Channel faces import law chaos

Channel faces import law chaos

The Federal Government has finalised a lifting of restrictions on parallel importation of software, but major vendors and distributors are struggling to see the point of the exercise.

The amendment to the Commonwealth Copyright Act will see Australians more easily able to purchase wholesale software directly from overseas vendors, rather than through a controlled network of local distributors.

According to the Federal Government and the ACCC, the amendment will enhance local competition and drive down retail prices of overseas-manufactured software.

However, the national marketing manager for software distributor Express Data, Peter Masters, believes prices cannot be driven far below existing levels due to already tight profit margins. He also believes a software industry trend towards global pricing structures will leave little room for price cuts.

Additionally, low pricing is no longer a key differentiator for a supplier, he said, citing post-sale offerings such as local support, maintenance and returnability as more important considerations for customers.

"[The restriction lift] is not a bad thing and not a good thing. It could well be a non event," he said. "We don't see it as any kind of threat whatsoever."Fiona Stewart, Tech Pacific's marketing and communications manager, said the distributor was not yet fully aware of how the proposed legislation would affect its agreements with key vendors, but added it "would be following it very closely".

"Our understanding is that an industry group will be making a submission to the Government and certainly Tech Pac will be involved in that process," Stewart said. "In the event that there are changes to importing restrictions, we will be having conversations with our key vendors as to just how we will deal with the situation."Oliver Descoeudres, marketing manager of e-commerce solutions provider NetStar, took a similar stance to Masters, dismissing any significant effects of the amendment on the integration industry.

Integrators that install overseas-purchased software will have damaged reputations if they sacrifice local support for the purpose of saving money, he said.

Descoeudres said only purchasers of low-cost, low-maintenance software were likely to benefit.

However, Masters said cost savings for low-end purchases resulting from the amendment would be negligible, given shipping costs.

John Slack-Smith, Harvey Norman's general manager, computers and communications, said one report had software prices 30 per cent cheaper than current prices; that is well wide of the mark.

"We have experience with our Harvey Norman stores in New Zealand and the few specific instances where prices are significantly cheaper are the absolute exception," Slack-Smith said.

He added HN had "strong, robust relationships with our distributors and if anything we want to cement that".

"The end result should be improvement for the consumer, but we can do that working with local organisations," he said. "Certain products may have a price reduction, but on the whole I do not see our systems changing in our software supply business."The local operations of software vendors Microsoft and Novell also shrugged off the possibility of any real effects arising from the law relaxation.

Ross Whitelaw, general manager of buying cooperative Leading Edge Computers, said the issue was not as simple as the media and Government would have the industry believe.

"It hasn't made a major impact on the music industry," he said. "There are lots of difficulties involved. In the music industry, for example, companies can import as much of the back catalogue as they like, but it is hard to know what is hot in terms of sales and import that in volume.

"It is not quite the same in the software market because the market includes perennial best sellers, but the support issue is significant. There will be a number of companies not providing support to those products unless they have a directive from the parent company. Suppliers often furnish significant support to their products and help drive sales. By importing directly and saving a few bucks, you may be affecting your chance of increasing your overall sales," Whitelaw said.

Then there is also the matter of piracy. "It is frightening when you see how much flagrantly pirated software is sold in Southeast Asia. So it is not as cut and dried as the media or the Government want to make it out."Microsoft said its current partner-based distribution model meant the amendment would have no effect on the vendor's pricing.

Likewise, Novell said pricing would remain the same due to its global pricing model.

The Australian Information Industry Association (AIIA) has said it will be consulting with its members on the proposed lifting of parallel importation restrictions. In a statement, the AIIA said it would ". . . vigorously represent their views when the draft legislation to implement the Government's decision comes before Parliament".

Rob Durie, executive director of the AIIA, said the difficulty at this stage was that it did not know what form the legislation was going to take.

"This is a very long-standing issue and we've on the record as opposing those changes, but before we go into any sort of lobbying we'll be sitting down with our members and just sorting out where they stand."

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