Overheads, warranties behind NZ PC price premium

Bill Bennett -

HP New Zealand managing director Grant Hopkins says higher overheads and warranties are behind the premium we pay when buying Windows PCs.

While New Zealanders get the same hardware as US or UK customers, we get better warranties.

He says HP’s US customers get a one-year warranty. That’s it. In New Zealand the Consumer Guarantees Act applies when non-business people buy computers. [1]

Acceptable quality

According to the CGA, goods must be of acceptable quality. Cutting through the legal language, this means consumers can expect a PC to last more than just one year.

Exactly how long it should last isn’t specified in the Act. But most of us have a good idea of what is reasonable or acceptable.

In practice if a computer bought in New Zealand stops working two [2] years after you buy it, you have a right to a repair, replacement or refund. Retailers can’t argue about any of this. Australian consumer laws are similar. [3]

Retailers are responsible for the goods they sell. That’s where you go if there are problems.

Carrying the can

Yet computer brands like HP know they won’t get anywhere if they let their retailers carry the can for poor quality products. They end up running in-house or outsourced support operations to deal with returned products and looking after their retailers and distributors.

While a brand like HP only has to worry about computers for one year in the US, in New Zealand a computer stays on the books as a potential liability two years after a customer buys it.

PC support costs are not directly proportional to the number of computers sold. In the US HP’s support operation gets economies of scale that aren’t possible in New Zealand. There are other economies of scale in a big country.

A big margin

Whether these costs add up to the full 60 percent premium New Zealanders pay over the American price is debatable. Let us know what you think in the comments.

Windows PCs often sell for more in New Zealand than elsewhere. The price difference is dramatic. Apple doesn’t mark up its hardware as much as the Windows PC makers.

Mind the gap

It means the gap between Apple and Windows PC prices is lower in New Zealand than in the UK.

In the linked story The Guardian’s Jack Schofield advises a reader about buying a work-from-home PC.

He says the HP Stream 11 is a low-cost option. Although it’s not recommended as a work machine, the Stream 11 is there to show how low prices can go. In the UK the HP Stream 11 costs £130.

Exchange rates fluctuate. More so in the last few days. In round numbers the pound is worth two New Zealand dollars. So the Stream 11 UK price in New Zealand dollars is about $260.

Twice the UK price

The same model sells in stores here for $500. That’s almost double the UK price.

In December we compared the New Zealand price of the Spectre X2 to the Microsoft Surface Pro 4. At the time HP’s computer cost 60 per cent more in New Zealand than in the US. That’s after taking GST into account.

It’s not just HP. You can compare US or UK prices for other popular Windows PC brands with what you pay here. Most brands charge New Zealand customers a premium. Sometimes a hefty premium.

Anger management

Readers often get angry about higher New Zealand hardware prices. That’s understandable.

One idea that comes up often when discussing the subject is buying PCs direct from the USA. There’s nothing to stop you from doing so, but there are pitfalls:

  • You are not entitled to local support. While some online retailers are responsive, that’s not common.
  • You buy on US warranty terms: 12 months. If you buy a decent model from a good quality brand that won’t be a problem.
  • Customs adds GST when the computer lands in New Zealand. Remember that is an extra 15 percent on the US price. It may also slow delivery.
  • It’s rare these days, but in the past people buying direct from the US have had odd, frustrating incompatibilities.

Hopkins has a point. You get something back in return for higher local prices. You may see the longer warranty as worth the cost.

It’s still your choice what to do. A toss-up depending on your tastes, needs and your ability to be your own service department. You can pay the local premium for more consumer rights or bank the savings.

  1. This only applies to computers sold to consumers. PCs purchased for business are not covered by the Consumer Guarantees Act. ↩
  2. Two years isn’t written down anywhere. Something that gets hammered out in the field might be of acceptable quality and still die after a year. You might have a strong case if other devices die months after their second birthday. ↩
  3. Australia’s consumer laws are similar. In most other countries you’ll have a harder time getting satisfaction if something goes wrong after 12 months. ↩