Federal Labor MP Ed Husic last week criticised Apple and other technology giants for hiking prices on their products when sold in Australia compared with the US, noting he would write to the managing director of Apple Australia to demand answers as to why the mark-ups occurred.
The Member for the electorate of Chifley in western Sydney, Husic is known for his love of Apple products and read his maiden speech in October 2010 from his iPad — following the path trod by Shadow Communications Minister Malcolm Turnbull, who regularly brings his own Apple tablet into the chamber. Speaking in the House of Representatives last week, Husic said it was “well-known” that he did not mind Apple products.
“Their sleek, smartly designed products are leading edge, innovative, and help shape the way technology caters to consumers,” he said. “Besides their terrific MacBook, I have also been impressed with the iPad, which I am using tonight. It was a great platform from which I read my inaugural speech. I am led to believe I was the first member in this place to do so.”
However, Husic added, it was not unusual for Apple’s “fervent devotees” to closely examine the iconic technology giant’s prices when sold in Australia compared to their cost in the company’s home country of the United States.
For example, he said that after discussing the issue on Twitter last week, he realised that Apple’s 13″ MacBook Pro costs $1,399 in Australia, but just $1,218 in the US, the 17″ model cost $2,899 in Australia by $2,700 in the US, and the 8GB iPod Touch went for $289 in Australia and $247 in the US. All of these prices are in Australian dollars, with conversion being carried out by Husic based on current exchange rates.
“Going through the Australian Apple website, to buy certain brands of headphones might set you back up to $200 more than buying the same product on Apple’s US website,” Husic added.
The MP gave Apple some credit — noting that the iPad 2, which went on sale last week to great demand, only cost $579 in Australia, compared to $543 in the US. However, in general he noted that apart from 10 percent GST, there was no reason for the price differential.
“It is important to bear in mind that Apple products are generally priced at a higher range to begin with,” he said. “On top of that, do not forget that Apple is overwhelmingly the manufacturer, wholesaler and retailer, and, from what I understand, they give resellers little, if any, control over pricing.”
“One more noteworthy point is that their products are largely manufactured in China and shipped out from there to both Australia and the US. Consumers are struggling to work out why they are charged way more for these products and they would like some answers. Given the enormous brand loyalty Apple no doubt enjoys, I think there is a valuable opportunity for the company to explain why the same products in the United States cost significantly more here. To help get some answers quickly, overnight I will be writing to Apple Australia’s managing director to put some of these differences to him.”
Apple has been invited to comment on Husic’s speech;any response received from the company will be published in a follow-up article.
Husic also listed other price differences between Australia and the US. For example, he noted that games for Microsoft’x XBOX 360 console cost an average of $110 on its release date in Australia — while in the US the cost would be about $60. He added that there was a substantial price differential between the cost of buying a Sony PlayStation 3 locally. “The issue of price differentials frustrates many consumers, particularly when they seek to purchase electronic items,” Husic said.
The MP linked the debate to the issue of online retailing, noting that many consumers knew that the instant they got on the internet, they could easily see the price differentials that existed between products bought in Australia and those purchased overseas.
The issue of price differentials between Australia and the US has existed for many years. For example, when Adobe launched its flagship Creative Suite 5 package in April 2010, it hiked prices substantially for the Australian market. The company’s Australian software store listed the full CS5 version of Photoshop as costing from AU$1,168. However, in the US, the same software was slated to cost residents there just US$699, or AU$757.48 with international currency conversion.
In Australia, CS5 Master Collection was to cost AU$4,344 for the full edition, and AU$1,503 for the upgrade edition. In the US, the same software will cost US$2,599 (AU$2,816.45) for the full edition — more than AU$1,500 less. The upgrade edition will cost US$899 (AU$974.22) — more than AU$500 less.
In a letter responding to the issue, Adobe said in-country market conditions significantly affected its local pricing. For example, in many countries outside the US, it conducted the majority of its business through its channel partnerships. And the cost of doing business was also different in different regions.
Over the past year, the value of the Australian dollar has gradually harmonised with the US dollar, with USD$1 currently buying you 97.4 Australian cents. However, the cost of buying its software directly from Adobe’s online store has not changed. For example, a full copy of Creative Suite 5 still costs $4,344 in Australia — but just AU$2,534 (US$2,599) in the United States — a price difference of about $1,810 for the same package.
Image credit: Josh Hallett, Creative Commons
The traditional explination from these companies is that they price products based on what they think the market can bare. Basically there’s no correlation to how much the cost of development and distribution actually is.
Sad, but expect to be screwed for a while yet.
I don’t think the practice is going to end any time soon … but I’m not going to stop publishing articles about it any time soon either ;)
He’s really picked the wrong company*. The iPad 2 in Australia is (from memory) the cheapest option to buy one outside the US. For all intents and purposes, the ‘Apple Tax’ is trivial compared to the software delivery nonsense such as Adobe’s tax. Even the digitally delivered version of Adobe’s software is at least $1000 more expensive in Oz.
*this is not an Apple fanboi response, merely an observation to give credit where credit is (after many years) finally due.
Apple’s just the most high profile. But yeah, I agree he did pick the wrong company — which is why I mentioned the Adobe example, which is far more extreme.
Tom it is due to people like you that we, the others have to pay the Apple Tax. Yes, other companies might have larger markups, but it seems that you do not understand economies of scale. Apple sells millions of articles with a markup of $100-$200 that is an extra income of $100-200 million. Where as Adobe might have a $1000 markup but manages to sell only about 50 copies = $50,000, now which company is enjoying the Australian Tax? You are defending nothing but the practice where Aussies can be charged whatever the companies think they can, therefore you can buy a can of coke for anything from $1.00 to $10.00 depending on where you get it. This practice is ridiculous. Even more ridiculous is the Apple Store, where there is absolutely no shipping involved. The software products are all priced at an extra 20% for what? Given the number of sales on the iTunes and Mac App store, guess which company is enjoying the Aussie Tax?
Apple is *NOT* the wrong company chosen, it is the right company that has been chosen to be targeted. In fact it is not only about Apple, but the entire pricing policy in Australia needs to be revisited to make it more customer centric rather than fleecing the customer for how gullible they can be.
If you think we have it bad, check the prices of Apple equipment in the UK.
Apple TV from the US is $99 (US)
Apple TV from the AU store is $129 (AU)
Apple TV from the UK store is £99 (Equivalent to $154 AU, and that’s on today’s excellent exchange rates).
It could always be worse…
If you want to prove your point, Apple isn’t the company to blame.
Look to Sony or Microsoft and you can see even greater price differences, or even video games RRP.
I wonder if there is an opportunity to screw adobe by importing CS5 and selling it at US retail price as opposed to AU retail.
But of course, the market still bears the disgusting mark up – nothing will change until people stop buying it. But for many we don’t have a choice. Not only are they screwing us on price, we are begrudgingly letting them, because we has little choice/recourse (as far as I know).
I know people who have flown to the US, bought a few copies of CS5, had a little holiday, and then flown back — with the whole thing ending up costing less than it would have had they bought the copies of CS5 in Australia. But I think if you started importing the software and selling it for a profit you would have a nice little lawsuit on your hands … from Adobe, spurred by its reseller community.
Choosing Apple a this time was a poor decision – aside from the fact that the big A gets headlines. Australians are enjoying the cheapest prices for Apple products in recent years. The real reason for the hike in prices isn’t shrouded in secrecy – its simple economics. Enough Australian consumers can afford the devices so why bother lowering prices? Blame the market. Doesn’t take a rocket scientist to figure that out. Convince Australians to stop buying Apple products and you’ll see prices decrease.
Just another pollie trying to jump on the Apple bandwagon. He should get back to focussing on the NBN & other important Aussie tech matters and stop searching for easy reasons to grab the spotlight.
I agree Apple wasn’t the best target — most of their price differences can be explained by currency fluctuations, the GST and so on. There are other companies who are far greater culprits — Adobe and Microsoft being amongst them. Windows + Office always cost more in Australia.
Talk with your wallet, and don’t purchase an Apple product
Ah talk with your wallet… just as you do when incessantly bagging the NBN, you mean ;-)
If anything, promoting the NBN would help my wallet, not the other way around
Jeez … talk about bringing the NBN into everything!
Actually, I have found Apple products generally help my wallet in the long run, despite how pricey they are up front. They tend to have higher build quality, and are normally more stable because of the integrated hardware/software thing. I expect later this year to dump my Windows 7 work machine and adopt an iMac in the office for this (and other video and page layout) reasons.
I’m waiting for a tablet with icecream/honeycomb by a manufacturer that is known to have great build quality. The main issue with apple products is they are something that requires sustained purchases to use to full effect due to software/hardware reasons
As for my PC, I don’t use either Windows or Mac, its Linux for me ;)
Indeed!
Ouch! That looked like I agreed with absolutely the WRONG post!!!
What I was “Indeeding” about was Renny’s comment:
“Actually, I have found Apple products generally help my wallet in the long run, despite how pricey they are up front. They tend to have higher build quality, and are normally more stable because of the integrated hardware/software thing. I expect later this year to dump my Windows 7 work machine and adopt an iMac in the office for this (and other video and page layout) reasons.”
Seriously!
Yes we believe you [sic]…!
Just like we believe those few usual suspect Telstra shareholders talk up Telstra 24/7, for the good of Australia…NOT their own TLS stake!
Your comments are just as believable as mine, this is what happens when you make completely baseless (and incorrect) assumptions
dat ego said –
“Your comments are just as believable as mine, this is what happens when you make completely baseless (and incorrect) assumptions”!
So to clarify – you just accused me of posting comments… which are just as “believable as your completely baseless and incorrect assumptions”…!!!!!
That’s what you just said…!
Well mine might be unbelievable (to you) but at least they aren’t completely baseless and incorrect as you just admitted yours are…!
But thanks for finally admitting that your comments are indeed baseless and incorrect, but we all already knew that anyway!
LOL!!!!!!!!!!!!!!!!!!!!!!!
“Well mine might be unbelievable (to you) but at least they aren’t completely baseless and incorrect as you just admitted yours are…!”
You are making a personal statement (about what I work or what my affiliation is) without even knowing who I am. This is in fact what spreading FUD is (its also called smear)
That makes anything (personal) you say about me baseless, including whether the NBN hurts my wallet or not. The fact is you are making desperate attempts to involve people personally
Hey guys,
just a quick one — I will tolerate a fair deal of slanging on NBN or Telstra threads because … well, it’s kinda traditional and few people seem to mind it there. However, on non-telco threads, let’s keep it on topic, shall we? I mean, if the topic spills over here, it is generally OK, but random slanging and sledging without any actual point just seems to be rather fruitless.
Renai
[censored …. I warned you, RS. You can’t just slag people off with no point on an unrelated thread — Renai]
Sigh…!
Perhaps ed husic should should be more focused on fuel price gouging or milk market fixing by coles. Vote this clown out
Yeah and vote someone in who will let both Apple and Coles gouge us…!
Frankly, I don’t drive, and I don’t drink that much milk. So I’m happy to have someone ranting about Apple in parliament :)
As others have correctly said, Apple isn’t the worst offender in this respect. But at the same time, raising the case of such international price disparity with a well known and very popular company will hopefully bear more of an impact rather than focusicng on Adobe or video games – which are much more niche markets that the average consumer could careless about.
But as Renai says, the practice is unlikely to end anytime soon unfortunately.
I will certainly be interested to see how and whether Apple responds to Ed’s comments — he is a MP from the ruling party, after all. It could have some bigger impact.
I think Husic was responding to a constituent’s letter that raised the general issue of prices of consumer goods wasn’t he ? As an MP he has an obligation to raise his electorate’s concerns. He used apple as an example in this case
Adobe is the worst considering many of their products can now be purchased as digital downloads that do not even touch Australian dealers hands. It smacks of price fixing and needs to be stopped. And then Adobe wonders why they have to cope with massive piracy problems here in Australia.
Here’s a news flash Adobe. Stop marking up prices and you might reduce your piracy problems in Australia and actually make more money.
Perfect example:
Adobe Creative Suite 5 Master Collection
Digital download AUD$3,944 on the Australian online store
Digital download US$2,599 on the US online store
Anyone would be silly to pay for the Australian price. Come on Adobe stop playing us for fools.
PC games on Steam are priced unfairly as well.
Civilization 5 is $49.99 US for Americans (+ sales tax = $54.24) versus $79.99 US for Australians.
http://store.steampowered.com/app/8930/
When you think of volume, all those little rip-offs add up to far more than Adobe will ever make on its software (not that it is right to do so).
Think how many compressed, detail-free sounding (compared to the CD version) itunes are downloaded every day.
The rake-in must be immense, not bad for someone who didn’t create a single CD.
Where does our so-called free trade agreement with the US come into this, does not seem too free.
We are constantly barred from buying US sites by manufactures restrictions. We are constantly ripped off, Epson is a prime example whose practices are disgraceful particularly on printing inks, They should also be named as should be the terms the so called free trade agreement.
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