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 percent more.

There’s a case for a small markup when companies ship and distribute gadgets to and around our sparsely populated countries. There is some justification for higher prices given our consumer laws are stricter about warranties.

There’s no justification charging more for software sold over the internet.

High margins in New Zealand

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 WiFi model)  is NZ$729 including 15 percent GST.

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

Apple sets the tablet price benchmark

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?