Apple has come under fire from Choice Australia for its pricing strategy in relation to the iPhone 5c/5s. I think they’re both right — and wrong.
Choice at least didn’t fall into the typical and rather idiotic hole of comparing the US contract prices to Australian outright prices; the $99/$199 iPhone 5c $199/$299/$399 US prices are contract prices, and we simply don’t have the comparable data from Australian carriers to make a sensible comparison yet. I mentioned that in the Liveblog even before the event had started, and still it ran wild through Australian social media like a wave of stupidity. It’s just that predictable now.
Geoff Quattromani over at NotAnalog has an excellent bit of data crunching comparing US and Australian contract prices as they relate to the Galaxy S4 — because that’s data we can look at — that concludes that the grand total of contract difference for that handset is $175. That’s $175 in favour of Australians, and for a better service to boot. I have no idea if iPhone 5c/5s contract pricing will be similar, although that $399 upfront 5s cost does give me a lot of pause for thought.
I don’t entirely fault Choice’s analysis of outright prices, using the stated outright purchase price via T-Mobile, because those are available figures, and they’re like for like in terms of what you get in hardware terms. We’re still paying a premium for a physical good, and that’s not a great thing.
Yes, Australia is a smaller market, and that has impact on pricing, and it can’t be ignored. That’s exactly what Choice does, although it occurs to me that most folk will look at those prices and take the exchange rate as absolute. It fluctuates, and it ignores (at a personal level, but then most people aren’t buying fleets of phones) any commission or transaction fees you might pay at currency exchange. That’s not always a factor depending on how you do the currency conversion, but I could very easily see it eroding that percentage away.
Equally, I’m not entirely sold on the idea that a large majority of users are looking for outright purchase. Outright purchase is what I do myself before anyone complains of looking too anecdotally, by the way.
I also rather strongly suspect that those complaining the loudest are those who wouldn’t buy an iPhone anyway — which they’re free to do, choice (with a small c) being a good thing and all that — but I do think it comes down to market difference anyway. It was a long time before you could even buy an outright iPhone in the US, and it’s not a concept that appears to have a lot of traction there.
I’m in the US at the moment (attending IDF, which you can read here and here, and, disclaimer: I’m here as a guest of Intel), and all the coverage I’ve seen talks about two year contracts. All the advertising for any phone or carrier talks about contracts. I’m sure there are US citizens who buy phones outright, but that’s not where the advertising goes, and advertising tends to chase the way that people spend their money, because they want that money.
When we’ve got Australian contract pricing, it’ll be easier to draw a direct comparison with some meat behind it. Choice isn’t wrong entirely, but we simply don’t have the full picture.