I’m generally pro-Microsoft. In my business life I’ve used the company’s software for more years than I care to remember, and most of my clients run a version of Windows and/or Office – Microsoft is more or less in my blood. You could be forgiven for thinking the company can do no wrong in my eyes, and until fairly recently you might have been right, but things are changing.
Microsoft is wrong to assume UK users will pay more
On Tuesday Microsoft will release Vista – the latest and much-awaited version of the Windows operating system. All major Microsoft releases are fraught with pre-launch rumours of security flaws and stories about incompatibilities, and generally I’m fairly philosophical – the software usually speaks for itself, and despite the doom and gloom merchants, most people eventually migrate to the new version. I’ve seen it happen over and over again.
This time, however, it’s different as Microsoft appears to have shot itself in the foot in a way that is far-reaching, and could have a major impact on Vista’s success.
I’m referring to the fact that here in the UK you’ll have to fork out around £220 for the Home premium version of Vista, but in America you could pick up precisely the same software for $230.00 (£115) - quite a difference, isn’t it? The are similar price hikes for all of the consumer versions of Vista.
Explaining away such a huge disparity in selling prices isn’t easy, surely it can’t just be old-fashioned greed, a ‘charge what you think you can get’ marketing policy? Steve Dunn, Microsoft’s finance director should know, so I asked him to help me out, and here’s what he said: “Microsoft wants to ensure transparent pricing for all its customers. Although the current dollar/pound exchange rate is high comparative to the beginning of 2006 it's not unprecedented in the context of fluctuations over the past few years. Other factors impact the price of Microsoft products, not least the costs incurred in delivering European packaging and settings plus the cost of marketing in many languages. In addition the scale and volume of the US market will drive a price differential.”
Now I don’t know about you, but that didn’t do the trick for me – it seems to leave lots of questions unanswered, such as ‘why does it cost so much to deliver European packaging?’. I have my Windows XP Professional edition pack in front of me, and try as I might, I haven’t been able to find anything specifically European on or in it at all. In fact the leaflet inside directs me to telephone numbers in the US and Canada if I want support.
I’m sorry Microsoft, but it doesn’t wash, any more than “…..the scale and volume of the US market”. Fair enough, the company has to make more Vista DVDs in the US than in Europe, but come on Microsoft – surely that doesn’t account for more than a few pence on the overall cost of the software to the consumer? Development costs are broadly the same for a European customer as for an American one – translation costs will only account for only a tiny fraction of the selling cost.
I was so dissatisfied with all this that I asked Microsoft for additional clarification, I told the spokespeople that I wanted to be scrupulously fair, and offer the company the chance to tell me that it wasn’t simply operating on the ‘because we can’ principle of pricing. I made that request via the Microsoft press centre on 6 January, and I’m still waiting for further information three weeks later.
There’s no reason why the company should justify its pricing policy to me of course. It’s a commercial decision. It was no doubt the result of considerable market research, which makes it all the more worrying. Microsoft appears to have failed to recognise the warning signs that we at PC Advisor have seen for some time, signs that UK consumers are simply not going to stand for what some people have called blatant profiteering.
We asked our online forum members what they thought, and the result sent a clear message to Microsoft. Of the 2481 people who responded 48.9 per cent said they wouldn’t be buying Vista at UK prices, and a further 46.4 percent said they were quite happy with their current operating system.
Any software company which ignores that level of apathy does so at its peril, and I believe Microsoft may pay a heavy price for its apparent reluctance to engage with its user base on this issue. I’ll continue to badger for more dialogue with the company, because I feel we all deserve better treatment, but don’t hold your breath, it’s an uphill battle.