This week saw the introduction of various new Apple products. Everybody has their own opinions on these new products, and websites all over the world saw enough discussions about the integrated video card of the Mini, the ‘HiFi-ness’ of the iPod HiFi, and more. Another issue, however, which got considerable less attention, was that of pricing. And no, I’m not talking about expensive-or-not (God, no). I’m talking about price differences between the US and Europe. And quite frankly, it’s pissing me off. Note: This is this week’s Sunday Eve Column.
I know that the pricing differences Apple maintains between Europe and the US has been a much–debated topic over the past few years, but I again wish to put it under the spotlight. Why? Well, because the pricing differences just hit an all-time high (or low, depending on which side of the Atlantic you live): the price of the new Intel Mac Mini has been raised by $100 in the US, but with EUR 150 in The Netherlands. To give you an idea: with today’s exchange rates, $100 equals EUR 82, while EUR 150 equals $180. In other words, the price raise is roughly twice as high on my side of the Atlantic than on the new side of the Atlantic.
Now, whether or not the actual price raise is justified at all is a personal matter; some will find the new features worth it, others will not. However, I do think we can all agree that the difference in the price raise is completely unjustified, as the Intel Mac Mini Europe Edition doesn’t have any better specifications than the US Edition.
All this prompted me to do some more comparisons of US prices to Europe prices. Remember that I corrected the following prices for VAT (BTW in Dutch), so all prices mentioned are without any sales tax. Prices were rounded up or down to whole euros or dollars, where applicable. Dutch prices were used.
Now, let’s convert all that to dollars:
You see the pattern? Software is only slightly cheaper in The Netherlands (av. 2.8%), while hardware is significantly more expensive (av. 8.375%). Of course this is only a selection of Apple’s product range, but I’m fairly confident when I say that if you were to compare the prices of Apple’s entire product range, you’d find similar figures.
Now, of course these figures only go for The Netherlands, and you cannot use these as an example when speaking of Europe as a whole. However, a quick check over at meine Deutsche Nachbarn shows that prices in Germany are rather similar to those of the Dutch online Apple store. It would be interesting to see how the prices of other European countries stack up.
Of course Apple isn’t the only company which employs these unjustified price differences; as such, it would be interesting to see how the pricing of other multinational computer companies differ between both sides of the Atlantic (companies such as Dell and HP). I’m again fairly confident when I say that you’ll find a similar pricing pattern there.
Now, what reasons could there be for these prices differences? To be honest, I can’t find any. You could say it are local conditions; but over 8% on average is a lot for mere local conditions. Also, this reasoning doesn’t explain how the 8% av. is consistent between The Netherlands and Germany (since normally speaking Germany is a ‘cheaper’ country when it comes to electronics, including computers and computer parts, than The Netherlands).
I’m wondering how long companies will be able to get away with this. With the ever continuing globalization of the world market, and the ever growing significance of online (incl. international) shopping, it’s gonna be interesting to see how long companies will be able to ‘hide’ the differences from their ever more aware customers.
–Thom Holwerda
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I wonder if the actual product sourcing for the hardware in Europe is different than the US – could explain the higher costs. Maybe look into import/shipping costs, too? I don’t know for sure, just an idea.
Anyhow, a price within 10% doesn’t seem like that big of a deal to me. That seems like a reasonable buffer for currency fluctuations. Apple’s going to have to spend a little extra money to convert all those euros back into $s at the end of the day.
Edit: Comment removed because as Thom rightly pointed out I was talking nonsense 🙂
Edited 2006-03-05 22:10
I believe taxes come into play too. Apparently European prices always include sales tax (VAT or value added tax, BTW for dutch speakers) while US prices don’t as they vary from state to state.
Tyr, I’m used to see valuable comments from you– not a comment that seems to be made from someone who didn’t read the column: I specifically said that I removed all taxes from the prices, to create a level playing field
.
Edited 2006-03-05 22:07
Off-topic, but could people stop going back and editing their posts like this? You could have left the post there, and added the “Edit: As Thom rightly pointed out I was talking nonsense” without removing the message. Or even better, not use the “Edit” function at all, and just reply to Thom’s post apologizing.
While it’s not a big deal here, since Thom included the post in his reply, there have been other instances where a reply makes no sense because the original post was removed like this.
While it’s not a big deal here, since Thom included the post in his reply, there have been other instances where a reply makes no sense because the original post was removed like this.
I didn’t want to bring down the signal-to-noise ratio with additional posts, well so much for that idea 😉
And the US folks too.
Don’t buy apple $99 Leather iPod case, I got one here for under $20 with more features.
http://www.jr.com/JRProductPage.process?Product=4072638
Now I know your smart enough not to get that overhyped, underfeatured iPod HiFi box.
So that’s some more money saved.
Of course buying a PowerMac Quad, even though it’s more up front, will save one considerable amount of money over the long term, of course the worst buy is expensive 32bit Mac laptops when the Firewire 800 has been stripped, so a cheap Dell laptop with OSX86 on it may be a better buy until the 64 bit dual cores arrive.
Apple has this formula, to make a certain percentage on each product or they don’t want to bother, we just have to make the same adjustments.
Of course a lot has to do with each respective countries tax policy.
I also want to add if you want a offical Apple Mactel Mini disassembly/hardware repair guide I got one. PDF.
homepage.mac.com/hogfish/
Edit:
Ahh yes the taxes have been removed, now that does bring up some interesting questions, is the costs of shipping/repair higher?
MacBook Pro 1.83Ghz: $1999 – $2166 [+8.3%]
Intel Mac Mini Core Solo: $599 – $657 [+9.7%]
Intel iMac 17″: $1299 – $1397 [+7.5%]
OSX Tiger: $129 – $125 [-3.1%]
iLife ’06: $79 – $77 [-2.5%]
iPod Nano 1GB: $149 – $161 [+8.0%]
Yes it seems it’s higher hardware related costs somehow, perhaps it’s got something to do with the exchange rate fluxuations and Apple is just giving itself 10% leeway.
Edited 2006-03-05 22:30
Hi,
Some more ideas for the price difference:
– Special regulations required for each country, like required native language documentation.
– Diferent power connectors.
– Different or stricker laws concerning product safety and warranty.
But the most important reason is that you sell your product the higher you can. For now Apple hardware is still viewed has an luxuary item over here in Europe.
The most significant difference is because of legal requiremnt for at least 1 year warranty here in Europe. The average 8-10% difference you see is there to compensate mainly for two things:
– warranty extension from 90 days to 365 days.
– FX volatility as teh company’s P&L is reported in dollars.
Tom, now does it make sense to you why Software is approx the same price while hardware is more expensive? Hint soiftware doesn’t really have any enforfeable warranty while Hardware does..
There is already a 1 year warranty in the US, it’s only 90 days of free support.
So if the legal reguirement is to give 1 year support then I can see the additional 10% avg price hike.
Reagrding the 1 year warranty, in New Zealand, the warranty, or what is known as the ‘expected life of the product without failure’ is considered 2-3 years.
If you have purchased an Apple product in New Zealand, don’t get pulled into the ‘extended warranty’ crap – they, Apple, have a legal obligation, under the Consumers Guarantee Act to ensure that your computer, give normal use, to last 2-3 years without a hitch.
Remember folks, legal requirements surplant what ever the vendor has in its small writing.
The European Union rule for warranty is actually *two* yers, mandatory, at least for defects not spottable by the customer.
The European Union rule for warranty is actually *two* yers, mandatory, at least for defects not spottable by the customer.
No, not the warranty. It refers to a “2 years right to file a complaint”. The guarantee/warranty period is 1 year only. But the judge will “listen to your arguments” the following 12 months after the warranty expires. After that, you are one your own and usually wrong
.
I do know people that have gone for a holiday to the US and have brought back a powerbook for a friend along the way because it was cheaper than in the UK. And you can hear people being irritated by the price difference every day.
Regards
The VAT taxes don’t operate exactly like a sales tax because the product is taxed every step of the way in the manufacturing process which means that they may be including VAT for the processor, case, powersupply, hdd, dvd drive, etc. in the cost of the product. I’m not exactly sure how VAT works in each country but it is most definetly not a sales tax. For one thing a sales tax is an external and not interal tax which allows you to see how high your taxes are in an area instead of merely having the cost included in the internal price tag of the product. VAT is one instance of a non-tariff barrier to trade between countries. Other non-tariff barriers include complex regulations and quotas which may raise cost by any where from 5%-15%.
Also while the EU typically maintains low tariffs for most product segments it may have much higher tariff costs for certain product segments such as electronics.
Not to make you think that I’m Europe bashing but the EU as well as the US need to start liberalising their governments and let in some competition. I mean look at how well Britian is doing in regards to most of the rest of the continent, at least until Blair’s most recent reappointment as PM, but hopefully Labour will give him the boot and bring Gordon Brown in before Blair’s silly policies start harming the economy.
@ asupcb
The VAT taxes don’t operate exactly like a sales tax because the product is taxed every step of the way in the manufacturing process which means that they may be including VAT for the processor, case, powersupply, hdd, dvd drive, etc. in the cost of the product.
Errr, companies usually get a refund for all their paid value-added taxes at the end of the fiscal year. So, it’s only consumers who really pay the VAT, thus it is a sales tax.
The European Union enforces that all consumer goods have to be sold with a 2 year warranty. This is not the case in the United states where Apple products are usually sold with a warranty of only 12 months (like the Mac Mini, for example). Same applies for DELL to name another well known computer company.
The different legal situation regarding product warranty could in many cases justify a 5 to 10% difference in price as you have to deal with a higher amount of accrued liabilities, i.e. less cash to invest freely.
No offence intended, but I was a bit disappointed by the opinions expressed in the last two Sunday Eve Columns. I am looking forward to the next one and hope I will like it better.
Well that explains it. Really no need to go any further.
I agree this Column need a bit more work, it sounded more like a vent.
Well that explains it. Really no need to go any further.
No, it does not explain it. Why? Because there are bound to be laws or legal requirements in the US that negate the effect of the extended warranty– laws that have no equiv. in Europe.
Other than that, I don’t think an extended warranty can account for a price raise of 7-9%.
Oh and besides, I also don’t think the extended warranty is the cause of the absurdly high price raise of the low-end Mini, now is it?
Edited 2006-03-05 22:54
Furthermore, Apple does not give you a two year warranty in Europe. I live in Belgium, and that is only an hour from The Netherlands so things aren’t really any different. Same goes for France and Germany. Apple sticks to the one year and 90 days of free calls. That’s it. No extended warranty of 2 years. (However, they should! So in fact, Apple is doing something illegal
)
I think that the main reasons for a higher cost are:
* Localization (For Belgium, this means an Azerty keyboard, both dutch, french and german localizations of the manuals and further tiny stuff).
* The overall higher cost of labour in Europe. Since someone needs to deliver it to your doorstep.
* And then come all kinds of European regulations that require some minor modifications. (The one that pops in my mind is the limit of dB that the iPod may produce in Europe is quite a bit lower than in the US).
Is all this really summing up to an additional price tag of about 10% ? I don’t really think so. It is a small reason, but not THE reason.
So why do they charge the extra money?
Hell, maybe they want to increase the penetration rate of Apple in Europe drastically. Therefore, they have been charging extra high rates from Europeans in the last 30 years to launch a massive advertisement campaign to make all Europeans change to a Mac. Or they just see that there are no alternatives in Europe and so they charge a bit more. Just for themselves. And the accountants of Apple love it. It just makes Apple think a bit different. (wow, what a play of words.)
EDIT:
I did a quick check here. Where can we buy a Mac? The choice is in fact quite limited:
– Apple Store online.
– Apple Centre or other Apple vendor.
– …
– Ah, that’s it. Nope, no Amazon. Other sellers? Sure, but they have to buy it from Apple themselves. Any others? No, well, at least none that John Doe would be able to find and order from. Even contacted a friend of mine who has a computer store. He buys his Apple equipment from a reseller. And that reseller buys his stock from…. (you know you know it) … an Apple Store.
Edited 2006-03-05 23:20
* Localization (For Belgium, this means an Azerty keyboard, both dutch, french and german localizations of the manuals and further tiny stuff).
Dutch Macs ship with the same keyboards as US ones. True Dutch keyboards are very rare, actually (I have one, a very old IBM keyboard that came with a real ps/2).
* The overall higher cost of labour in Europe. Since someone needs to deliver it to your doorstep.
As I already said, all prices are excluding shipping costs.
* And then come all kinds of European regulations that require some minor modifications. (The one that pops in my mind is the limit of dB that the iPod may produce in Europe is quite a bit lower than in the US).
That does not matter either; you might as well say: the US requires a higher dB limit, so they must be more expensive in the US. Get my point?
Just to preface this, I used to work for Apple, but these are my opinions based on observations outside of my employment. Common sense, actually.
“Dutch Macs ship with the same keyboards as US ones. True Dutch keyboards are very rare, actually (I have one, a very old IBM keyboard that came with a real ps/2).”
Well, that’s nice. There are other countries in Europe, you know.
“As I already said, all prices are excluding shipping costs. ”
That’s wonderful, but that doesn’t change anything. Labor in Europe costs more money. Just because delivery to you isn’t included in the price, it doesn’t mean all delivery/shipment/warehousing costs aren’t. Those add up to a substancial amount, and *you* are going to pay for those additional costs. Apple isn’t just going to eat the cost because you write a rant.
“That does not matter either; you might as well say: the US requires a higher dB limit, so they must be more expensive in the US. Get my point?”
Your point is off the mark, I am afraid. USA = Apple’s primary market. That’s where their cash comes from. So, the products are designed for the US market, the US people, the US laws and regulations.
ANY deviation from this, costs money. Economies of scale make mass production less expensive, the more standardized your products are. Any and every change made costs additional $$$. It may not seem like much to you, but in manufacturering two products with slight differences can cost a fair amount more than simply popping out one model.
Using your (OPs) example about the iPod. In the US there isn’t a limit on the output of iPods (well, if there is, it’s pretty high.) People want their iPods to be as loud as possible for various reasons. Therefore, Apple makes iPods which can output at Xdb. Now, here comes the EU to the rescue! In order to sell iPods in the EU, they’ve got to limit the output of the iPods there. That requires a deviation from the norm/standard product. You can argue all you want about “it’s a simple software change!” or “it’s a simple hardware change!”, but those *simple* changes add up to $$$ in production that have to be offset somehow.
Oh, and concerning the prior discussion concerning warranty. If it’s legally required by your local government for products up for sale in your country (not just products manufactured in your country) then Apple *will* obey they laws. They can’t afford not to. You better bet those costs are also factored in.
There are various other costs involved, additional laws and regulations they have to submit products for certification and so forth. So not only is Apple having to get FCC approval and so forth, they then have to also get approval from the respective country’s organizations. Again, more and more $$$ out the window. Once more, *you* are going to pay for those things. If you don’t like it, start your own company to compete with Apple, but offer products of the same quality at better prices in your country.
Quite frankly, if Apple wants to charge 8x more in country X Y or Z, and people are willing to pay it, I’m all for it. It’s no different than me paying 10x more for a cell phone than people in Japan, and having it be crippled beyong belief. I won’t even get into the markup we pay for European clothing/apparel/etc. Having a GF from Europe, I know all too well the CRAZY amounts of money I have to spend here to get European brand X good, when if I could travel to that country, I could pick it up for pennies on the dollar. Italy is my favorite offender.
You don’t see me writing rants about it. They don’t have a whole lot of valid reason for it either, Apple does. Shh and either pay up or deal with the rules of a world-wide economy and companies out to make a buck!
Quote Your point is off the mark, I am afraid. USA = Apple’s primary market. That’s where their cash comes from. So, the products are designed for the US market, the US people, the US laws and regulations. /Quote
Well:
Mac sales outside the United States (pct of total sales)
2005 4th quarter: 40%
2004 4th quarter: 39%
2003 4th quarter: 38%
I bet my hat that at least over 50% of Apples total profit arrives from non-us sales. US may be the biggest market at the present, but certainly not the most profitable one. And it will become the smallest source of revenue, in a foreseeable future
Market strategy:
US = high-volume & low profit strategy
World = low volume & high profit strategy (for each country)
The “smallest source of revenue, in a foreseeable future” comment was a bit foul, at least how I read it, but addressing the other point of your post – I’m sure a good portion of Apple’s overall revenue is from other countries. I’m talking about the single largest portion. You can split your (imaginary – more on this later) 50% figure over 20-30 countries, and then compare it to the (imaginary) 50% in the US. Those 20-30 countries == more cost for operations which == consumers there paying more.
Now, to debunk your apparently make-believe #s/%s.
http://biz.yahoo.com/e/051201/aapl10-k.html
That’s their latest SEC filing summary. Scroll down a bit. Net sales in America: 6590 Europe: 3073. These are in millions. I’ll leave it to you as an exercise in basic “let’s not make false statements and conjure up false numbers to support false claims” education.
——-
That’s their latest SEC filing summary. Scroll down a bit. Net sales in America: 6590 Europe: 3073. These are in millions. I’ll leave it to you as an exercise in basic “let’s not make false statements and conjure up false numbers to support false claims” education.
——-
Sorry, but:
More than 40% of Apple’s sales during the period were outside the US, reflecting the popularity of the iPod across Europe and Asia.
Source: http://news.bbc.co.uk/2/hi/business/4442775.stm
Some quarters Apple sales outside the US is up on 43% of total revenue
Beside that: Apple employ almost no people inside the EU. Sales are either driven by local vendors or by remote sales from Apple Store.
The US brick & mortar Apple-Stores are probably the least profitable operation of the whole Apple Inc., at the present, and there is only one of these stores located in the EU (London). So – again – I still bet my hat the on that average EU-Apple-sales are far more profitable than average-US-sales. But, then again. so what ! – Apple is free to mine deeper in some markets than other.
But EU-marketing, Apple can not.
.
Edited 2006-03-06 08:02
I don’t care what journalistic fun the BBC had with Apple’s financials, but the SEC filing is factual, not fictional. The #s there are real. Without voodoo math, that 40% statement is impossible to dervice, non-factual.
Did you even bother to read the SEC filing? Apparently not with your comments about Apple retail.
What is your point about Apple employment in the EU? They still have labor costs, regardless of if they are directly employing people.
Now please, go read the SEC filing. I even was nice enough to only direct you to the summary. The least you could have done was read the net profit section, instead of sending me links to a new source making claims. I can show you movies showing unicorns and dragons, does that make them real? Nope. But sure enough, I can also show you a live elephant – that is absolutely real.
SEC filing = fact. The end.
The US brick & mortar Apple-Stores are probably the least profitable operation of the whole Apple Inc., at the present, and there is only one of these stores located in the EU (London).
There are well over a dozen Apple Centres in the Netherlands alone where they sell Apple hardware exclusively. I assume they are similar to Apple Stores?
http://www.apple.com/nl/buy/applecentre/
I assume they are similar to Apple Stores?
No, they are literally as different as night and day. Apple Stores are stores owned by Apple, run by Apple. Apple Centres in The Netherlands are independant resellers, not owned by Apple, not run by Apple.
So yes, they mostly sell the same stuff, but for the rest they are completely different. We Dutch are going to get a true Apple Store at Dam Square in our capitol (next to the Royal Palace).
Edit: damn, just recommended my own damn story
. Yes, we need a re-design badly… My apologies.
Edited 2006-03-06 11:09
Apple Stores are stores owned by Apple, run by Apple. Apple Centres in The Netherlands are independant resellers, not owned by Apple, not run by Apple.
Ah, that’s a big difference indeed.
And the worst thing of that is, when they sell you something they act like they are Apple. But once you come back with something, then suddenly they are the local dealer again which happens to have some macs in his store. Happened to me several times.
FYI Thom, older dutch macs,(performa series and quadra etc.) always came with a dutch keyboard. I still have a few of them.
Anyway i agree with you, the price difference is ridiculous.
Just what I wanted to say myself. The warranty laws in Norway is like this aswell, perhaps even more strict than EU ones. And in addition to that theres always been like companies set different prices for different countries compared to how the financial situation is in that particular country. It’s just easier to see it now when we can put each (next to identical) store next to each other and compare.
Now I don’t really think that the Mac prices are that bad at all (except from upgrading RAM and similar in AppleStore…I rather buy it online), atleast not for the Mac’s I got (iBook G4 and iMac Core Duo). Mac’s are amazing machines, with a great OS; and hardware that competitors actually don’t offer at lower prices (I have yet to see a “PC iMac” that’s cheaper than the iMac). You get what you pay for. With Mac’s you get great quality! —I should note this is just my personal opinion. What others might think is up to them. I dont want to start over the whole OS war thingie…—
The please explain Apple why they only give 1 year of warranty in Spain.
The myth about 2 year warranty in Europe comes from a picky law with lots of small letter, that, summing up, comes down to the customer having to prove to a judge that whatever failed after the first 6 months is not due to his/her fault.
Really cool law, IMHO. It effectively shuts the mouth of stupid voters while taking power from them.
Go check what your national law says instead of relying on what Apple writes. In Denmark i get 2 years of warranty on the purchase plus 2 years on any repairs/replacements from the day of the repair, despite Apple claiming (on their website) it to be 1 year from purchase and 90 days from repair date. It doesn’t matter what they write or even make you sign, luckily i can not sign away my rights.
Well, that’s what I was writing about. Spain’s “mandatory 2 years of warranty” are a joke, since they put the burden of proving something broke because of malfunction instead of misuse in the customer’s side past the first 6 months. If you can prove it, sure, you have 2 years. How you prove the HDD broke because it was faulty I am not so certain…
Congrats for having a parliament that does not try to screw you… We do not seem to be that lucky.
our apple reseller within european union forces consumers to buy “additional year of warranty” if we are consumers (i.e. not companies). So if you want to buy a mac here and you are not a company, you simply have to pay additional year of warranty in addition to 5-10% difference in price and simply won’t sell you a mac without that additional year of warranty.
So no, this is not the case.
This is one of the things why I decided, that I won’t buy another mac. I have powerbook g4 and i’m going back to classic manufacturers.
In Italy Apple sells with 1 Year warranty.
The EU law states restrictions to the seller to sell a compliant product according to what is adversized, otherwise the seller has to return money in the first 6 months.
You should not forget import taxes and Localization. I guess these are a cost factor too… all these crazy umlauts 🙂
AZ
Edited 2006-03-05 22:39
If a company wants to enter a new market, they should absorb the cost of localisation.. It’s hardly a money burner, one person, a few weeks work tops for each language?
It’s naive to think everywhere would use the language that the initial product shipped with.
And this goes for England too, far too often I buy a product off the shelves, and some lazy company hasn’t gone to the effort to localise from en-us to en-gb.
And this goes for England too, far too often I buy a product off the shelves, and some lazy company hasn’t gone to the effort to localise from en-us to en-gb.
Join the club; New Zealand uses GB English, and yet, the American company thinks we use the Australia dictionary! dear god, someone, please, wake them up over there; I know the world stops at the shores of the US, but honestly!
I know the world stops at the shores of the US, but honestly!
Face it: we’re bigger, better, and more beautiful than you Brits, Kiwis, Aussies, & the rest of the former Empire!!!
I know… none of them is really true. But getting all three b’s in a row was irresistible.
I’m gonna get voted down for this, aren’t I.
😛
Well, I wouldn’t say that – you left just when the empire was starting to get good; ah, Devonshire tea, cricket, rugby, double entendre’s and sexual innuendo’s; all part of our superior pommy culture 🙂
Anyway, back to the original topic; what is so bloody hard about defaulting to Great Britain dictionary/language for those of us in the commonwealth? I mean, sure, Australia may have slipped into the laziness of dropping the ‘u’ out of colour, but really, some of us do have our standards 🙂
Do you personally provide feedback when you encounter improper English variants (say US English being used outside the US) in products?
If you don’t, then you might be part of the problem. If nobody provides constructive feedback, such occurrances are likely to increase over time.
Edited 2006-03-07 18:00
I was wondering whether tariffs, higher corporate taxes, higher transportation costs (gas is more expensive), and higher benefits required to employees might contribute.
I don’t think the companies are trying to extort Europeans, and I’m certain that a straight price comparison (even after removing VAT) is useless. The only way you could even approach certainty is if you could see the entire balance sheet.
If there’s anyone they’d tried to screw, it would be the Americans who typically have higher disposable income per capita than Europeans, or who at any rate are less averse to whipping out the gold card, to say nothing of fewer consumer protections.
I was wondering whether tariffs, higher corporate taxes, higher transportation costs (gas is more expensive), and higher benefits required to employees might contribute.
Both prices *exclude* shipping costs. And since Apple products are made/assembled in Asia, shipping them to either Europe or the US should give comparable costs.
You’re missing the point on shipping. Apple still has to ship it through Europe by truck to the warehouses and dealers. That is not a negligible difference given the fact that the European gasoline price is typically 3-4 times the American price. So, you have to triple the cost for gasoline from the airport to the warehouse or to the store.
But that’s only part of the issue; there still remains the other points I mentioned: higher corporate taxes and higher benefits required to employees.
well it’s not the only company that sells products for more in the EU than they do in the US. Dell does that all the time especially with some of the discounts that you can get from them in the US. What I have noticed is that Dell’s educational discounts for large quantities are a lot lower in the EU than they are in the US. And when you add the higher sales tax in EU it really sucks for the people there.
And as far as Apple computers go … well they’re expensive everywhere.
EDIT: oh and as far warranty goes you get 1 year warrant in the US as well. The 90 days support is the phone support. I am pretty sure that Apple is getting hit by some EU taxes and hence the end product gets to be more expensive for the EU consumer. After all Apple is not going to cut their profit down …
Edited 2006-03-05 23:09
Localisation does not explain the differences either. Not at all. Because, prices of Apple products are even HIGHER in Britain than in the rest of Europe– and converting OSX from EN-US to standard EN shouldn’t cost more than translating it to German, right?
And of course hardware requires even vewer localisation (only the booklets).
> Localisation does not explain the differences
> either. Not at all. Because, prices of Apple
> products are even HIGHER in Britain than in the rest
> of Europe–
And seeing as quite a lot of Apples hardware seems to be assembled in the ROI (Republic of Ireland) and therefore either has to travel through the UK or go way out to sea and back to get to mainland Europe, it’s even more puzzling. The ROI is closer to the UK than to, say, the Netherlands. It’s absolutely criminal. Quite often the dollar amount seems to be translated directly into Sterling. So, for example, $299 for an iPod Video would be £299, which is quite a bit more, depending on exchange rates. As the Dollar fluctuates at around £1 = $1.50 up to $1.80, I would conclude we are all idiots in the UK for paying the price hike.
It used to be common practice for American companies to price good the same across currencies – e.g. if they charged $100 in the US they’d charge £100 in the UK.
Apple’s prices seem to be fairy close to the American prices so it’s not too bad.
That said there are reasons for differentials:
Keyboards are different for different countries in Europe, in the US there’s 1.
Import taxes may be different for products or components imported from outside the EU.
But, most likely they charge more simply because they can. That’s the way business works.
Are Apple products _selling well_ at their current prices in Europe?
If so, I don’t really understand what this debate is about. Companies will ask a price that they feel will still produce good volume of purchases. It’s not like Apple wouldn’t charge more in the US if it thought it could. And it’s not like Apple’s prices are directly determined by things like “cost of fabrication”. These are expenses, but you take whatever profit you can, whatever “the market will bear.”
Imagine if instead of Apple, you were debating the prices of Armani eyeglasses in different markets? See how pointless the debate becomes? It’s not about cost. Any price is pretty “arbitrary” in the first place.
No, they aren’t. Not in Italy, at least.
“common” people do not know anyone owning a mac. More, many people do not really know that macs (computers) exist at all.
It’s not easy even finding where to buy them (apart from the online store, obviously): there is normally only one store within reasonable range that sells Apple, apart for big cities (where you can find 2 or 3).
The same happens in Spain.
just see the price difference between Japan and Europe (compared to the Ausrian/German Apple Store). It’s just amazing how much more expensive Apple Hardware is in Europe.
Just because of Taxes?
I’m a Dutch man getting rather sick and tired of these people that do a dollar to euro conversion and then start shouting that Apple is ripping off Europeans.
The price of any product in any country varies depending on loads of variables:
– wages standards / minimum wages in that country (eg. for people working in stores that sell the product)
– cuts that resellers get in that country
– local taxes
– costs for localization of the product (keyboards, manuals, etc)
– local laws (about warranties, product safety, etc)
– cost of transport (gas and road tax is much higher in Europe than elsewhere, how much water & land to cross to get the product to the customer, etc.)
– customs (how many borders to cross to get product to customer)
– company policies about profits may vary per country
– market size (size of the specific country)
– competitive companies / products in that country
– wealth / state of the economy in that counry
<sarcasm>
Now why the hell do I have to pay more than one Euro for a kilogram of rice when in Indonesia it costs 20 cents? Those bloody Indonesion rice farmers are ripping us Europeans off!
</sarcasm>
– wages standards / minimum wages in that country (eg. for people working in stores that sell the product)
Wages in the US are generally higher than in Europe.
– local taxes
Like was already said roughly 23432832 times: the prices were excluding taxes.
– costs for localization of the product (keyboards, manuals, etc)
Like I already said: then please explain why Apple’s prices in Britain are even higher than in the rest of Europe?
Other than that, is manufacturing a German keyboard more expensive than manufacturing an English keyboard? Of course not. It’s flicking a switch on a machine– nothing more. And after a run of German keyboards, the switch has to be flicked back to English.
– cost of transport (gas and road tax is much higher in Europe than elsewhere, how much water & land to cross to get the product to the customer, etc.)
It’s already been said 3294083 times: the prices excluded shipping costs. And since Apple products are made in Asia, shipping them to either the US or Europe should give comparable costs.
– customs (how many borders to cross to get product to customer)
See above.
Did I just lay the base for an angry minute there?
Wages in the US are generally higher than in Europe.
Forgive my ignorance, but is the wage difference in absolute pre-tax income or after adjustments for cost of living and taxes (obviously this would be affected by the former)?
– local taxes; like your forgot about 28283798 times: I am not talking about just VAT / Sales Tax / BTW, but other taxes such as environmental taxes and other stuff companies have to pay, as well as additional costs for having employees in your company. There’s more than just VAT in a product’s price you know.
– wages: do you know what a Burger King waiter gets in the US? 4 bucks per hour?
– localization costs: you must agree that setting up a separate product line for AZERTY keyboards (or other localization) MUST be more expensive than when the entire world has the same keyboard. Same for localized user manuals and packaging. It’s not just flicking a switch. You actually HAVE TO PAY people to translate, alter the graphics, etc etc. Don’t be ignorant
The fact that in Britain the prices are higher, obviously don’t have to do with the localization…. or perhaps customers in the USA also have Pound (sterling) sings on their keyboard? Besides, American English and British English ARE different!! In early Mac OS versions the USA “Trashcan” was called “Wastebasket” in British English. To say that English == English is extreme simplistic. (Look at the different TV-ads for the Intel Macs for instance. They’re slightly different to fit in better with the audience. This costs money you know.)
– transport: like you forgot 23827678 times: do you really think the cost of transporting a single machine is transferred directly into the sale price? Of course not. You also have to take into account the transport of parts, assembly, and transporting half-fabricates to other places, more assembly, transporting, packaging, transferring finished products to central places of distribution. Mind you, taxes may vary per country even on transporting / exporting / importing parts or half-fabricates.
For instance, customs on complete computer systems may be lower in certain parts of the world than when they are still in parts.
– customs: see above.
You are really being overly simplistic by just converting dollars to euro’s and then deducting sales taxes. And you did not respond to my points about several other point I made.
Not that I blame you, everyone does that –especially Dutch peopl– but you obviously haven’t worked for any company that actually produces and sells computer products worldwide.
– local taxes; like your forgot about 28283798 times: I am not talking about just VAT / Sales Tax / BTW, but other taxes such as environmental taxes and other stuff companies have to pay, as well as additional costs for having employees in your company. There’s more than just VAT in a product’s price you know.
Apple has far less personel in Europe than they have in the USA (let alone the Netherlands).
– wages: do you know what a Burger King waiter gets in the US? 4 bucks per hour?
And Burger King has what to do with Apple?
– localization costs: you must agree that setting up a separate product line for AZERTY keyboards (or other localization) MUST be more expensive than when the entire world has the same keyboard. Same for localized user manuals and packaging. It’s not just flicking a switch. You actually HAVE TO PAY people to translate, alter the graphics, etc etc. Don’t be ignorant
Then how do you explain the fact that software, which requires much more localization than hardware, is actually cheaper on our side of the Atlantic? You see, the local. argument never held any water anyway, because the costs of localization are minimal at best (and only have to be done *once*, and *not* for every machine or copy sold), but the argument completely falls apart when you realize that software, which requires more localization than hardware, is actually cheaper here.
The fact that in Britain the prices are higher, obviously don’t have to do with the localization…. or perhaps customers in the USA also have Pound (sterling) sings on their keyboard? Besides, American English and British English ARE different!
I study English, so yes, I know. But ‘translating’ from EN-US to EN (incl. keyboards) should be cheaper than from EN-US to Dutch, right? Then why isn’t this reflected in the prices?
You also have to take into account the transport of parts, assembly, and transporting half-fabricates to other places, more assembly, transporting, packaging, transferring finished products to central places of distribution.
Apple’s products are assembled in Asia. Transporting them from Asia to Europe should be no more expensive than transferring them to America.
Secondly, since the US is a larger country, supplying local supply stations should actually cost *more* than in The Netherlands, as here Apple requires fewer supply stations, and because our nation is smaller, less internal transport costs.
And something I haven’t mentioned yet: how about advertising costs? Apple does a lot more advertising in the US, so shouldn’t that be reflected in the prices in the US?
My point is this: some things in Europe might be more expensive to do for Apple, and some things are more expensive in the US for Apple. I think they cancel eachother out, pretty much. Neither of the reasons I heard at this point justifiy a price difference on hardware for 8.375%, let alone the *double* price raise of the Mac Mini in Europe (which everyone seems to be handily forgetting *cough*).
In any case, I’ve sent out a mail to Apple’s PR manager in The Netherlands, so maybe he can give us a decent explanation!
Edited 2006-03-06 10:51
Thom, what basis are you using to assert that software prices are lower in the EU than in the US?
I’m just curious, especially given the tremendous variation in pricing between different stores and web sites in the US (sometimes 30-40%).
You think most of Europe is bad?
In apple store online in portugal if you want to modify for example an ibook, you are severely limited compared to ALL other apple stores. And even then, if you change a small thing, your keyboard defaults to English and you have to pay another 30€ to get it back to Portuguese.
Just check for yourselves, the LAMEST apple store of all Europe:
https://store.apple.com.pt/cgi-bin/WebObjects/Asto.woa
Unfortunely that store is not an Apple store, it’s run by a Portuguese company.
A few years back when I started looking at Powerbooks, one could fly to NY, buy a brand new Powerbook and the price combined would be roughly the same as buying one here in Portugal
1840.56 € for MacBook Pro 15″ 1.83 GHz here in Lithuania.
Who else here found this article more of a rant than actual investigative news? Why didn’t Thom contact companies such as Dell, HP, etc that sell their products globally to see what the reasons are for the cost differences? It’s one thing to make a comment but to make one with out doing real investigative work makes ones article appear more of a rant instead of real news.
As for Thom’s comment “quite frankly, it’s pissing me off” I was actually shocked this came from a OSNews staff member. After all it makes me view not only the article but also the site as not being professional or even worthy of readers time.
Edited 2006-03-06 00:16
You have to keep in mind that this is Thom’s “Sunday Eve Column.” Basically, this is Thom’s opportunity to make unjustified rants about how life isn’t fair. He then proceeds to ignore or shout down any legitimate criticism, often using the justification that it’s only his opinion, so we’re not allowed to explain why he’s full of it. See last week’s elitist rant for a telling example. How this thin-skinned kid became managing editor, I don’t know.
This week, we see Thom whining about how businesses charge higher prices in socialied European countries. Gee, Thom, what a surprise — the consumer actually pays for all the regulations and increased costs of doing business in the end! Economics 101. Get over it.
While it could be a rant, it’s also interesting for me (at least) to read, since artificially-inflated prices in the EU aren’t immediately obvious to me here in Atlanta.
It’s possible that Apple is overcharging simply because there’s a fairly long history of US companies overcharging for their products in Europe and Apple thinks they can continue to get away with it…
Edited 2006-03-07 18:09
Good job, Thom. It was about time that somebody wrote an article about this issue.
I might be wrong, but it seems to me that HP/Dell and off-the-shelf hardware don’t suffer of price differences between the US and Europe (or to a lesser extent anyway)
Besides (correct me if you believe I am wrong) a wise pricing policy should keep local taxes (VAT) into account as well, so that the difference in final price doesn’t look *huge*
After all it is the final price what the consumer will look at.
Edited 2006-03-06 00:18
So Apple should charge less in European countries because they pay higher taxes, so in the end the items appear less expensive? People should be pretty used to niche import items costing more, because that’s basically the trend all around. I end up paying more for various European goods in the U.S. than I would if I were to go to the respective countries of origin and purchase them.
“So Apple should charge less in European countries because they pay higher taxes, so in the end the items appear less expensive?”
I didn’t say that, I said: “a wise pricing policy should keep local taxes (VAT) into account as well”
It is not a must, it is good marketing so that you don’t piss off your customers. But Apple seems to enjoy annoying their potential buyers.
“People should be pretty used to niche import items costing more, because that’s basically the trend all around.”
Not true, I see the prices of electronics going down all the time, at a very fast rate. Maybe Apple by being so expensive wants people to believe that they are the Ferrari of computers. Well, I can’t afford a Ferrari, and I wouldn’t buy one even if I was a billionaire.
It is not a must, it is good marketing so that you don’t piss off your customers. But Apple seems to enjoy annoying their potential buyers.
So Apple should charge less in European countries because they pay higher taxes? This “must” idea is irrelevant to what I’m asking you. I’m asking you, and you don’t seem to be disagreeing, if you believe that Apple should make less per sale because certain countries tax more. You think that’s good marketing, but it appears more that you believe it to be a better sales-strategy. Apple’s marketing generally consists of elitism not chasing prices.
Not true, I see the prices of electronics going down all the time, at a very fast rate.
It is true. Prices for items, especially novelty import items (and not just specifically electronics), are more expensive all over the place. Apple isn’t just an electronics company selling just electronics when pertaining to its personal computers. It’s a foreign company selling a fringe product. Their world-wide share of computer sales is lower than their U.S. share of computer sales, which is already a relatively small percentage of total computer sales. They will shift the cost of their products to reflect the local market, and affix some premium for the expense of offering the product there.
Maybe Apple by being so expensive wants people to believe that they are the Ferrari of computers. Well, I can’t afford a Ferrari, and I wouldn’t buy one even if I was a billionaire.
Then as the Mac user might say, “You’re not Apple’s target market.” I have to pay more for import CDs from the UK, more for decent vinegar, more for decent wine, more for pharmaceuticals, more for textbooks, and any number of products of foreign and domestic origin.
It seems that there are no logical explanations for the differences in price other than the fact that things are usually more expensive in Europe so Apple charges more for its products here.
Just be thankful that you’re not living in Dublin where the average price for a pint of lager is about €4.70.
Who is “we”? Here in Italy Macs are known only by a (small) bunch of geeks, and bought by even fewer people.
As to me I am not going to throw my good money down the drain, and besides for hardware which was deliberately made to run only one OS, however good it might be.
And BTW, in this part of Italy where I live €4.70 buy me a delicious one course meal at the restaurant, or the best pizza, or one kilo of our great local sausage.
Edited 2006-03-06 00:54
My point is that generally, computers and other electronic stuff are usually more expensive in Europe. Maybe Apple feel that because things are more expensive over here, they can get away with charging more for their computers.
Macs can run as many operating systems as ‘normal’ computers except for maybe Windows but I’m sure that it will only be a matter of time before someone gets it working on a Mac in some form.
Yeah, Dublin is pretty expensive. I’d like to go back to Italy again. Beautiful weather, food, wine and women. What more would I want!
“Maybe Apple feel that because things are more expensive over here, they can get away with charging more for their computers.”
Yeah, that is a good point, but most people will think twice before spending their hard earned money.
“Yeah, Dublin is pretty expensive. I’d like to go back to Italy again. Beautiful weather, food, wine and women. What more would I want!”
🙂
Don’t we all want what we don’t have? Personally I miss England.
Yeah, Dublin is pretty expensive. I’d like to go back to Italy again. Beautiful weather, food, wine and women. What more would I want!
Just one more thing, Spain
You get all of the above plus better Ham.
Yeah, Faustino is my favourite wine! I’ve only ever been to the ‘holiday’ places where there are hardly any Spaniards. I’ll have to check out Spain properly this summer!
I think people hit a lot of the biggies.
Some other things are, how big is apple in Europe? If they have a smaller market there, then their prices would be hire to cover operating cost.
If they have employees based there, they have to account for their overhead separate from the US, and if wage and benefits are higher, and combines with less volume of sales, this would raise prices.
I would also assume apple has a rep or two in every country, some sort of office. Yet countries over there are like states or smaller here, thus less people to sell to, again, means more mark up to cover things.
Anyways, something else to add, such price differances are not just with apple products, its with everything. I know people buy camera gear from the US and ship it back to save money because prices in Europe are much higher. Seams to be the case with just about everything.
Also, no company charges the same everywhere. From one side of the US, to the other, the same store will charge vastly different prices. Food at a grocery store in California cost twice that of Food in a store in Pennsylvania, and yet a lot of the food even comes from California. Even in state you can see differences. Just go from say 1 wal mart to the next, the price for the same thing on the same day will often be different.
Another thing is if you took away the internet, and thus didn’t know the US prices, thus the only price you knew was what it was where you were at, would you even think twice about it? No you wouldn’t since you have no idea what others pay. And thats what it comes down to, there are who knows what reasons, but they exist, and the price is different, and the only reason you complain is because you can see it and not know everything behind it.
Europeans have all this free higher education, free health care and war-free economies. Sorry, but it’s your moral duty to use a little of that extra money sloshing around in your pockets to subsidise Apple’s stylish contributions to what’s left of civilization.
Europeans have all this free higher education, free health care…
Which we all gladly subsidise with taxes you mean?
For Belgium, 21% on goods and 40% to 50% of your wage go to the treasurekeeper. And haha! Free higher education. Books, computers, material, all free? Nothing’s free, except the air you breathe in.
There is just no way Apple (or any other IT company) can justify these huge differences in pricing.
…the answer to the question is that in different economic areas there are different formulas to maintain the same profit margin on each product.
It might not be a situation that Europeans are getting ripped off with higher prices, as it’s more like it’s cheaper to do buisness in the United States.
Looking at it this way, and being a American, I guess I’m sort of glad Apple didn’t just decide to round up their prices to European levels.
But I guess what they should have done is adjusted both to be almost the same.
But again, that could reflect in lower sales in the United States because the price is higher, turning off more customers in volume than in the European market (etc.) where sales volume are lower.
Ok, I’m getting a headache now.
(guess a course in buisness economics are in order)
Not only that, I bet Americans would be pissed off if they had to subsidize some socialist welfare experiment in another country.
Well that about does it.
Edited 2006-03-06 03:49
I work for a global company that sells IT equipment. Our operating expense for our European subs as a percentage of revenue are higher across the board than our North American operations. Taxes (corporate and employee), benefits, duty/import, facilities, utilities etc.
But without a doubt one of the single biggest kickers is the f/x rate with the US dollar, which is the basis that most manufacturers use for operating/reporting. Manufacturers have to anticipate long term currency prospects, because they do not have the luxury of changing their retail/list prices weekly to match a fluctuating dollar/euro. So this necessitates a buffer. Every one of our manufacturers has a European pricelist with euro-based pricing that is higher than the equivalent USD-based pricelist in NA after taking currency conversions into account. It’s a necessity for protecting your bottom line.
Apple Europe is simply a subsidiary that purchases products from Apple HQ in USD, then resells them in Euros (or the local currency wherever they are operating). Right now it may seem you’re paying more, but it could just as easily swing the other way and the gap would narrow if the currency was more volatile.
If Apple Europe pegged their system pricing to the value of the Euro against the US Dollar at the time the product is released, who’s going to cover their loss if the Euro slides in value against the USD by 5 or 10% over the course of a year? Would customers accept Apple increasing their prices? Not likely.
This isn’t a situation unique to Apple or the Netherlands. Almost all manufacturers selling globally face this, and there’s an entire sub-industry of grey marketers that buy products wholesale in one region to sell in another one and profit from the difference in pricing. You can often find gear for cheaper on eBay or similar sources because of this, but most manufacturers tie warranty support into the country of purchase to try and discourage this, it really screws up their local sales channels. The internet and global village nature of the world today is simply bringing more visibility to the siutation, but it will change nothing.
It could be worse. The cost of doing business for our Australian operation would bring a tear to your eyes.
If Apple has any brains at all, they’d keep their euro’s instead of converting them back into dollars. The USD is on the verge of collapse. The whole american industry is billions in debt, as is the government and the consumers. The only reason why it hasn’t collapsed yet is because of the fact that alot of corporations still trade in USD. It’s being kept artificially alive. Yeah go on, mod me down for offtopic + flamebait but it’s true.
If Apple has any brains at all, they’d keep their euro’s instead of converting them back into dollars. The USD is on the verge of collapse. The whole american industry is billions in debt, as is the government and the consumers. The only reason why it hasn’t collapsed yet is because of the fact that alot of corporations still trade in USD. It’s being kept artificially alive. Yeah go on, mod me down for offtopic + flamebait but it’s true.
Your don’t have worry about the US economy. It is in a fine shape, and not any worse off than so often before when it has been criticised. It is rather we in the EU that should worry over our stagnating economies.
It would be really stupid of Americans to do business in any other currency than the USD. Why ? Because they never have to worry that much about balance of payments- or trade deficits as we other nations are forced to do. Why? Because all American business and trade is done in US Dollars, and Americans actually do actually control their own currency. They don’t have to do business or import any goods in any other currency, – and US currency reserves is not really an issue for the US. So the problem with deficits is not that alarming as one might think. It would be for all other nations, but not for the US. The US economy is fine, and thanks for that.
The USD is on the verge of collapse
Wow. Are people really this out of touch with the state of the United States economy?
>> Wow. Are people really this out of touch with the state of the United States economy?
yup. Usually the same people who believed their ecology professors in school when they say the worlds oil supply will be completely exhausted in ten years… Something they’ve been saying since 1968 without changing their tune (or adjusting the timeframe once).
I was perusing a lady friends economy book, and it has the balls to call the 80’s “a time of economic crisis akin to the 1930’s”… OF COURSE people are that detached from the reality of the economy.
Unemployment has been below 6 percent for over a decade, the real gross GDP continues to remain above the prime rate, and has completely recovered from it’s 2001 dip… and while the national debt adjusted to 1950 dollars is almost what Ike was saddled with paying off WWII, if you bother to adjust that against the lending rates and inflation, the US is no worse off financially than it was at the start of the Kennedy administration.
Oh, but we’re on the verge of economic collapse… right. If there is a collapse coming, it’s sure as hell not the governments fault – place the blame on the fact that as a nation 90% of the people live in debt buying goofy crap (like computers… uhm) that they can’t afford, paying MORE for it in the long run…
I’m more interested in when the credit system is going to collapse, as it IS built on a giant scam.
Having lived in places other than the US for more than a casual stay, I don’t see your point. While I was in Japan, I never complained about the fact that I was paying nearly three dollars for a smaller serving of fries than I did in the US. Nor did I complain about the fact that products from Japanese manufacturers were typically cheaper than they were in the US. I ate the cost as it was a service or item that I wanted from a company that probably had to invest a good deal of money to set up shop outside of their home territory and called it a day.
I am sure there are things available to you where you are that are much cheaper than I can get them for but do you hear us up in arms on the ‘new’ side of the atlantic, whatever that is suppose to mean. Some might, but anyone who wants the service and feels that the service provided justifies the price won’t.
If you like the Apple products, pay the price. If not then shop elsewhere. If you are tired of paying more for items that come out of the US, boycott US goods. Simple as that. I don’t complain everytime I pay nearly as much in shipping for the CD I just ordered. Why? Because it is not a item available in the US and if it were, I would probably be paying around the same price.
I don’t want to sound like an ass, but ‘articles’ such as this really annoy me as simply comparing prices from one region to those in another reason really isn’t justification to be crying over an ~10% increase in price. Now if you did some real work and found out that the cost for Apple of doing business did not justify the difference in cost and presented it in an intelligent manner, maybe I would have had a different reaction but as it stands I don’t see what all of the fuss is about.
There should be no real valid reason for higher Apple product prices in the EU, in general.
There will always be currency fluctuations for all currencies. Companies insure themselves against currency losses. Who knows in which currency Apples production-steps are made in. Almost none of the ingredients in a Mac computer/hardware are produced in the United States. So many production costs parameters are the same for both US & EU. Freight is contracted with UPS, TNT and others. And customer support is located in the Ireland for many EU countries (tax dumping)
In some smaller language zones, like in Norway and Denmark for instance, some of the localisation costs are not withstanding as full localisation is simply not undertaken: Examples: spell checking missing in many Apple applications – the Danish Apple Store is for example in the English language.
In Europe as a whole Apple products should be rather much cheaper than in the United States, most of the time, as Apple does not run any marketing campaigns or do any advertising in most of the EU’s countries (maybe with the exception for Great Britain, where Apple seems to do some minor scale advertising & marketing in GB media). This marketing cost burden for Apple in Europe is simply not there.
Cost burden for legal consumer lawsuits in the EU is also much lower than in the US, as these rarely happens due to legislation differences.
But – the market is free. That is for sure. Companies are free to demand the price they want. In Apple’s case Apples unfortunate case is very clear: they are undermining their market growth and market position on a 400 million population market, by charging higher prices than the market can absorb (disposable income for EU citizens is on the average much lower than for our brothers & sisters in the US as EU income taxes are on the average much much higher than in the US). And – Apple is not spending any cash in the EU markets for advertising, marketing and brand-building.
Apple appearance on Europe’s markets is, for the most, silent as the grave – i.e. non existing in most of Europe’s countries.
Thanks
I live in 3 different European countries, and do my business on Mac’s. Great products, but a bit too pricey – and i feel a bit alone using them in MSEULand.
Edited 2006-03-06 05:49
“Apple appearance on Europe’s markets is, for the most, silent as the grave – i.e. non existing in most of Europe’s countries.”
Exactly. There are quite a few computer shops in this town in southern Italy. Try and ask them about Apple and Macs. Chances are that the answer is: “Huh? What is that?”
The nearest Apple shop is one hour driving from here (and we are lucky)
In Leeds, UK, even if the situation was slightly better, there were only 2 0r 3 shops out of hundreds selling Macs.
Apple doesn’t advertise in the US either, except for iPods. The new intel imac commercial was the first commercial for a Mac in 2 years. If it wasn’t for the iPod, a bulk of the population wouldn’t even know apple still exist.
SEC filing = fact. The end.
Yes, it says nothing about sales outside the US. Is says: Americas net sales
Americas:
United States
Canada
South America
Ok ?
Edited 2006-03-06 08:22
This isn’t going to format well, but since you just CANNOT read:
Net Sales
Net sales and Macintosh unit sales by operating segment and net sales and unit
sales by product follow (net sales in millions and unit sales in thousands):
September 24, September 25, September 27,
2005 Change 2004 Change 2003
Net Sales by
Operating Segment:
Americas net sales $ 6,590 64 % $ 4,019 26 % $ 3,181
Europe net sales 3,073 71 % 1,799 37 % 1,309
Japan net sales 920 36 % 677 (3 )% 698
Retail net sales 2,350 98 % 1,185 91 % 621
Other Segments net
sales (a) 998 67 % 599 51 % 398
Total net sales $ 13,931 68 % $ 8,279 33 % $ 6,207
See? Europe! Japan! THEY ARE THERE. They even break it down by type of Apple product sold (iPod, Macintosh, etc.) I cannot believe your inability to read a simple document when I even tell you WHERE to look inside.
🙂
yea, but you still miss the point. Americas accounts for the U.S. plus Canada plus all the countries of South America. There is zero info on US-sales-only in the statement. So sales outside the US is still about 40-43 %, and this is a publicly well known figure. OK?
.
Edited 2006-03-06 23:47
You’re arguing a moot point. There are no changes in the products for locations listed in “Americas”, and the distribution channels are the same. If you look at Apple’s pricing in these countries, it is relatively close to the pricing inside the USA, and this reflects everything which I have stated so far!
There is a very tiny markup, and I’m sure that has to do with the (slight) additional cost in distribution to get it to those countries. They don’t have the crazy labor costs of Europe though, and they are geographically MUCH closer.
I’m not missing any point, I think you are just trying to punch holes in my argument based on misunderstandings and misinterpretations.
If you think, paying %10 is more, please chech the prices in Istanbul, Turkey.. Than you would have an idea how we are ripped off
A company, Bilkom is authorized to sell Apple products in Turkey, and I think they are trying to make profit of 10 sales in one… just few examples of their prices…
$1 = 1,304 yTL
30 GB Ipod Video = 500 yTL+ VAT = 590 yTL
and that makes $452 for just one 30gb ipod video
imagine the rest
Apple somehow has to do his sales himself in Turkey, otherwise they can’t compete in Turkish Market with that stupid Bilkom company who is trying to rip off for years and years….
http://estore.apple.com.tr/cgi-bin/WebObjects/AppleStore.woa/wa/mai…
The same here in Greece my friend .
iMac G5 -> 1.324 Euro pro vat (19%) (in Greece)
in USA it costs 1299$.
It seems that the greedy b1st1rds here in Greece are decided to make the most out of us. I think the price is high.
Apple should ship directly from USA and not use this Rainbow.gr .
Mac Book Pro -> $1999 and in Euro 1868 pro vat (19%)
The VAT trick here in Greece is used repeatedly. They make us unable to buy Apple products because they want to have luxurious holidays but without working. They jut want the money. Please Apple, HELP US ……
Edited 2006-03-06 09:15
Geia sas Fithisux..
I don’t know if that will make it any better, however I have sent an email their marketing them to remind them of whats goin on in Turkiye and Hellas
Until they make any changes, its best to order it from a friend visiting US
Well, as I am from Germany, let´s take the prices ( including taxes ) from the german Apple store:
# MacBook Pro 1.83Ghz: €2099 => $2329
# MacBook Pro 2Ghz: €2599 => $2884
# Intel Mac Mini Core Solo: €639 => $709
# Intel Mac Mini Core Duo: €849 => $942
# Intel iMac 17″: €1349 => $1497
# Intel iMac 20″: €1749 => $1941
# OSX Tiger: €129 => $143
# iLife ’06: €79 => $87
# iPod Nano 1GB: €159 => $176
And now some danish cartoons ,ehhhh sorry ,prices
# MacBook Pro 1.83Ghz: DKR 16.799 -> $2706
# MacBook Pro 2Ghz: DKR 20.999 -> $3383
# Intel Mac Mini Core Solo: DKR 5.099 -> $821
# Intel Mac Mini: Core Duo: DKR 6.799 -> $1095
# Intel iMac 17″: DKR 10799 -> $1740
# Intel iMac 20″: DKR 13.999 -> $2255
# OSX Tiger: DKR 999 -> $160
Edited 2006-03-06 12:27
And now some danish cartoons ,ehhhh sorry ,prices
# MacBook Pro 1.83Ghz: DKR 16.799 -> $2706
# MacBook Pro 2Ghz: DKR 20.999 -> $3383
# Intel Mac Mini Core Solo: DKR 5.099 -> $821
# Intel Mac Mini: Core Duo: DKR 6.799 -> $1095
# Intel iMac 17″: DKR 10799 -> $1740
# Intel iMac 20″: DKR 13.999 -> $2255
# OSX Tiger: DKR 999 -> $160
Please, you have to exclude the Danish 25% VAT. Price comparison should only be made on sales prices excluding VAT as US prices also are without local Sales Tax. For Danish prices this means multiplying sales price incl. 25% VAT by 0,8
Example: Intel iMac 20″: DKR 13.999 x 0,8 = 11.199,20 ex VAT
Then take this price and convert it to USD (today’s exch rate is 6,2078 DKK per 1 USD, which gives your a comparison price of USD 1.804,05 for the Intel iMac “20. But Apple does not run their shop with day to day prices so this comparison is only rough.
.
Edited 2006-03-06 13:37
i read about some dude here in sweden. he went to us to buy a powerbook 17″ he paid customs for the laptop and later he bougth a swedish keyboard from apple.
the trip to us + livingcosts for 3days and customs and the keyboard did not add up to what he would have to pay for the machine here at that time.
Prices are higher in Canada too. For the longest time, I never understood how people could say that Mac prices compared with PC prices. Then I looked at a US site, and saw that they actually did down there!
If Apple opened up facilities to make hardware/computers in Europe, then a lot of the shipping costs and toll taxes could be cut down. Question is if it would cost more to produce the computers anyway???
If Apple opened up facilities to make hardware/computers in Europe, then a lot of the shipping costs and toll taxes could be cut down. Question is if it would cost more to produce the computers anyway???
Nothing in a Mac is produced or assembled in the USA. It’s done in Ireland and Asia.
Macs are Irish?
Green beer in the CD drive time!
riha wrote: If Apple opened up facilities to make hardware/computers in Europe, then a lot of the shipping costs and toll taxes could be cut down.
Apple computers are assembled in the Czech Republic (city Pardubice, by Taiwanese company Foxconn).
However, almost no one in this country uses Macs and I have yet to see programming job asking for this platform. Apple had opened a branch in Prague a decade ago but closed it after few years of lacklustre sales. Very high prices (comparatively to Wintel) didn’t help much.
What tax numbers are you using? Sales tax (VAT)? Normal goods import? Those numbers don’t line up with the import taxes/duties last time I looked… Is that the difference in VAT between regions or something? Sure doesn’t look like the duty rates.
Didn’t the netherlands just last year put a 14% universal duty on computer and video equipment imports, while Germany remains duty free on that? I remember something about that in relation to DVI semi-recently.
Not to mention did you pull up third country tarrifs and dock fees? Account for different storage and labor rates across regions? Customs handling fees? (those ALONE can run 1-5%) Port docking fees? Cost of fuel at your airports and ports vs. the countries around you? Renting tarmac space if flying it in?
Laying it all in Apples lap is hardly fair – I don’t bitch that a pack of smokes costs about 50 cents a pack less one state over, because I realize that employees get paid more there, it costs more to ship it there because of the terrain, costs more to store it there because land is cheaper here… Shall I go on?
But then we’re talking about a region who’s import tax on computers is 33% if they come from Japan… That makes US duties on VEHICLES seem low.
Knowing how shipping works, I bet it’s cheaper for them to boat them to germany or france, then overland it to the Netherlands – which means paying two import duties (or more), once to get it into europe, then again every time you cross a border…
The EU Single-Market is indeed a single market => you pay import duties only one times, i.e. when goods arrive into the EU-single-market. Just like the US, just once. After goods enter the EU it can flow freely between member states with no additional duty or VAT. This is why EU is called the “single-market”
>> The EU Single-Market is indeed a single market => you pay import duties only one times, i.e. when goods arrive into the EU-single-market. Just like the US, just once. After goods enter the EU it can flow freely between member states with no additional duty or VAT. This is why EU is called the “single-market”
Well, that’s not ENTIRELY true… one of the conditions for member states remains the ability to add on ‘third country duties’ which can include (but not restricted to) customs fees, safety inspection costs, regional ‘fair market’ adjustments (they make it cheaper than us, we need to tax them to make our own stuff competative – shades of the US government), union imposed shipping fees (fees for not shipping it with native shipping companies – basically government sponsored gang extortion), trade association memberships (which some of the borderline commie governments wont even let you import to their country without joining a government sponsored trade guild) and a billion other things the member state governments can get away with it. To excasterbate the problem further, some countries even reserved the rights for TOWNS to impose their own fees and costs.
But, in terms of VAT you are correct… in fact that would support the notion of shipping into another country first then trucking it to the member states with higher base VAT’s.
Oops, almost forgot:
>> Just like the US, just once.
Not quite. In addition to state sales tax we have state import taxes on a great many different things before you even get to Point of Sale – which is why (again with the smokes) a pack of luckys will run you ten bucks in new york city, almost six bucks in taxachusetts, and only $3.50 here in New Hampshire.
This applies to other goods too… different income taxes on employees can cause major cost jumps across state lines. I can get a ten dollar large pizza across the entire state at the mom and pops, I hop across into Mass it’ll run me 18 bucks. Gasoline is a good 50 cents difference a gallon just 20 miles south, and that’s BEFORE you take sales tax into consideration.
———————————–
Well, that’s not ENTIRELY true… one of the conditions for member states remains the ability to add on ‘third country duties’ which can include (but not restricted to) customs fees, safety inspection costs, regional ‘fair market’ adjustments (they make it cheaper than us, we need to tax them to make our own stuff competative – shades of the US government), union imposed shipping fees (fees for not shipping it with native shipping companies – basically government sponsored gang extortion), trade association memberships (which some of the borderline commie governments wont even let you import to their country without joining a government sponsored trade guild) and a billion other things the member state governments can get away with it. To excasterbate the problem further, some countries even reserved the rights for TOWNS to impose their own fees and costs.
But, in terms of VAT you are correct… in fact that would support the notion of shipping into another country first then trucking it to the member states with higher base VAT’s.
——————————
He he, yes your are right in many ways. This “integration” process is painstakingly slow. Newer member states are less “harmonised” and in less sync than the “older” states. Western Europe is although pretty much easy doing business in. The whole process may take 100 years to complete, or even more.
I just hope we will never have a monolithic Union, where all things are the same. Infrastructure that works is enough. It would be unbearably boring to see the same shitty goods, same shitty food, same boring monolithic culture, same shitty taxes, same rules, same laws, same language, same this-and-that all over Europe.
But as I said. The market is free. Apple can charge whatever they want. Just like I can rant as I want
Edited 2006-03-07 11:15
Are there any sort of export / out of US tarriff’s that Apple need to contend with?
This isn’t what I remember, but it’s damned close.
http://www.gtlaw.com/pub/alerts/2005/0504.asp
Their own import tax above and beyond what the EU dictates. ’nuff said, even if this particular tax only applied to LCD’s… A technology apple seems to love to bundle…
This is the same banter that happens every single time. VAT taxes in Germany are 16%. Those prices are already reflected in the price being charged by Apple. If you purchase a computer here in the US, they add the sales tax later. That means that I’m being taxed at 7% where I live in addition to the 599 price point for the mini. That means I’m paying 640 dollars for my Mac Mini after tax. So the prices are inline with the US.
Get over it.
>> That means that I’m being taxed at 7% where I live in addition to the 599 price point for the mini.
Which is where I get to gloat – I live in NH, we don’t have a sales tax.
Although our property tax is particularly nasty – though not as bad as florida or the commiewealth of taxachusetts.
You’re lucky. I am in Florida and get both sales taxes and property taxes. Fortunately no state income taxes.
OK, if 8% for Europe seems like a lot, how about South America?
Prices in Argentina vs US:
Intel iMac 17″: $1299 -> $1763 [+35.7%] (yes, thirty five %)
Intel iMac 20″: $1699 -> $2350 [+38.3%] (yes, thirty eight %)
Intel Mac Mini Core Solo: $599 -> $809 [+35.1%] (yes, thirty five %)
Intel Mac Mini Core Duo: $799 -> $1099 [+37.5%] (yes, thirty seven %)
iPod Nano 2GB: $199 -> $375 [+88.4%] (yes eighty-frickin’-eight %)
iPod Nano 4GB: $249 -> $485 [+94.8%] (yes ninety-frickin’-four %)
iPod video 30GB: $299 -> $563 [+88.3%] (yes eighty-frickin’-eight %)
iPod video 60GB: $399 -> $724 [+81.5%] (yes eighty-frickin’-one %)
:/
Oh, and that is of course WITHOUT tax. For reference, the 4GB nano is $584 after taxes. No, really.