Microsoft criticized for higher pricing in South Korea

Microsoft Corp. is facing criticism from the South Korea government over charges that its products are more expensive in South Korea than in other countries.

South Korea’s Program Deliberation and Mediation Committee (PDMC), which is part of the country’s Ministry of Information and Communication, earlier this month said Microsoft products are more expensive in South Korea than in the U.S. The gap between these prices means South Korean users are paying, in some cases, three times as much as U.S. users, according to the PDMC.

“Microsoft SQL Server 2000 Enterprise price for 25 clients is US$4,790 in the U.S. but 18 million won (US$17,930) in Korea,” the report said. That represents a 3.7-times difference in price.

The report went on to say that, “the price of Microsoft Windows XP Professional is 54 per cent higher and Home Edition is 36 per cent higher than in the U.S. It is the same in the case of Microsoft Office 2003 Professional and Microsoft Visual Studio .Net Professional 2003.”

“This report has some errors,” said Seoul-based Microsoft Korea in a statement released Tuesday. “The PDMC report is based on a simple price comparison. Microsoft doe not decide the final local retail price and therefore the decision of product pricing is at the retail vendors’ discretion,” the company said.

However, Microsoft has conceded one case in which South Korean charges for its Hotmail service are not equal with other markets, including the U.S.

Microsoft announced in June last year that it would expand the storage allowance on its Hotmail service from 2MB to 250MB for some accounts. The expansion was offered in nine countries: U.S.. U.K., France, Germany, Italy, Japan, Spain, Canada and Australia. But South Korea was excluded from the list. As a result, South Korean users must pay to get access to enlarged storage capacity in their Hotmail accounts.

“Our U.S. headquarters office decides the schedule of the e-mail capacity expansion according to the online advertisement market and subscribers. Korea seems to lag behind in the benchmarks,” a Microsoft Korea spokesman said.