How Apple keeps the bastards honest on tablet prices

Technology companies often ask New Zealanders, like Australians, to pay more for gadgets and software than US customers.

Local prices vary from more-or-less in line with the US all the way to 60% more.

There’s a case for a small markup when companies ship and distribute gadgets to and around our sparsely populated countries. There’s no justification charging more for software sold over the internet.

Gadget makers find it hard squeezing high margins out of New Zealanders for tablet computers. That’s because Apple sells iPads in New Zealand for close to the US price.

At the time of writing the third generation iPad (16GB Wi-Fi model)  is NZ$729 including 15% GST.

The same model sells in the US for US$499. Today’s conversion rate makes that around NZ$610, add 15% for GST and you get a shade over NZ$700. That’s close to the official NZ price.

Apple dominates the tablet market. The iPad accounts for more than half of all tablets sold in New Zealand. At the moment it is clearly the best model by a comfortable margin. So NZ$729 is the price benchmark.

Rival hardware brands simply can’t get away with their usual New Zealand markups if they want to sell tablets here. Why would any sane person pay more for an inferior tablet?

So, while Apple’s prices are internationally aligned, there’s no room for price gouging in the tablet market. The question is, could that effect spill over into closely related hardware markets, like portable computers?

5 thoughts on “How Apple keeps the bastards honest on tablet prices

    • Yes. It’s not normal to quote US state taxes because not everyone pays them in every case. They don’t really alter the big picture. Apple’s NZ price puts a cap on rivals possible price options.

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  1. You said a couple of weeks ago that you haven’t checked out android tablets for a while. You should, before you say the iPad is the best tablet by a ‘comfortable margin.’

    So why is my iPad lying idle while I use my Nexus 7 in preference? Sure I have the slow iPad 1, but the reasons I prefer the Nexus are mostly not because it is considerably faster. It’s the general convenience of the smaller form factor, more readable media apps, vastly superior text input using Swype and a Jelly Bean OS that’s just as useable as iOS.

    I suggest you extract yourself from Apple’s reality distortion field and actually _try_ a Jelly Bean tablet.

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    • We can argue about the meaning of “best”. It’s not about my opinion. Rightly or wrongly the market – that is people who buy tablets – perceives the iPad to be the best. I doubt even Samsung would disagree with that point.

      Sure there’s a reality distortion effect. Apple’s market share has recovered since the new iPad was launched. Samsung’s share declined. See http://www.bgr.com/2012/08/14/ipad-market-share-all-time-high/.

      The tablet market is about to go ballistic with a slew of new Windows devices and, if rumours are correct, 7 inch models from Apple.

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  2. You did say the iPad was “clearly the best model by a comfortable margin.” To me that reads like hardware/software best rather than most popular. Of course the iPad _is_ more popular and due to its position in the market, some people might also assume that its hardware was also ‘best’. But I would have expected you to draw a line between popularity and quality.

    Which is not to knock the iPad’ system’s quality. It is good, but it is no longer better than the opposition by a comfortable margin, if at all.

    Given the power of the brand name, many people will buy the upcoming smaller iPad model. I think they’ll love it. I really think the smaller size is better for most things you do with a tablet. Most productivity things – even serious web browsing and searcging – are far more efficiently done on a laptop or desktop computer. Granted, many ingenious methods have been invented to make a finger/touch style tablet do more than we might ever have thought was possible. But compared to a full computer with a mouse, most of these methods are little more than fiendishly clever, but ultimately inferior, kludges.

    Which is why the coming Microsoft Surface tablets, giving users the best of both worlds, looks very attractive. If the price is right!

    Incidentally, if Apple’s NZ pricing forces the Nexus 7 to be sold at or near the equivalent of it’s US200-250 price, it will be a great buy.

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