Is Apple gouging Canadian customers?

Section: iPhone / iPod touch / iPad, iPad, iPhone, iPod touch, iPod, iPod Family / Legacy, iPod classic, iPod shuffle, iPod nano, Macintosh / Apple Hardware, Desktop Macs, iMac, Mac mini, Mac Pro, Laptops, MacBook Air, MacBook, MacBook Pro, Apple TV, Features, Opinions and Editorials, Originals

Apple is selling the iPad 2 16GB WiFi entry-level model for CAN$519, which represents a significant price cut from the previous iPad 1's base price of CAN$549. However, while iPad 2 demand is strong in the Great White North (as it is virtually everywhere), few Canucks consider the price cut much of a bargain.

The reason is that—a far cry from when it dived as low as 62 cents American in 2002—Canada's "loonie" dollar has been trading at a higher value than the U.S. greenback all this year so far. And unlike with its brief upward spike in 2007-'08—during which time it briefly hit US$1.10—this time the Canuck-buck is forecast to remain above-par through 2012 as well, and perhaps beyond. So, why should Canadians be paying higher nominal dollar prices for Apple hardware (and most everything else) than Americans?

Here's the current disparity in Canadian vs. U.S Apple Store pricing:

iPods and the Mac mini are the worst deals proportionate to price. The $500 nominal discrepancy in iPhone prices relates to an AT&T service plan subsidy in the U.S. that is not available from Canadian service providers.

So is Apple gouging Canucks? After all, while retail pricing can't be expected to track floating exchange rates precisely, the Canadian loonie (so-named in reference to the Common Loon that appears on Canada's $1.00 coin) has been at par or above for about four months now, and as noted, this time it's not expected to be a temporary blip.

However, in defense of Apple and other retailers operating in Canada, it isn't quite that simple. Wholesale unit cost is just one element of the pricing dynamic. Canadian businesses have to pay their staff, their rent, and in most instances all of their other overhead costs in Canadian dollars, the overall tax burden is substantially higher in Canada, and there are the negative economies of scale in serving a market roughly a tenth the size of the U.S.'s. Another factor is a less-competitive market environment north of 49. Some Canadian market watchers say Canadians are just simply unwilling to spend as much time comparison-shopping and rooting through bargain bins as Americans.

Nevertheless, if the loonie soars to U.S.$1.10 again or higher, as some are predicting, for any length of time, demanding at least nominal price parity wouldn't seem too unreasonable an expectation.

Full Story » | Written by Charles Moore for Appletell. | Comment on this Article »

---

NII HOLDINGS NIKON NINTENDO NOKIA NVIDIA