IT News is all about government intervention today.
Leading with stories on the London Taxi blockade and the likely unpopular stance of the AIIA to recommend not introducing legislation to address the so-called “Australia tax” on IT products and services.
It all comes back to innovation. Uber, who the Taxi drivers are complaining about, is innovating. They’ve developed a high quality service that customers want. They are disrupting an industry. They are doing what every management consultant has been telling them to do (though I’m not suggesting that’s why they’re doing it).
As usual, their competitors want protection from the government. Which seems unfair and all very anti-competative of the taxi drivers but I understand where they are coming from. They don’t just want protection – they want protection in exchange for the all of the regulation they have had to endure in the past:
“Why, asked the drivers, is Uber allowed to compete in an industry that is otherwise highly regulated?”
Fair point. Previous legislation has an impact of future expectations – remember that.
Back here in Australia, where Microsoft has admitted it is engaging in the horrendous crime of “charging what Australians could bear” – AIIA is recognising that legislation that caps prices will just as likely cause exits from the market as it will cause lower prices. Just like minimum wage legislation – however desirable in its intended outcome – can’t help but cause jobs to disappear.
But what if it’s not just that Australia can bear higher prices? What if this just plays to our pride in being a lucky and prosperous country? What if Australia’s payment of higher prices reflects an innovation challenge?
It’s not all about price elasticity. There is another major competitive force at work here – the threat of alternatives. Perhaps the reason Australia appears to bear higher prices isn’t because of the prosperity of the lucky country no matter how much we want to believe it.
Perhaps Australia is paying more for IT products and services because our knowledge of alternatives is less.
I’m a happy Apple customer so I’m not knocking Apple products at all. But Apple was slow to make a dent in the Asian market because there are so many other options there. Success in Australia’s limited option market probably helps fund expansion into Asia (speculation).
Knowledge and availability of alternatives is an important force in competition and therefore prices. I’d argue that availability isn’t a problem in Australia (though it might be if you tried to regular price) but rather the problem is knowledge of alternatives.
I’m not just talking about alternatives to Microsoft Office like OpenOffice, LibreOffice, Google Doc, etc. I’m talk about alternatives to Microsoft Office like focusing on the content! Like not needing to write a long complex document to get things done. Like maybe using Photoshop instead and creating something a little more visual.
I’m also talking about alternatives like experimenting with your digital channels to try out new integrations with your customers using the devices they already use. Rather than writing an internal document to explain to a disengaged management team something they should already know. Take that team to a customer site. Or at least show them the data you have collected about in-store traffic flow.
AIIA has the right idea. The legislative framework needs to create the environment for innovation here in Australia. Not to try and protect us from the companies we freely purchase products and services from. The Australian response doesn’t always have to be legislate, or boycott, or feel helpless. Sometimes it has to be – innovate.