Microsoft's Response to the Vista Pricing Question

Caged · 5 Jan 2007 at 14:04

I emailed Microsoft the other day with regards to this, and received the following back:

Dear Sir/Madam,

Thank you for your e-mail concerning price differences between the US and the UK.

I can confirm that the U.S will usually be cheaper owing to the following reasons:

U.S resellers, particularly online ones may be able to sell the product at a lower price owing to them taking a reduction in their margins. They can normally do this more than resellers in smaller countries due to the economies of scale of selling to a larger customer base. I should point out at this stage, that as a result of EU regulations we cannot set prices ourselves. Taxation, which can be substantially lower in the U.S than the U.K.

Operation costs such as distribution and manufacturing can be significantly lower in the U.S owing to the same economies of scale as mentioned above.

Different Microsoft regional offices can offer promotions and discounts to resellers and consumers that are specific to their own region. Microsoft UK and Microsoft Europe will quite often offer such promotions that are not applicable to our U.S customers.

Finally, the differences in price can also vary with the currency exchange rate between the U.S and the U.K.

I hope this information has answered your query, but if you have any more questions, please call us on 0870 60 10 100. Our lines are open from 8am to 6pm, Monday to Friday, excluding public holidays. Of course if you prefer please send me an email.

Many thanks for contacting us.

Kind Regards,

ANOOP VISWANATHAN
Customer Service Professional
Microsoft Customer Services

So I sent a reply back:

Anoop,

Thank-you for your reply, I have just one more question.

If all of the above is true, and I have no reason to believe it is not, how can Microsoft keep the VAT inclusive price of their UK Xbox 360 titles much closer to the US price when converted into GBP? Surely the market size issues and taxation would also apply here?

Thanks

Jonny

I'll update this when I get a response.

Burnsy2023 · 5 Jan 2007 at 14:13

Doesn't seem a very convincing explination. Shouldn't the exchange rate mean it's cheaper here?

Burnsy

xsnv · 5 Jan 2007 at 15:54

I personally thought it made a lot of sense. U.S. traders can obvioulsy sell with lower margins if they have a much larger customer base and make similar profits to U.K. resellers.

burnsy2023 said:
Anoop,

Thank-you for your reply, I have just one more question.

If all of the above is true, and I have no reason to believe it is not, how can Microsoft keep the VAT inclusive price of their UK Xbox 360 titles much closer to the US price when converted into GBP? Surely the market size issues and taxation would also apply here?

Agreed but is it microsoft or the software houses that set the title prices?

Finally remember; Microsoft cannot legally set the prices itself in the EU so I think you're barking up the wrong tree...

Burnsy2023 · 5 Jan 2007 at 16:01

xsnv said:
snip

You miss quoted me

but a lot of what you saying does make sense I suppose. It's just it's such a high difference, I could understand if it was under £100, but it's nearly double the price.

Burnsy

xsnv · 5 Jan 2007 at 16:14

My bad...it would be intresting to know how much ocuk actually pay for each version because I suspect they're making quite a bit.

Either that or transporting cd's has become a very dangerous and risky business

Burnsy2023 · 5 Jan 2007 at 16:26

xsnv said:
I suspect they're making quite a bit.

Either that or transporting cd's has become a very dangerous and risky business

I was talking to one of my suppliers and apparently the profit margin is really quite small.

Burnsy

Klytus · 5 Jan 2007 at 16:29

Would a US bought disc work on a UK machine or are there compatibility, licensing issues?

Burnsy2023 · 5 Jan 2007 at 16:33

delbuenno said:
Would a US bought disc work on a UK machine or are there compatibility, licensing issues?

As far as I know, the only issue is support which you have to get from the states.

Burnsy

garyh · 5 Jan 2007 at 17:27

I thought there were issues with the media center stuff from the US version of Vista? ie. linking with the Xbox 360.

Burnsy2023 · 5 Jan 2007 at 17:59

garyh said:
I thought there were issues with the media center stuff from the US version of Vista? ie. linking with the Xbox 360.

Actually, that does ring a bell, could possible be an issue.

Burnsy

Klytus · 5 Jan 2007 at 18:15

What about buying a Vista DVD from the US and using that product key to activate a UK version? say for example if you have OEM Vista (UK) then change your motherboard and need another license.

Burnsy2023 · 5 Jan 2007 at 18:18

delbuenno said:
What about buying a Vista DVD from the US and using that product key to activate a UK version? say for example if you have OEM Vista (UK) then change your motherboard and need another license.

I'll be honest, I have no idea. I doubt anyone will know until the release and someone has tried it.

Burnsy

VeNT · 5 Jan 2007 at 18:35

xsnv said:
My bad...it would be intresting to know how much ocuk actually pay for each version because I suspect they're making quite a bit.

Either that or transporting cd's has become a very dangerous and risky business

arn't the disks printed in the UK anyway?

Burnsy2023 · 5 Jan 2007 at 18:40

VeNT said:
arn't the disks printed in the UK anyway?

If not the UK definetly europe. (Ireland or Holland I think)

Burnsy

NathanE · 5 Jan 2007 at 19:16

They're printed in Ireland.

cremo · 5 Jan 2007 at 21:19

any chance i could get mine sent direct from mircosoft, may save OCUK some shipping costs

daveydave · 5 Jan 2007 at 23:16

xsnv said:
I personally thought it made a lot of sense. U.S. traders can obvioulsy sell with lower margins if they have a much larger customer .

they also have a market with more competitors, when broken down the ratio or suppliers to customers is gonna be the same as over here. The are just doing what most profit hungry business do and exploiting an opportunity...to use our taxation and the other pony excuses he gave to pump up the price.

Macro · 5 Jan 2007 at 23:17

There other factors as well like the average wage in the US is less than the UK so a lot of stuff (like groceries) tend to be cheaper.

Most people that have visited the states tend to end up with a shopping list of tech items along with the old favourites like Levis (and if you're feeling well off Tiffanys). It's not just software. I'm sure there must be some kind of study on the background on this stuff somewhere, I can't believe it's escaped the notice of economists (any economics students out there?)

I suspect though a lot of it comes down to companies setting prices at a level that they believe the local market will accept though.

Thinking about it i've not checked prices in the rest of europe for comparisson, wonder how that pans out...