It has been a hard month for Apple with the company losing their iPhone trademark rights in Brazil as well as Mexico. Now, the company has been bombarded with questions by the Australian Parliament over the price disparity of various Apple products in Australia.
A few weeks back we had reported that the Australian Government was furious over the price disparity of certain products especially digital content from companies like Apple, Adobe, Microsoft etc and demanded explanation for such difference.
According to Sydney Morning Herald, Apple customers have to pay almost 70% more price for software and digital content as compared to US customers. As a result, the parliamentary inquiry was called upon to address this issue.
In this regard, Tony King, the vice president of Apple Australia, New Zealand and South Asia, replied to the various questions bombarded upon the company. According to the Sydney Morning Herald, Tony blames the high wholesale prices of music, movies and TV shows set by the publishers. As a result, the company has to pay high prices for this content as compared to US and other countries and naturally the prices of their products reflect this high wholesale market price. He further adds that the prices charged by the company for their content are in line with the prices charged by other offline and online retailers in the market.
In the words of Mr. King “The pricing of this digital content is based on the wholesale prices which are set through negotiated contracts with the record labels, movie studios and TV networks,” He added, “The content industry still runs with perhaps old-fashioned notions of country borders or territories or markets.”
He further said that Apple products had to pay a 10% sales tax which adds to the cost of the products. As sales tax was not an issue in US, the prices were relatively low.
Also, as the Australian Dollar and the US dollar are currently at par, many even questioned why Australian customers were asked to pay a premium of 3 to 10% on Apple products. To this Mr. King replied that the company can’t adjust the daily fluctuations in the currency on their products as it would be highly complex and confusing for the customers. But he stressed on the fact that the company revalued their prices at the time of the introduction of a new product. Also, according to Mr. King, the product prices naturally differ from country to country and the Australian product prices are affected due to the product costs, freight charges, local sales taxes, levies, import duties, channel economics, competition and local laws regarding advertised prices.
Apple is not the only company to be asked questions about price gouging in Australia as Microsoft as well as Adobe have been called by the parliament for an explanation. Microsoft and adobe have been accused of charging very high markups for their software products. Adobe’s software like the CS6 design and the web premium suite are sold at AUS $ 3175 which is 75% more than the US price of $1899.