On Friday, Apple (along with Microsoft and Adobe) will front the Federal Australian Parliament’s inquiry into IT Pricing. You may recall that after failing to voluntarily appear, the committee in February of this year summonsed the three, effectively forcing them to appear. Given Apple’s appearance, I wanted to take a closer look to see what Apple actually charges for their products (both hardware and media from their iTunes and App Stores) and see how it compares to the US.
Doing this kind of analysis can be fairly contentious given there are a few ways to do it, various assumptions you have to make, and different ways of presenting the information. To be clear, here is how I have constructed the data presented in the graphs in this article.
I collected from Apple’s website, the Australian and US prices of all their key products and main models (but not built-to-order models).
GST is removed from Australian price: The Australian price includes a 10% GST (goods and services tax), so I removed that from the Australian price because US prices do not include a sales tax, that is added at checkout based on which US state the customer is from (sales taxes varies across US states).
Now that both prices don’t include sales taxes, I convert the Australian price from Australian dollars (AUD) to US dollars (USD). I use a 3 month average of the exchange rate. The 3 month average smoothes out any temporary peaks or troughs in the exchange rate and gives Apple a fairly lengthy period of time to alter prices if there was a significant change in the exchange rate.
This now gives me the price of the Australian good in USD and without GST, a figure that can now be compared with the US price. So I calculate the percentage markup of the Australian price based on the original US price.
NOTE: Methodology for the Media calculations do vary a bit, read the notes I include with them.
I encourage you to scrutinise my calculations by taking a look at the Excel document I created, linked below.
Apple opened its first retail stores on May 19, 2001 – one in Virginia and the other in California. In the Steve Jobs biography, author Walter Isaacson wrote how Jobs had wanted Apple to have its own stores so that their iMacs didn’t have to “sit on a shelf between a Dell and a Compaq while an uninformed clerk recited the specs of each”. Despite initial criticisms and comparisons to Gateway’s failed retail stores, Apple Stores not only continue to exist today, but are regarded as one of Apple’s greatest innovations - one that now contributes to more than 10% of Apple’s revenue.
“Unless we could find ways to get our message to customers at the store, we were screwed.”
I’ve previously written about the coverage of Apple’s entertainment services in international markets (including how they compare to Google, Microsoft and Amazon), so I was similarly intrigued by how Apple’s stores have expanded into countries outside the US. Whilst researching all this, I came across other questions such as whether Apple had a particular preference for when they opened new stores and how the expansion of their retail network would affect visitors and profits. What I have found isn’t particularly groundbreaking, but there are certainly some trends and fascinating tidbits that I’ve come across, all of which is detailed below the break.
A note to RSS readers: This article includes an HTML5 diagram that likely won’t display in your reader, view this post in your browser (it works on iOS devices) to view that diagram. Apologies for the inconvenience.
In mid-October, we published a story on the entertainment ecosystems of Apple, Microsoft, Google and Amazon – looking at to what degree their music, movie, TV, eBook and app stores were available in international markets. Apple on the whole seemed to have the best average availability – slightly losing to Microsoft for the app stores and Amazon dominating everyone in the eBook store.
I’ve decided to briefly revisit the topic today because the original post garnered quite a lot of discussion and feedback and because of two “events” that have since happened. Firstly, Apple yesterday announced an expansion of the iTunes Music Store into dozens of new countries (and Movie store in a few additional countries). Secondly, I have since found two pieces of data on which countries Xbox Music is available in (for some odd reason I cannot find any official Microsoft document detailing the countries it is available in). So below is an update to the Music and Movie diagrams and graphs.
Please note: An update to this article is available here, it includes the December 2012 iTunes expansion (Music & Movies) as well as Xbox Music.
The choice of what phone or tablet to buy is one that often involves many considerations, chief amongst those is the physical device and the operating system that it runs. But I think there is a third fundamental consideration that is growing in importance: what services and entertainment ecosystems you’ll be able to access. You need only look back to the recent criticism of iOS 6, in which Apple replaced Google Maps with their own Maps app. Summing it up generally, Apple’s Maps app is sub-par to what it was replacing and that mattered to people – enough that Tim Cook felt the need to apologise for the frustration the switch caused.
Today I want to focus specifically on the entertainment ecosystems of Apple, Google, Microsoft and Amazon. I’m referring to the various digital content stores that are run by Apple, Microsoft, Google and Amazon – specifically their Music, Movies, TV Shows, eBooks and App stores. In my mind, there are four general aspects that make a good entertainment ecosystem:
Wide selection of quality content
Interoperable on a user’s devices
I want to explore the third aspect in depth today, because it’s something that I feel is all too often downplayed by the technology press (which, coincidentally, is based predominantly in the US). I’ll also briefly discuss the fourth aspect as well at the end. Why are these two aspects so important? Well, smartphones and tablets are devices that have universal appeal, so for Apple or any of the other three to win the smartphone or tablet “race” – an entertainment ecosystem that is available across the world, not just in the US, isn’t just a cool extra feature, it’s a necessity. The US may be one of the biggest markets for such devices today, but is there any doubt that these devices will rival the prevalence of personal computers (which are everywhere) in years to come?
I’ve collected data on which countries each service is available in and then added in population figures to create many of the graphs and diagrams you’ll see below, mixed in with some of my own analysis and thoughts. Please note that the five HTML5 map diagrams are interactive, click on the logos of the four companies to compare their coverage.
In an article posted this morning on Asymco, Horace Dediu discusses how the revolutionary user interface of the iPhone served to disrupt the mobile market and unseat the incumbents – Nokia, Samsung, LG, Motorola and Sony Ericsson.
In 2007 something happened which changed the industry. It took a few years to even realize it was happening but by the time it was obvious, it had changed to such a degree that huge companies found themselves in financial distress.
Furthermore, Dediu discusses how over time as new input methods have been created, so have new platforms and new business models – as well as hurting the incumbents of the market. A big question that Dediu poses in his article is that with next revolutionary user interface seemingly being created at a faster and more rapid rate (mouse, click wheel and then multi-touch), what will be the next revolutionary user interface? He questions whether in fact it could be Siri.
My disruptive hypothesis for Siri is that it shifts the competition from platforms positioned on a device to a “coupled” super-platform deponent on broadband and infrastructural computing. Just after collecting enough data and observing patterns in it that give us clarity, It looks like things are about to change all over again.
If you’d like to hear more from Horace on this idea of Siri being the next shift in user interfaces, this week’s episode of the Critical Path would also be worth a listen.