06 December 2006

Microsoft UK rip-off

“The UK’s future competitiveness depends on IT,” said Gordon Frazer, Microsoft’s UK managing director at last week's launch of Vista claiming that Vista and Office 2007 would have a real impact (though I find this hard to see unless other countries don't upgrade as fast - assuming indeed that upgrading DOES help productivity).

The UK has been a huge market for Microsoft, and we have a particularly soft public sector that accepts anything Microsoft throws at it for extortionate amounts of money.

So how come if the UK is so important to Microsoft, and that the company is so concerned with our productivity does it ensure that its software should cost twice what it does in the States?

I was wondering what it would cost for instance to put XP Pro or Vista on a Mac using Parallels. So I checked out Amazon:

Amazon.co.uk - Windows XP Pro SP2 Cost £232.99 (reduced from £289.99)
Amazon.com - Windows XP Pro SP2 Cost $239.99 (reduced from $299.99)

Even allowing for VAT on the UK version that is an exchange rate of £1=$1.21 at a time when the dollar is almost at the 1:2 ratio. Microsoft already makes gross margins of over 85% on Windows. It means in the UK, it makes double the profit.

This is not an isolated case. For Microsoft Office 2003 Professional, the price is £399 UK vs $414 US. It is possible to get both applications cheaper in the US (for instance NewEgg has Office 2003 at $359). Many US stores are also carrying Vista upgrade offers (though I've read some horror stories there too).

To me this is outrageous and unjustified, yet I see no fuss about it. Where is our good media when they're needed? This is a scandal that our competition and consumer bodies should be looking at now!

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Charles said...

You'll have noticed that we covered this at http://technology.guardian.co.uk/weekly/story/0,,1975953,00.html

..see, it is worth reading.

Ian Hobson said...

Well Charles,

I published my article on 6th December. The Guardian article is dated 21st December. So, what exactly would I have got from reading the Guardian?

Second, my article is aimed fairly and squarely at Microsoft. Trust their apologist Jack Schofield to let them off the hook in both making the Guardian article far more general and in letting them put their very weak excuses.

The very worst case of Apple exchange rate nastiness for example is on the one he notes - Mac OS X - a product released more than 18 months ago. The exchange rate (VAT effects excluded) is around $1.70=£1. As I point out, Microsoft's products seem to use a rate of around $1.20=£1. That's quite a difference.

Furthermore, while Apple also has the same localisation issues as Microsoft, there is just one package of Mac OS X to my knowledge. And indeed, with Apple products I can buy them anywhere I wish. With Microsoft, I am NOT allowed to buy my products from a US supplier and install them here (just check sites such as Amazon for this). So much for globalisation. Our government, which is possibly Microsoft's biggest customer (including the NHS), is being stuffed by this farcical situation.

While Adobe may also be guilty of these practices (though percentage wise they don't appear as bad as Microsoft), at least with Adobe you have a choice - buy something else. For the vast majority of computer users when it comes to OS and Office applications, there is of course just Hobson's choice as I might say.

The exchange rate anomaly now with Microsoft is far too big to put down to a normal bit of dollar/pound variation. This is an abuse of power that the UK and EU should be looking into. That was the thrust of my post. The Guardian had an opportunity to make more of a deal about this to the benefit of the British consumer. It wimped out.

AmberCat said...

I could not agree more.

We are being well and truly screwed.

See How the British Consumer is being screwed