Higher prices for NZ tech addicts

STUNG: New Zealanders are paying more than US customers for products such as the Apple iPhone.
STUNG: New Zealanders are paying more than US customers for products such as the Apple iPhone.

Kiwis are paying a premium for some consumer technology products and software, in some cases shelling out over 40 per cent more than shoppers in the United States.

The disparities in pricing are in spite of the sustained strength of the New Zealand dollar, and even extend to software distributed online such as music and games through Apple iTunes.

The pricing of software and other consumer IT goods has become a hot issue in Australia, prompting a parliamentary inquiry.

New Zealand's Communications and Information Technology Minister Amy Adams has said she is watching the inquiry closely to determine if similar action is needed here.

PC World editor Zara Baxter said Kiwis paid significantly more for smartphones and laptops in particular, while other products such as tablet computers - including the iPad Mini - seemed more evenly priced.

New Zealand had a higher GST rate than either Australia or United States, "but there are some products where the price differential is just massive and ridiculous".

A Dell 18X Alienware laptop retailed for about US$1999 in the US but was $4699 (equivalent to US$3870 at current exchange rates) through Dell's New Zealand website, she said.

In some cases higher prices, could partly be explained by better or different features for local markets.

Manufacturers also frequently cited New Zealand's more stringent warranty obligations under the Consumer Guarantees Act - which requires them to keep spare parts for repairs - for higher prices here.

Comparing prices for products between countries could be difficult as they often had slightly different product names, particularly if they had been tweaked to suit local tastes.

"Because we're such a small market, we're almost inevitably going to pay more than Australia and the US because we don't have the economies of scale."

Vendors and telcos tried to maximise their economies of scale - to help keep costs down - for example, by bringing in more units but fewer products, but that also had the effect of reducing choice in the market.

"We pay a lot in reduced choice as well as in higher prices."

Baxter said Kiwis also typically paid over the odds for software, such as music and apps through Apple iTunes - which were downloaded digitally and so did not incur shipping and distribution costs.

Kiwis looking to get around geographical pricing could order products online from US sites to get US pricing, she said.

To buy from Apple in the US you needed a US address and credit card, and that was the case for many US stores, but there were services such as Youshop which provided a US address for overseas shoppers.

But buying on US sites meant the products would come with US plugs, and Kiwis would then have to pay GST and Customs charges once it arrived in New Zealand - which could get expensive, Baxter said.

One source working in IT procurement said higher pricing for New Zealand could be justified in some cases, due to shipping and GST costs and the tiny size of the market here.

Vendors took a risk in sending product out to New Zealand, he said. It might not sell and it was expensive to ship back if it did not, so New Zealanders paid for that risk.

But there were cases where Kiwis were "getting screwed" on prices, because the market here was so isolated, he said.

Chris O'Connell, board member and spokesman for the Telecommunications Users Association, said vendors charged what they knew they could get away with.

"With products like the iPhone, where demand always exceeds supply, they know there are always people willing to pay over the odds. I know people who have flown to America just to get new ‘i' products . . . we're victims of our own gullibility."

Some companies converted their software downloads to the US dollar rate, but others hit consumers with geographic pricing.

"That's an issue governments should look at. It is impeding innovation and development here. If a business has to pay more simply to get the software it needs to operate here, that puts New Zealand at a disadvantage against Australia, Singapore and the US.

"To have to pay a premium simply because I'm downloading in Wellington rather than Wollongong is a bit ridiculous. Some companies are turning their customers into pirates by trying to gouge them."

Many consumers were sidestepping higher local pricing, through parallel imports, services such as Youshop, and buying via friends living overseas, he said.

"There are ways around it. Sadly, there's not a lot we can do beyond that."

Samsung's Galaxy Note II was about 30 per cent more expensive here than in the US at launch.

Samsung head of telecommunications Stefan Lecchi said it did not set the recommended retail price for mobile products in New Zealand, and telcos could opt to sell handsets below the wholesale price if a customer committed to a certain contract.

"Additionally, various other factors like exchange rates, rebates, freight and other distributor costs may contribute to that final setting."

Microsoft users can currently upgrade to Windows 8 Pro, the new operating system, for $49.99 - a similar price to Australia and the US. Kiwis downloading Microsoft Office 2010 from the Microsoft website will pay 42 per cent more than US consumers.

Microsoft New Zealand consumer marketing director David Rayner said the prices on its website were the recommended retail price for that particular product across all retail channels in a country. The RRP reflected the local conditions of the market, including distribution costs, exchange rates, and local taxes.

Apple did not respond to calls and emails for comment.


❏ 16 gigabyte iPhone 5 through Apple: NZ: $1049; Australia: A$799 (NZ$1010.6). Kiwis pay 3.8 per cent more US: US$711.3* (NZ$860.5) Kiwis pay 22 per cent more

❏ Samsung Galaxy Note II (RRP as at launch): NZ: $1199; Australia: A$899 (NZ$1136.5) Kiwis pay 5.5 per cent more US: US$767.2* (NZ$927.9) Kiwis pay 29 per cent more

❏ Microsoft Office 2010 through Microsoft online: NZ: $225 (for one user); Australia: A$189 (NZ$238.9) Kiwis pay 6 per cent less US: US$119.99* (NZ$159) Kiwis pay 41.5 per cent more

❏ Locked out of Heaven, Bruno Mars music single through Apple iTunes: NZ: $2.39; Australia: A$1.69 (NZ$2.14) Kiwis pay 11.6 per cent more US: US$1.41* (NZD$1.71) Kiwis pay 39.8 per cent more

*Including average US sales tax of 9.6 per cent, as reported by Forbes. Exchange rate as at January 4.

The Dominion Post