Labor MP asks why Apple costs more in Oz

Federal Labor MP Ed Husic last week criticised Apple and other technology giants for asking more in Australia for their products than they do in the US, noting that he would write to the managing director of Apple Australia to demand why the mark-ups occur.
Written by Renai LeMay, Contributor

Federal Labor MP Ed Husic last week criticised Apple and other technology giants for asking more in Australia for their products than they do in the US, noting that he would write to the managing director of Apple Australia to demand why the mark-ups occur.

Husic, MP for the electorate of Chifley in western Sydney, is known for his love of Apple products and even read his maiden speech in October 2010 from his iPad. Husic is following the path trodden 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's "well-known" that he enjoys using 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 is not unusual for Apple's "fervent devotees" to closely examine the iconic technology giant's prices when sold in Australia, compared with 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-inch MacBook Pro costs $1399 in Australia, but only $1218 in the US. He also found that the 17-inch model costs $2899 in Australia, but $2700 in the US and the 8GB iPod Touch costs $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, only cost a minimum of $579 in Australia, compared to $543 in the US. However, in general he noted that apart from 10 per cent 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's Xbox 360 console cost an average of $110 on its release date in Australia, while in the US the cost was around $60. He added that there's a substantial price hike in 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 can easily see, on the internet, the price differentials that exist between products bought in Australia and those purchased overseas.

Price differentials between Australia and the US have 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 starting at AU$1168. However, in the US, the same software was slated to cost residents there just US$699 — AU$757.48 when converted.

In Australia, CS5 Master Collection was to cost AU$4344 for the full edition, and AU$1503 for the upgrade edition. In the US, the same software will cost US$2599 (AU$2816.45) for the full edition, more than AU$1500 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 that domestic market conditions significantly affect its local pricing. For example, in many countries outside the US it conducts the majority of its business through channel partnerships. Adobe also said that the cost of doing business is different in different regions.

Over the past year, the value of the Australian dollar has gradually harmonised with the US dollar: US$1 currently buys 97.4 Australian cents. However, the cost of buying software directly from Adobe's online store has not changed. For example, a full copy of Creative Suite 5 still costs $4344 in Australia, but just AU$2534 (US$2599) in the United States, a price difference of about $1810 for the same package.

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