Hand that feeds, bites - Mac prices in NZ

It's masochistic - to have the temerity to want to promote and retail Apple in New Zealand. Photo / Richard Robinson

Opinion

Mac prices in New Zealand used to be horrendous - not just in comparison to other computers, but also by comparison to Apple gear bought in the US.

Way back, profit margins here used to be more like 20%. The premium product seemed to require a premium client - I remember going into an Apple Reseller and basically getting the bum's rush because I wasn't wearing a suit and tie, despite having the (considerable) cash in my pocket to buy a Mac.

Needless to say, I never, ever tried to buy anything from that firm again - but this was in 1990. Things have, thankfully, changed a lot since then. This century, wallet pretty consistently beats personal appearance.

But now, a reseller is lucky to make five per cent on the sale of a Mac, at least if they source it through the local Mac vendors. I don't exactly know (Apple being the apogee of corporate secrecy) but I truly doubt this was anything the local vendors put in place. Not that long ago, the margin was more like eight per cent, which was hard enough. It's much more likely that Apple mandated the drop from its already stressfully low margin, as part of a move to ... er, what? Depress the market to raise revenue from direct online Mac sales? Squeeze NZ resellers out of business? Honestly, I don't know what the grand plan is. All I do know is that once you've jumped through the considerable hoops to become an Apple Reseller, life isn't exactly a bed of roses and you have to work really hard to maintain your premises and workforce. You also you have to work hard to sell anything else possible with any Mac you vend, since everything else in the shop has a way better margin for your efforts.

So when a reseller tries to flog you a bag, a printer or even a cable, at least be sympathetic.

Once, NZ Apple resellers had a licence to print money (which I agree was too extreme, and engendered considerable ill feeling). Macs were a lot different to other computers then - the very CPUs inside them were different (up to PowerPC) and even the OS worked a lot more differently to Windows.

However, modern Macs are now made from the same components as much cheaper computers, although attention to detail and the fact Apple controls the assembly process does mean - we believe - we get a better, more unified final product.

Apple nowadays directly controls pricing of its products all around the world, but hard-to-fathom discrepancies still exist. The price differences were to some extent understandable back then - Macs were assembled in the States and shipped from the US, so they were understandably cheaper at source. But now, they are shipped direct from China to New Zealand, just as they are shipped from China to the US market.

Now, this may be verging on immaterial (shipping routes, methods, volumes etc), but Shanghai (for example) to Auckland in a straight line is 9347 kilometres. Shanghai to San Francisco is around 10,000kms.

That must have, on paper, had an impact on pricing at destination compared to 20 years ago.

Nowadays, Apple typically fixes a country's prices on release going by the current exchange rate - so now is theoretically a good time for NZers to buy new Macs. Whatever the rate does after the price is fixed is rarely reflected in price changes, although Australia recently got price reductions in both the Mac and iTunes App Stores for software - I can't see that we did.

Over here, Dick Smith and JB HiFi source their Macs direct from Apple. This is because - although the logic escapes me - Apple is based in Sydney and both chains are Australian-origin concerns. But it means JB and DS don't have to operate (presumably) under the same margins Ingram Micro and Renaissance do, importing machines for the other resellers to acquire from them, in turn, to sell.

I don't know what the differences in margins are, but I got two brochures in my mailbox last week. One was from Harvey Norman and one was from JB HiFi.

Here are two examples for you:
iMac 21.5-inch, 2.5GHz i5 CPU, 4GB RAM, 500GB HD: JB $1947, HN $1999.
MacBook Pro 15-inch 2GHz i7 CPU, 4GB RAM, 500GB HD: JB $2786, HN $2999.

These machines are identical; they're the latest with Thunderbolt ports. The prices aren't all that different in the iMacs but the MacBook Pro price difference might well be compelling.

On the NZ Apple Store (http://www.apple.com/nz/) these machines are the same as the Harvey Norman prices - $2999 and $1999.

But on the US Apple Store site, they are US$1799 and $1199 respectively. Directly changed into NZ dollars on the day I wrote this, that was NZ$2128.50 for the MacBook Pro and NZ$1487 for the iMac. Note that these prices were set when the NZ dollar was much lower. But it's a big discrepancy - respectively nearly a third and over a quarter less.
Now Apple (and you) may have a good reason for this, but I don't.

Our two local suppliers (Renaissance and Ingram Micro) are hardly competitive, since they have nothing to compete with, margin-wise, except with Apple, which could make (again, I'm guessing) 20-40 per cent from each direct sale compared to the NZ Resellers' allowable and pathetic peanuts.

It's masochistic - to have the temerity to want to promote and retail Apple in New Zealand (and many other places around the world) comes with Apple's punishment. It's as if Apple started making Apple vendors work to be fitter to survive in a market that's increasingly tough ... except it's Apple itself that's making it toughest. No matter how hard they strive, and how successfully they service and support their sales and foster their retail relationships, Apple seems to be working to kill 'em off - and this is a policy replicated around the world. Meanwhile, Apple's massive profits keep going up, and for the whole world to see.

When people talk about the future demise of Apple - which I don't believe is imminent - I wonder if Apple might bring it on its own head from a sort of inexplicable (to outsiders), steely-eyed, ice-cold-blooded market philosophy. This may turn even the most loyal against them - at least if decent alternatives show up.

Apple is opening Apple Stores (real Apple-owned, Apple-selling stores) around the world at a prodigious rate at the moment.

Does this scorched earth policy herald an impending NZ Apple Store? Or just underline the unspoken rule: only Apple can profit from Apple.