I know that whenever something comes over from the US (or Japan), the price conversion is more often than not a straight $ -> £ conversion (so $20 would equal £20, even though at present $20 is only worth £10). This has really hacked me off, and the iPhone is no exception - the 8Gb model going on sale in the UK for £269, equivalent to $542 (given that £1 = ~$2). In the US, the 8Gb model is on sale for $369. What really spurred me on was reading the SiliconValley.com article about O2 being announced as the exclusive UK carrier (Dear god, they must have been desperate for the custom, O2 is one of the worst networks in the UK - I should know, I was dicked about for 12 months by them before moving to T-Mobile!) The article wrote off the higher UK price to "value added tax." Well, it's not all VAT, and here's my quick maths to prove it:

(All sums done with Google btw because I'm lazy and it has currency conversion built in, and decimals rounded up to nearest £ or $ because that's what they all do anyway.)

# globals
let VAT = 17.5%, or 1.175
let $1 = $2.015 (thanks Google)

VAT-inclusive UK price in USD: $536 = £266 according to the article, but £269 from Google = $542. For the sake of simplicity, let's go with the article's figure.

£269 (UK sale price for 8gb model) x.85 = £228.65 before VAT = $462.

$536 (UK sale price VAT incl.) - $397 (US sale price) = $139 difference = £69 difference.

$397 (US sale price) = £197 in GBP (plus VAT).

Now, if the world was fair, we should be being charged £200 (well, £197, 'but what's £3 between friends,' quipped Steve Jobs).

Therefore,
£200 x 1.175 = £235 with VAT, which is what we *should* be being charged for the 8Gb iPhone. Ha.

So, somewhere, somebody's making £34 to £35 on each sale ($70, by the current exchange rate). Maybe it's for Ives' pension fund? And, even though I don't think the iPhone is a particularly great device save for two things - its multi-touch interface and its form factor - I still get really annoyed when companies bring their products to the UK and rip us off. The iPhone's not the most spectacular example of this, consoles and PCs being much worse for this problem, but it still hacks me off. If you're planning on becoming a beta tester for a new product (i.e., early adopter), you really have to have a fat wallet to survive this kind of hobby.


And yeah, if you're wondering, I have posted this elsewhere, I am active in more than one place on the Internet. ;)

2 Comments:

  1. webdesign said...
    This comment has been removed by a blog administrator.
    Sun Yan said...
    Apple is always good at marketing. Other than the good innovation of iPhone itself, iPhone has changed the landscape of telecom industry. This is a good lesson for those tech-kie in telecom industry to learn.

    iPhone 2G has never been sold officially in Hong Kong . All iPhones 2G in HK are parallel imports. We all know it. The traditional product life cycle of telecom products is short (half a year?) and the price will drop when the PLC is at maturity stage. We learn it from marketing class.

    iPhone changes this theory. All iPhone were from AppStore and they were locked. Also Apple only co-operate with one teleco in each country. The introductory price of 8Gb 2G unlocked iPhone in HK at early launch (version 1.11) was about HK$4,000 (parallel imports). I expected the price will follow the traditional intelligence and will drop. However, it was wrong! The price was increased nearly to HK$6,000! Why?

    .... visit my blog:

    http://hk.myblog.yahoo.com/sunyanhk/article?mid=51

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