Fairfax Australia

Adobe’s global CEO Shantanu Narayen defends product pricing of the Adobe Suite at the opening of the company's new office in Sydney.

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Adobe's global chief executive Shantanu Narayen has been forced to defend why his company charges Australians $1800 more for some its software when compared with what it charges in the US.

Narayen was in Sydney on Thursday to open a new Adobe office alongside Communications Minister Stephen Conroy and NSW Premier Barry O'Farrell, which will be home to about 200 Adobe employees.

But the main question journalists wanted Narayen to answer was why his company continued to gouge Australians when charging for some of its products. As recently pointed out by technology website Gizmodo, in one instance it's actually cheaper to fly to the US and back than to buy a product from Adobe on Australian soil.

Adobe's Creative Suite Master 6 Collection, which in Australia costs A$4334, carries a price of US$2599 (A$2509) in the US, leaving a price disparity of about A$1825.

"It's still cheaper to fly from here in Sydney to Los Angeles, buy it there, and come home. By doing that I'd save $601, and I'd get Virgin Australia frequent flyer points, too," wrote Gizmodo Australia's Luke Hopewell.

Before answering questions, Narayen predicted price disparity would become a topic of interest among journalists asking questions, and tried to avoid the topic by repeatedly saying that the future of Adobe was a move to cloud-based products instead of something you have to install on your computer.

On Wednesday, Adobe announced a price reduction in Australia to its cloud-based products, but came under fire from consumer advocates for not cutting the prices of other software that can be installed on computers.

Narayen said before questions were asked that some of the recent announcements Adobe had made on pricing of cloud-based product were about continuing "rapid adoption" of that particular product.

He said cloud was where Adobe saw the future of its Creative Suite products, adding that Adobe was using Australia as the first region in which the company had conducted "effective sort of pricing studies".

"[It] is a key part of our strategy and it's just one of an ongoing and continuous way in which we continue to look and attract more customers to the [cloud] platform," Mr Narayen said.

But he refused to say why Adobe's traditional software-based products, which many businesses and individuals continue to use, would not also get a reduction in price to make their cost comparable to what the US pays.

"The future of the Creative [Suite] is the Creative Cloud and so when we look at how we get that access to customers it's all through Creative Cloud and so that really has to be viewed as what the focus is and so the pricing moves there are very much in line with where we see the future of the company," he said.

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But that answer wasn't enough for journalists, with one stating Mr Narayen wasn't answering the question.

"How can Adobe possibly justify charging up to $1400 more for the exact same software delivered in Australia delivered over the internet with no box copy compared to the US prices?" asked journalist Renai Lemay.

Narayen responded by saying that Adobe "really believe[d]" that if you looked at what it had done with pricing with Creative Cloud it has resulted in "a great value" to its customers. "We think that's the future of the company and I think it's a very attractive opportunity right now in terms of pricing."

He added: "I think the message I'm trying to send all of you is that the Creative Cloud's the future of Creative and when you look at the value that customers ... are getting through the Creative Cloud, we just think that that's phenomenal value for our customers."

After further prompting to answer the question by Lemay, Narayen said: "All I can say is when we think about the future of what's the best offer for customers ... we think about the Creative Cloud. We think we have a great offering at a great price for customers and the value of that is there."

A minder then interrupted further questioning, saying: "So as much as we appreciate the questions I think this opportunity of [Narayen] being here is a chance to also give a talk about the opening of this new office ..."

After other unrelated questions, Narayen was again drawn back to pricing.

"Can you rule out cutting your prices for other non-Creative Cloud products?" journalist David Ramli asked.

Narayen said: "You know we're always looking at pricing around the world and I think the meeting today is all about sharing where we're heading as a company with the Creative Cloud and the Marketing Cloud.

"I think we're constantly looking at what's the best way to deliver value to our customers ..."

Narayen's comments come after Adobe, Apple and Microsoft were on Monday summonsed to appear before the an Australian IT pricing inquiry in Canberra on March 22. They have been accused of stonewalling efforts by politicians to figure out why Australians pay so much more than Americans for identical technology products.

- The Age


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