Apple Raises iPad and iPod Prices in Japan

[gnasher729]

Yes, because god forbid Apple make less margin on their already high margin products!!!!!

You can put it in a snarky tone like that, but what would you say if your employer said "well, the exchange rate has changed, so we'll reduce your salary". Fact is that with the weak Yen someone paying for non-Japanese goods in Yen is paying less money.

And of course it doesn't mean "Apple make less margin on their already high margin products". Because an iPad sold in Japan at the old price would be extremely low margin.

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What I find most amusing is that the US spends more public money per person on health care than the UK.

The UK spends very little on health care. I mean on the actual health care. They spend a lot on failed software projects, and on multiple levels of management that seemingly can't be reduced. People doing the work are actually outnumbered by management. (On the other hand, studying various stocks I once found a company that had 18 managers out of 20 employees in total. )

 

[unlinked]

It is not really amusing (IMO, of course).

I think the disjointedness between peoples professed opinions and reality is amusing but obviously at the same time it is a serious topic with real consequences.

 

[marc11]

Wow, I guess that's what $1.4 Trillion in stimulus does to your currency.

You do know that was the plan all along right? Japan is an export based economy aside from consumerism so a week currency means cheaper exports which means more work and business.

 

[pirg]

Yes, because god forbid Apple make less margin on their already high margin products!!!!!

Yeah apple should be like all the other corporations out there whose goal is to minimize their profit.

 

[Chupa Chupa]

Hang about, in the UK the consumer pays the VAT, not the retailer, the retailer just passes that amount onto the Government. Apple putting the prices up just meant that there was a higher initial amount for the increased VAT % to be calculated from...

VAT is charged at every stage of a product's life, from manufacture to final consumer sale, so the retailer does directly pay a VAT to the wholesaler. The wholesaler pays a VAT to the manufacturer. The manufacturer (if product and parts are made in the UK pays a VAT on the raw materials to make the parts).

Good explanation w/ example of the UK VAT system here: http://www.vatexchange.co.uk/What-is-VAT-and-how-does-it-work

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Yes, because god forbid Apple make less margin on their already high margin products!!!!!

I wonder if you'd feel that way if people were talking about your company, knowing you have all those employee's with great benefits, none of which you want to layoff or reduce pay, but also shareholders that demand value, and customers that expect great products. The money for all that has to come somewhere. Governments can raise taxes or print money (real or virtual, like bonds). Businesses have to work to maintain margins. It's a tough balancing act.

 

[Mr.damien]

More than 20% change in exchange rate in the last 9 months, so a price adjustment seems justified.

It would be, if Apple wasn't so fast when they raise the prices and so slow when they need to lower it ...

 

[iGrip]

Value Added Tax. Value added to whom?

http://en.wikipedia.org/wiki/Value_added_tax

 

[Illicit]

Plus exchange rate fluctuation. Everything is "tied" to the USD.

really? so where were the price cuts to apple products when the Canadian loonie strengthened?

you should amend your comment to say "everything is "tied" to the USD (only when it's favorable to the company)"

 

[nelmat]

Hang about, in the UK the consumer pays the VAT, not the retailer, the retailer just passes that amount onto the Government. Apple putting the prices up just meant that there was a higher initial amount for the increased VAT % to be calculated from...

That is incorrect. The VAT of 20% is added to the price passed to the consumer by the retailer, and paid in full to the inland revenue by the retailer, less exemptions. When VAT went from 17.5 to 20 percent all good and services which attract VAT were accepted as having a price increase of 2.5 percent. A domestic consumer doesn't "Pay the VAT" the domestic consumer pays the list price, which includes the VAT as imposed on the retailer by the inland revenue.

 

[Chupa Chupa]

You do know that was the plan all along right? Japan is an export based economy aside from consumerism so a week currency means cheaper exports which means more work and business.

You make it sound so perfect and shang-ri-la like. You forgot to mention it's not a sustainable monetary policy and at some point it results in inflation that can morph into stagflation. The iPods here are a great example -- a 15% price increase over night. Do you think wages are going up 15% as quickly?

 

[nelmat]

What I find most amusing is that the US spends more public money per person on health care than the UK.

In the UK if I'm ill on the roadside, I am taken in an ambulance to a hospital and treated. If I feel lousy, I go and see my GP and get a free consultation and a prescription for a nominal fee to provide the necessary medicine. There is no cost, no fee. If you think that's a bad thing, then there's something wrong with your life outlook. If the US requires you to pay for your healthcare privately, then what does all that public money in the US actually pay for?

 

[Chupa Chupa]

It would be, if Apple wasn't so fast when they raise the prices and so slow when they need to lower it ...

I've been using Apple products for over 30 years. It's price points are relatively stable. They don't raise or lower prices much either way so I'm not sure what you are talking about Apple being fast to raise prices. Agree some of their products are way out of line for my taste, but it's not correct to suggest they increase prices regularly. Its margins have been shrinking, not growing.

 

[mikkelhorsbol]

Proportions?

That' s a huuuuge hand...

 

[iGrip]

Why? They don't bring the profit back to the US to be taxed so why use the US Dollar as a basis for rate exchange?

Double dipping?

Their expenses are likely denominated in dollars, while in Japan, their revenue comes in the form of Yen.

If apple had paid yen to get their gear made, then it would all come out in the wash. But when they spend dollars and receive yen, they need more yen to maintain profit levels.

 

[Piggie]

In the UK if I'm ill on the roadside, I am taken in an ambulance to a hospital and treated. If I feel lousy, I go and see my GP and get a free consultation and a prescription for a nominal fee to provide the necessary medicine. There is no cost, no fee. If you think that's a bad thing, then there's something wrong with your life outlook. If the US requires you to pay for your healthcare privately, then what does all that public money in the US actually pay for?

This is totally untrue (I'm in the UK)

You have to by law give pay part of your salary every week/month towards state medical care

The difference is it's free at the point of delivery. It's not free at all. Workers have to pay money every week to fund it.

It's like me having to pay the library £10 a week or go to prison for tax avoidance, then saying Ohhh, free books. No they are not free. You just pay from them every week, even if you don't use the library

 

[iGrip]

Seems fair.

Fair ain't got nothing to do with nothing.

Apple figures that they can raise prices without taking a commensurate hit on sales volume, resulting in increased profits.

Fair doesn't enter the equation nowhere.

 

[Piggie]

Also, lest we forget.

Price in the shop often has VERY little to do with the cost of making the product.

Prices point for items are set at levels the manufacturer (Apple) thinks the market will stand.

If they price it too high they won't sell as many, if they price it too low, they wil lose potential profits.

This has little to do with if the item costs Apple $100 or $200 to actually make.

 

[marv08]

You make it sound so perfect and shang-ri-la like. You forgot to mention it's not a sustainable monetary policy and at some point it results in inflation that can morph into stagflation. The iPods here are a great example -- a 15% price increase over night. Do you think wages are going up 15% as quickly?

There are very few product categories that are not covered by Japanese producers. People do not eat an iPod every day. The effect on the average cost of living is abysmal. There will be an effect on imported expensive goods, but for most of them there is a Japanese replacement. The real problem is rather that the strengthening of the local businesses and exports will again strengthen the Yen, requiring additional money to keep it down. It is a solution for now, it won't work forever.

 

[Iconoclysm]

Exactly! Being from the U.K., it amazes me the ignorance on socialized democracy systems and the amount of fear mongering that the general U.S. population feeds into.

It's equally amazing to me when Europeans assume that the vocal minority is the general US population.

 

[unibility]

Wow, I guess that's what $1.4 Trillion in stimulus does to your currency.

hmmm... Obama's stimulus, NO(BAMA) care, increase spending, adding $5.5 trillion dollars to our national debt does not help or US dollar either. and please DO NOT blame Bush. Obama's been in office for over 4.5 years. Man up and take the blame.

 

[TallManNY]

Thank God. Hopefully the demand doesn't drop for these products and domestic manufacturers (and some large retailers) see the Japanese consumer is still willing to spend money on price inflated goods, thereby raising their own prices and possibly getting that economy out of a tailspin.

Japans economic issues have been vastly overblown. True their stock market hasn't gone up much at all in the last 30 years. But their unemployment rate has rarely been above 5.5% (and never reaching 6%). Tailspin? Their terrible 20-year "recession" has largely been with an economy with less than 5% unemployment. Throw in state supported health insurance for all citizens and you've got a pretty comfortable economy for the average worker.

 

[Gasu E.]

Let's see how well this inflationary monetary policy stimulates consumer demand now... #nowwhatKeynesians #ThanksPaulKrugman

As Krugman or any other proponent of a stimulative monetary policy would state outright, imported goods will be more expensive as the currency weakens. That's one of the inflationary components of the policy, which is both predicted and intended.

At the same time, Japanese goods becoming cheaper, so exports become more attractive. Japan has traditionally had an export-driven economy, but that has stagnated lately.

Finally, and most importantly-- sometimes a little inflation is a good thing. Japan has actual been teetering into deflationary territory, which is BAD, for many reasons. The most obvious being deflation means it is more attractive to hoard money (under the mattress) than to spend it. We could discuss this point at further length, if you are interested.

Looking at just ONE number to condemn an economic policy, especially when it is acting just as the proponents of the policy predicted, seems rather foolish.

 

[TallManNY]

This is totally untrue (I'm in the UK)

You have to by law give pay part of your salary every week/month towards state medical care

The difference is it's free at the point of delivery. It's not free at all. Workers have to pay money every week to fund it.

It's like me having to pay the library £10 a week or go to prison for tax avoidance, then saying Ohhh, free books. No they are not free. You just pay from them every week, even if you don't use the library

You are right. UK healthcare isn't free. But it is cheap.
UK per capita health care costs $3,433.
US per capita health care costs $8,233.

 

[Gasu E.]

hmmm... Obama's stimulus, NO(BAMA) care, increase spending, adding $5.5 trillion dollars to our national debt does not help or US dollar either. and please DO NOT blame Bush. Obama's been in office for over 4.5 years. Man up and take the blame.

And, if you have actually been paying attention-- the deficit has been dropping rapidly as the economy recovers. When are you yourself going to "man up" and start handing out credit along with that blame?

BTW, where is the rampant inflation and weakening dollar that you guys have been predicting would result from the stimulus? I'm still waiting on that.

 

[Gasu E.]

Question. What's wrong with saving money (after you've paid off all the debt of course) again? Where would the money come to finance investment without savings? .

Saving money is GREAT if it leads to investment; which, in many economic situations, it does. However, sometimes the economy is awash in savings and there aren't enough productive investments available. A symptom of that is extremely low real interest rates, which means supply of capital exceeds demand-- which we are seeing in Japan and the US. There are a number of factors at work in the US, but in Japan it's pretty clear that they are mainly just stuck in a rut-- nobody is investing because there is no point to it-- consumers aren't buying, and the currency is too strong for exporting. So why would anyone invest to increase output? You can invest to reduce costs, but that's typically a much more limited set of opportunities.

So the goal of Japanese policy has multiple facets-- weaken the currency to help exports, making idling capital less attractive, and put more money in the hands of consumers. All of these are intended to shake Japan out of the doldrums. Time will tell whether this works.