Robbing Romania
Isn’t Romania that poor country where the people eat dirt to survive? Isn’t America that land of fat cats with gold bullion just falling out of their pockets? Apparently, Steve Jobs doesn’t get out much.
I think Apple is making a strategic mistake with respect to their pricing in Romania. Granted, I understand revenue models vary and, often times, one of the more profitable routes is to sell fewer units at higher margins.
But these are temporary times of new opportunity for Apple to gain marketshare while Microsoft’s horrid Vista product reveals itself to be the flop that it is. A moment in time where people, in larger numbers than previously, say to themselves, “you know, I should dump this Windows junk, but what is my alternative?”
Apple knows they must strike while the iron is hot which is why they’ve launched a barrage of mildly humorous adverts (and hilarious ones in the UK). The bigwigs in Cupertino are hip to the crack in Redmond’s armor. Bill Gates’ team has really blown it this time around.
It’s a full-court press and the Apple war chest is being put to very good use as the company bobs and weaves in the ring, jabbing away at chair-throwing opponents.
In the United States, Apple has worked very hard to tighten its’ belt and compete on price. There’s been an outdated cliche about Macs being expensive, but that old wives’ tale hasn’t been true for years.
The fact is plain: feature for feature, Apple products are highly competitive on hardware and simply blow the doors off when talking about software.
It’s a better machine, a better experience, and a better bargain.
Surely, thought I, Apple must be sensitive to the economic realities of Romania’s significantly lower income levels and make their best effort to offer their products as far down as they dare, during this momentous opportunity.
Heck, with the typical income having skyrocketed to a mindboggling $544 per month, I thought the Apple prices in Romania must be, at least, roughly the same.
Bzzzt!
Not only is Romania in the Middle East actively subsidizing the American invasion of Iraq and the looming British (by proxy) invasion of Iran, but it would seem they’re being asked to compensate for low computer prices in the US as well.
Let’s take a look at how blatantly obvious the situation is, shall we?
Starting at the entry-level, Apple offers the Mac Mini which is designed for people who want to use their existing PC monitors, keyboard, and mouse. Just upgrade the box to this little doozy.
It’s a stylish piece which makes considerably less noise than your typical PC and takes up dramatically less space in your home or office. It’s dual-core platform packs a punch strong to enough to handle most people’s requirements for a computer such as email, web, video chat, watching movies, editing photos, composing music, home-networking, et cetera.
For many PC users looking to convert, this might be the right package for them. It’s priced quite nicely in America even after taxes for, say, Houston. How about Germany or Romania? Not so pretty.
| US | DE | RO | |
|---|---|---|---|
| Price | $648 | $813 (€619) | $878 (2.259 RON) |
| Premium | - | $165 | $230 |
Wow! Romanians are asked to pay an extra 33% than their American counterparts, even though they make substantially less income on average. No doubt this will curb popular adoption of an otherwise great product which should perfectly fit many Romanian pocketbooks, if not for the gross oversight.
What if you’re just buying your first computer? Or what if you’re sick of your nasty old monitor and the rollerball mouse that hardly works? Well, Apple has a solution for you: the iMac.
It’s a highly stylish feat of engineering where Apple designers have essentially placed a very powerful computer on the back of an LCD flat-panel monitor which takes up very little room without any need for a big clunky PC box.
There’s a gorgeous 20″ monitor available with a built-in, high quality webcam already included. It does everything you want like creating your own movies, burning DVDs, video games, and pretty much anything else with nearly effortless ease.
This marvel of machinery is very well priced in the US market, even after Seattle tax rates. Do the myriad of zillionaires in Romania get the short end of the stick, again? You bet they do.
| US | DE | RO | |
|---|---|---|---|
| Price | $1,631 | $1,969 (€1.499) | $2,182 (5.613 RON) |
| Premium | - | $338 | $551 |
The financially-burdened peasants from the west can get the same computer for only 75% of the price charged to wealthy Romanians living in their lavish castles in the sky.
It’d be better to take a train to Germany and come back home to Romania. One might have expected the opposite to be true, but apparently Apple isn’t interested in Romanian marketshare and has ill-advisedly given up on a nation fiscally forced to pirate Windows 98.
Naturally, one becomes a little more nervous when taking a look at something higher-end like the drool-worthy 17″ MacBook Pro laptop.
This is no mere lil’ notebook computer, but a high-powered, mobile unix workstation dripping with OS X ease-of-use glory. It has all the extras you might expect in a top-of-the-line laptop: illuminated keyboard, Firewire, DVD burner, Bluetooth, Wifi, built-in video camera, dual-core processors, and much more. It’s thin, weighs nothing, looks gorgeous and is totally silent.
This is serious professional grade gear and yet the price still beats comparable machines from Sony, Dell, Toshiba, and whomever.
Well, it’s a good price in Los Angeles. But not in Romania.
| US | DE | RO | |
|---|---|---|---|
| Price | $3,030 | $3,676 (€2.799) | $4,153 (10.679 RON) |
| Premium | - | $646 | $1,123 |
It’s the same behavior all over again. Romanians are asked to pay a 33% premium over the American price. Think about it in raw dollars… it’s a bonus of US$1,123. Well over a grand? There is no reasonable explanation for that.
Folks, for that kind of money, I can take a flight all the way from Bucureşti to the far west coast city of Seattle with only 2 weeks advance notice. The flight stops over in Schiphol airport and you’ve got some flexibility to keep your itinerary efficient or to maximize your layover so you can stretch your legs for many hours and enjoy the town.
Are the executives responsible for European sales ignorant and incompetent? Could it be some matter of disrespect for the potential of the Romanian market? Or is it just possible that Apple enjoys robbing Romania?
You tell me. With the chance to spend two half-days (or longer!) in Amsterdam plus visit Seattle, America’s best city, why on earth would I bother to buy higher end products at the Romanian Apple Store?
Cue the sound of crickets.
February 17th, 2007 at 9:21 pm
I got my new Mac (yay!) from a retailer and it costed me around 200 RON (~$70) less than if I’d have bought it directly from Apple Romania. And as a business, I also get the VAT (19%) back. But even so, it costed me around $500 more than the US price. Some of that can be explained by the tariffs/duty, but yes, I’m aware I’m being ripped off. :-)
It’s commonly done in the importing of electronic goods, sometimes they charge twice the US price or even more! (the record was about four times the price of a video camera battery, which I ended up ordering it from the internet)
BTW, ZOMG, You have an Ayn Rand quote! Don’t tell me you’re one of them! :-)
February 18th, 2007 at 2:13 am
great site, decent point of view on things, congratulations! :)
February 18th, 2007 at 12:30 pm
it would better if the prices was more realistic for romania so more would use it, but i am still a happy owner of my macbook
February 18th, 2007 at 1:06 pm
Romerican, I have experienced the same frustration. Less than 48 hours ago I bought a Canon Multifunction printer from a local store in S. Romania. I paid $320 when I could have bought it in the US, or on Amazon for $186 + free shipping.
I cannot believe that it is Canon’s fault or Apple’s fault. The Romanian government does not care about how much their people must pay to enter the 21st century. They want their piece of the pie. They want the 19%VAT + the inport tax + the markup difference…meanwhile, they probably buy their gadgets on the piata neagra. I am sure that Apple would have no problem selling a computer in Romania for the same price they do in the US. They are selling them at a higher rate for a reason…someone else wants to get rich for doing nothing.
February 18th, 2007 at 3:49 pm
Generally bullsh*t - Apple was always expensive and if you are some sort of fanboy that just wants to be cool you will pay the extra to be locked in a monopoly worse than the one from Redmond (and see it as a cool thing), but if you are smart you will go Linux …
February 18th, 2007 at 4:29 pm
Bogdan - w00t; scored yourself come goodies, eh? I’ve been daydreaming about a new Mac before the next century, so I looked into the Romanian prices. I understand there’s a bit of some tariffs/duty but I am quite reluctant to believe that accounts for all the extra money involved.
It is contrary to all logic that import taxes accounted for the full US$1,123. Not possible. Check out this Irish comment about paying a premium upwards of 20% after the linked article.
Watch out! I might be forced to throw in a few more Rand quotes right along with Kropotkin and anyone else who expresses a cogent idea on the role of government vis a vis the individual.
Mihnea - Welcome to the show! I checked your photo gallery, particularly the Sighi shots and, of course, Monica.
iOnel - Welcome to the show! I couldn’t have summarized it better myself. The large undercurrent trend in Europe is a world away from Windows hegemony (a world the majority of folks have not yet experienced) and toward systems like Apple’s quality offerings and (I think radically moreso as time passes) the Free/free distributions like Ubuntu.
It would be nice to see Apple (or it’s Romanian subsidiary/partner) remove the artificial barrier to adoption caused by unjustifiable (in my mind) premiums. The high taxes/customs are already enough.
Jonathan - Welcome to the show! Your opening remarks makes me cringe as I’ve been looking at Canon printers in Carrefour (our local megamart) where the choices are sparse and overpriced. I did not give in to my desires, so I’m experiencing a little vertigo to hear you took the plunge.
While I can imagine that the Canon printer may very well be subject to a near 30% import duty (characterized as EU discrimination by the US Department of Commerce), it would appear that computer hardware such as Apple computer systems are not subject to such a high rate of customs duties.
Granted, I’m no expert and having a bit difficulty finding the specific applicable tariff rate at the European Commission’s Taxation and Customs Union database for TARIC 8471300000 (MacBook laptops, I believe) and TARIC 8471410090 (iMac/Mini, I believe), but elsewhere -whose source escapes me- I was being (mis?)lead to the understanding that such taxes and fees were substantially less than 30%.
Maybe someone else can fill us in with accurate specifics.
Nevertheless, I remain ensconced in the position that Apple should strongly endeavor to end such outrageous premiums by whatever means necessary, be that by reducing their prices to some degree, by negotiation in Brussels, or setting up a small manufacturing facility here in Europe (Romania!) which licenses technology, et cetera, as so many other international biggies do.
Having said all that, you’re damn skippy those vultures try to soak whomever they can for whatever they can without ever exerting any effort except to look into the media camera to say, “don’t worry comrade, I’m obstructing free trade for your benefit.”
cucu - Welcome to the show! I think “fanboy” is an overused ad hominem that’s rapidly approaching Godwin’s Law status. Too bad, because folks can make good points without resorting to such mindless silliness.
I’d venture to say that Apple is cool. But it’s not cool because “everyone thinks so.” If they did, Apple would have a much larger market share. As it is, the herded masses seem to believe Windows is “cool because it’s popular.” Which is no reason to be cool. In any event, Apple is cool to just about anyone whose used it for more than a couple months (and doesn’t have a philosophical objection to non-Libre software). Typically speaking, their products work wonderfully well and are very powerful.
In fact, they haven’t been overpriced for about 5-7 years now, depending on which details we’re talking about. But there’s a difference between being overpriced and being expensive. For example, the crap that passes for cheese — Kraft Singles “processed cheese food product” — ain’t expensive in price, but as it is vastly overpriced. Know what I mean, Vern?
While it would be most correct to say a smart person is one who would intelligently weigh the benefits of relevant solutions to addressing their individual computing needs, I do, ultimately, share your vision about Linux. I think it’s become clear (to non-bleeding edge adopters) that Linux is the future of mainstream desktop computing in our homes and offices. It won’t be overnight, but it is now unstoppable.
February 18th, 2007 at 5:19 pm
I have experienced this kind of price gouging when living on a well-known, yet somewhat economically isolated U.S. island as opposed to pricing on the U.S. mainland. I witnessed it again on inspecting the cost of imported electronic goods in a sweet little part of the world known as Costa Rica. As for a “fanboy that just wants to be cool”, some of ya’lls needs to take a gander at the Windows Vista displays in the big box office products stores in the U.S. Yuck! Microsoft must think that this is the epitomy of being “cool”. Let me tell you that more than once those turkeys have “updated” my software only to cause me to have to reverse the hex that they have tangled. Romania could use either (1) Romanian Apple manufacturer right there in the homeland or (2) Romanian Ebay. In the meantime, U.S. computer manufacturers are missing an important segment of the world market that could be quite beneficial to them.
February 18th, 2007 at 6:55 pm
In Italy Microsoft Software costs about twice then Usa. And you cannot buy it on line from Usa. Italian dealers blame Microsoft, Microsoft blames Italian pyrates, pyrates blame high prices.
Linux = Old dear Arab Phoenix. Sorry.
February 18th, 2007 at 10:55 pm
“Isn’t Romania that poor country where the people eat dirt to survive? Isn’t America that land of fat cats with gold bullion just falling out of their pockets?”
Poverty in Romania is a fact, which only morons ridicule. Eat dirt yourself, moron.
February 19th, 2007 at 1:42 am
I think you missed the point. He was talking about the western perception of Romania.
February 19th, 2007 at 4:03 am
oui, i agree, it was merely a metaphor not a ridicule
February 19th, 2007 at 9:18 am
shadowchase - Interesting reminder that various people get jacked the world over. The Vista muck has been everywhere, per usual. But unlike with past releases, there is no stampede to go and get it. Sales are far lower than expected. Even websites like C|Net, which usually get in the front line of the hype-machine, have quietly dropped the big in-your-face promotion because no one is clicking.
Funny, I did take a whirl through and you know what I see? I see all these computers being ranked as “barely sufficient” for “basic” Vista (i.e., don’t expect to do anything with your computer besides turn it on). I had to laugh at that.
Check out this one example. Aesthetically, it’s ugly as sin. The review itself says it’s slower than an iMac. And yet it costs more! (The only thing nice I can say is it has a touchscreen.)
I firmly believe that almost no reasonable person (without a hardcore philosophical objection to non-Free software) cannot really be so ignorant as to think the Mac “sucks” because it clearly does not. If one or two people hug their Mac because it’s a nice machine, that hardly makes them eccentric. Just because you’ve never loved yours the same way…
Sometimes it sounds just like the playerhaters: “Yeah, well, I might be ugly, but at least I ain’t got no money, bitch.”
Don’t worry about Microsoft updates. They’re only here to help you more easily flush out all the hackers they let into your computer so they can now surrender control of your PC to the corporations who are the real customers (instead of you).
Strudel - There was an interesting article I read somewhere which had excerpts from a recent interview with Bill Gates where he tried to pass off the “double price in Europe” as possibly stemming from currency exchange rates. Of course, the smart journalist didn’t buy that baloney. Are we seeing a pattern here?
I’d say you’re right. Linux is the phoenix. Once the burned out realm of line command junkies, it is now preparing to rise up from the ashes and spread its’ wings. Download Ubuntu, burn it to CD, there’s no need to even install it. Just run it off the CD, if all you want to do is see if it works. Try it once or twice and keep Windows as long as you want. Easy as pie.
Florin - Welcome to the show! You’ve certainly shamed me and now I’m riddled with rich Western guilt. How much shall I write you a check for, to make my pain go away? Lemme know!
February 19th, 2007 at 2:28 pm
Speaking of Vista, you gotta see this:
http://www.arnnet.com.au/index.php/id;7680622;fp;16;fpid;1
Now excuse me while I laugh my ass off.
February 21st, 2007 at 2:33 am
Macs cost a whallop, Windows is plain dumb, Linux kicks ass but takes time to learn and get right. However, Ubuntu directly from CD - that’s too attractive not to try. I did enjoy Mandrake…
And yes, Romania is poor, and it’ll be a very long time until that changes. Why do you think so many are looking to ‘escape’ ? There’s also a heavy polarization. Bucharest has loads of luxury cars rolling on the streets, 20 year old chicks in 4×4 BMWs, etc., while in the country you see villages where they don’t even have running water.
February 21st, 2007 at 1:33 pm
eFTy - I don’t think Macs cost too much at all. $600 for a Mini? Don’t let the name fool you into thinking it’s a weak machine. $1600 for an iMac which is a full computer plus 20″ LCD? I just now went to Dell and configured a somewhat simliar PC (thin box, wireless adapter, MS Works, security, keyboard, optical mouse, etc) and it came out to $1461…. but doesn’t look as nice, makes far more noise, and eats up a lot more room — plus it’s got Vista *shudder*.
Macs do NOT cost more. It’s a myth.
Yeah, Ubuntu is pretty easy to try. They’ll either ship a CD to you or, what I recommend, you just download the latest version and burn your own CD. Pop into the CD drive and reboot. Ubuntu launches without any need for installation, just so you can kinda test it out.
Of course, running off a CD means the boot-time is a lot slower than off a hard drive, but you’re just testing it out so no big deal. Once it’s booted, people can see the software it has, the software they can add for free, test their internet connection and all that stuff. Pretty cool for free.
From there, you can install it as a dual-boot so people keep their old Windows *and* get Ubuntu on the hard drive both. I’d say that’s pretty slick and well worth a try.
You’re right it’s a little weird to see the Bucuresti escorts driving around all pretty in their Porsche SUVs while others have a much harder time. However, there are a lot more new cars on the road all over Romania, including the villages. I see them in every town, large and small. Everywhere. So, some people are making money, even if it is unequally distributed. Hopefully some of that levels off a bit, but I have to remember that it’ll never be totally equal… unless you wanna go back in time.