KEY POINTS:
Apple computers cost more than others. Yep, they do. What you buy is an integrated solution. Yes, many (if not most) of the components have been made using mass production techniques in Asian factories where, yes, most other PC components are made.
But, like Apple's software, the
components were either designed by Apple or have passed Apple's criteria for integrating with Apple-designed components.
Apple puts massive effort into research and development, and indeed came up with the first mass-produced mice for computers, invented the track pad, integrated FireWire and USB into computers widely before anyone else and is responsible for thousands of other hardware and software innovations usually eventually aped by many others. This pushing of technological boundaries is costly.
Apple's integrated approach makes Macs much less expandable than some PCs, which is great for all those people who prefer producing work on computers to actually working on their computers. These Mac users would be analogous to people who prefer driving cars to playing with the engines in them. And yes, there's room for both types of people.
But even so, there is a widespread perception that people outside the US - and particularly at this end of the world - pay more for Apple hardware and software. This perception is bang-on, because we do pay more.
We're a long way away from even the closest Apple assemblers in Asia - there are shipping and insurance costs.
The price difference was much more extreme 15 years ago than it is now, and even three years ago there was quite a differential. A lot of this was put down to the fact that all the Apple-branded products sold legally in New Zealand were handled by Renaissance, the one company with the Apple license. Sales, warehousing, training, distribution, transport, marketing and other infrastructure costs had to be covered.
Apple eventually mandated the margins that could be added to Apple products here, which improved the price point for buyers. The strength of the NZ dollar has helped, too. When Australia got its own branch of Apple, prices subsequently dropped a little over there.
A couple of years ago Apple Australia took over online sales of its products here. Apart from putting all the Apple branded products on Apple's international pricing model - which cut prices overnight by around 4-8 per cent depending on the item - this led to other benefits. These included being able to order iPods online complete with laser etching, like those in the US. It gave us the NZ iTunes Music Store and, later, let iPhoto users access to ordering books, calendars and more straight out of iPhoto, delivered finished to your door in just over a week.
With the recent opening of the huge Apple Store in Sydney - the first in Australasia - Apple's senior vice-president for retail Ron Johnson was surprised to be criticised for Australian prices on Apple products. He said that "In every quarter, we look at the various exchange rates and try to get the product prices as well as we can."
Somewhat disingenuously perhaps, Ron Johnson also said that, based on the growth in sales figures he has seen, price is clearly not an issue for Apple's Australian customers. Ouch!
This comment could hardly be expected to please the critics. He reckons, from hundreds of emails he gets a day from customers, he's never had one email complaining about Apple's pricing. I expect he combines a very efficient PA with a good email filter, then.
CommSec's chief equities economist Craig James has noted that, despite there currently being near parity in the US-Australian exchange rates, many Apple products in Australia sell for between 15 and 30-plus per cent more than they do in the US.
So although Apple's international pricing structure has passed on a few benefits to New Zealand customers, it seems that some fine tuning of currency exchange rates could result in still better pricing structures for Australasians. We've still got a long way to go.
Mark Webster - mac.nz
