back to article Cynical Apple gouges UK with 20 per cent price hike

Apple has taken advantage of a more competitive sterling exchange rate to hike its computer prices – by far more than sterling fell. Cupertino raised some UK prices by as much as £500. Apple had already raised the prices of its iPhone, iPad and Apple Watch products. Sterling has fallen some 15 per cent from its 1H 2016 …

  1. TheTick
    Mushroom

    All according to plan

    A weak pound is exactly what the government wants (pity we mere voters want the opposite) because it reduces the real value of the vast debt they have heaped up over ours heads and those of our children.

    Carney took full advantage of the cover of Brexit to lower interest rates (after bullshitting that he was about to raise them for the last year or so) AND start up the printing presses with more QE. He's done absolutely everything he can to trash the pound at it's most vulnerable point in years.

    So we poor saps who cherish our savings are once again looted by the invisible hand of inflation (no relation to Adam Smith's invisible hand of awesomeness).

    Fortunately I invested in a bit of gold and Brexit actually had a net positive effect on my finances. Real money people - real money.

    1. Dazed and Confused

      Re: All according to plan

      > (pity we mere voters want the opposite)

      Well that depends doesn't it. You might want an over valued currency so you can buy German cars cheaply, go on cheap holidays to Spain or in this case buy cheap Chinese electro-bling.

      If you want to have a job, the pound going down is good.

      It might make imported goods and raw materials more expensive but it makes our exported goods cheaper and more competitive. As it makes imported goods more expensive it make makes home produced ones cheaper comparatively speaking. Hence we've seen worries from Irish mushroom producers that they can no longer undercut UK suppliers and so are losing their market. Also why we see the German trade bodies worrying that their exported goods to the UK are going up compared to UK produced ones and that on an international scene when they are competing against UK suppliers in the US or the Far East they are suddenly finding it harder.

      Having a high value currency is good from a willy wanging perspective, mines bigger than yours and all that good stuff. But if you want to be competitive on the international stage then lower is better.

      1. TheTick

        Re: All according to plan

        "You might want an over valued currency"

        No, I would like a correctly valued currency, the problem is what sets the value and that, quite simply, is the supply of money. The supply of which is controlled, ultimately, by the central banks, who respond (whether they openly admit it or not) to the government.

        While it does make British exports cheaper, if you are in manufacturing that means the cost of imported raw materials has gone higher as well.

        But the "weak currency = jobs" myth is just that - mythical. West/reunified Germany had an immensely strong currency in the Deutschmark and had no shortage of jobs and manufacturing. It was so strong the French devised the Euro to stop being so embarrassed by Fritz next door because the Franc was constantly devaluing. Switzerland is a modern example of very strong currency and plenty of employment. Please don't propagate that falsehood anymore.

        1. This post has been deleted by its author

        2. Solmyr ibn Wali Barad

          Re: All according to plan

          "West/reunified Germany had an immensely strong currency in the Deutschmark and had no shortage of jobs and manufacturing"

          They had an economic stagnation in late 90's and early 2000's with unemployment hitting 9%, even 17% in eastern parts. Wasn't all that rosy back then. But they handled it well and managed to do some serious reforms. These measures got the economy moving again, albeit lagging behind the boom in other countries, and in a pretty good shape for weathering the 2008-2009 crisis.

          Similar timings can be observed for Poland - they struggled through 90's and early 2000's, missed out on some benefits of the bubble, but were relatively less harmed when the big wave hit.

        3. P. Lee

          Re: All according to plan

          >But the "weak currency = jobs" myth is just that - mythical.

          Then the converse must also be true, strong currency which sucks in imports rather than promoting local supply, does not reduce local employment, must also be true. But I think not.

          We are talking long term here, in the short term, not much changes - that's by definition.

          I'm also thinking that if we are *so* dependent on imports and sterling has devalued by 10% which should see inflation hitting similar levels to the devaluation. If inflation is only hitting 1.5% then either we are not that reliant on imports, or we've suddenly become 8.5% more productive. Good news either way. Or the figures are being massaged.

          The bottom line is we have spent far more than we have and we will be poorer while we correct the deficit. Whatever you think of intentional QE with regard to the financial crisis, somewhere along the line we adopted Keynesian policies of spending more than we earnt and pretending it didn't matter. Now the piper must be paid.

          Taking on debt to pay for current liabilities rather than assets creates poverty - only fools think otherwise. We need to put more money into paying off debt and less money on shiny. Depending on demand curves, price hikes (e.g. from devaluation) for imported goods divert wealth to other things which haven't just jumped 10% (or 20%) in price.

        4. Dazed and Confused

          Re: All according to plan

          > While it does make British exports cheaper, if you are in manufacturing that means the cost of imported raw materials has gone higher as well.

          You seem to have missed the most basic point of manufacturing, you add value. If you don't you won't remain viable much longer. This value add is where the profit comes from. The issue I think that you are trying to make here actually works the other way around to what you seem to be implying, the effect of the drop in currency actually multiplies the increase in profit not reduces it or it allows you to drop your overseas prices making sales easier. Usually you aim for a middle ground increasing profile and sales at the same time. It's a win win not a lose lose you seems to be implying.

          > But the "weak currency = jobs" myth is just that - mythical. West/reunified Germany had an immensely strong currency in the Deutschmark and had no shortage of jobs and manufacturing.

          True but Germany has managed to create itself a great "brand" Made in Germany is seen as an assurance of quality (same as the example of Switzerland you quote). This has helped them immensely. Sadly in the 70s the UK managed to trash their manufacturing reputation. So we need to rebuild our markets. The price advantage of a more realisticly valued currency normally helps. Hence what we've seen since the vote and also what we saw when the Pound was broken out of the ERM back in the 90s.

          > Please don't propagate that falsehood anymore.

          Well I might if they were falsehoods. But as someone in the export business (if not manufacturing) I know what I'm talking about. Believe me this helps when your market is using other currencies. A huge chunk of the UK economy is based on services, Here the raw materials are people with skills, These are going to get more expensive because increases in import prices will have an inflationary pressure effect. But the value add part is bigger.

      2. Anonymous Coward
        Anonymous Coward

        Re: All according to plan

        Not so fast. People will want pay rises to pay for the increased price of import goods. That will raise the cost of our exports.

      3. Hans 1
        Paris Hilton

        Re: All according to plan

        >It might make imported goods and raw materials more expensive but it makes our exported goods cheaper and more competitive.

        What do you produce in the UK and export ? Raspberry pi, ok, easy, what else ? Serious question WHAT ELSE ?

        1. Dazed and Confused

          Re: All according to plan

          > What do you produce in the UK and export ? Raspberry pi, ok, easy, what else ? Serious question WHAT ELSE ?

          Well the UK exported 1.2M cars last year exported SMMT, who I guess would know these things.

        2. Anonymous Coward
          Anonymous Coward

          Re: All according to plan

          We export a lot of drugs and weapons...

    2. I ain't Spartacus Gold badge

      Re: All according to plan

      I've got some news for you. There's no such thing as a free lunch. If you save your money with a bank, you are lending it, at risk. The risk being the bank going pop, and you losing your money.

      Interest rates on bank loans are lower, because the risk is very low. But there's still a risk there. Had QE not happened, those with savings would have lost everything. So don't complain too much about QE - it did it's job.

      BTW QE is not money printing, in the normally accepted meaning of that phrase. The difference is technical, but real. Basically because it's a temporary effect tied to the short-term purchase of an asset from the market, that will later be sold back into the market and the central-bank created money is then destroyed. The job is not to create money but to create liquidity - and stop the economy seizing up. It worked.

      The 2nd job of QE is to force interest rates down, so that those holding lower risk assets are forced to either take more risks, or accept small losses.

      However complaining about the shocking inflation of 0.5% (expected to rise to 1.5% next year) is pretty bloody laughable.

      One of the major causes of the recession was over-saving. Not by UK households, we borrowed too much, but by the world's main exporters (basically OPEC, Russia, East Asia and Germany). They poured cash into the money markets rather than spend it themselves, or let their currencies appreciate sucking in imports - and this caused a huge global imbalance. This was one major cause of the borrowing/banking boom - and subsequent bust. QE was trying to force unproductive assets to be moved into investment in the real economy - to try and force economic growth. This is the bit of QE that hasn't worked as well, it's led to more of an asset boom than an investment boom.

      But as QE saved the banking system, and so the economy, and kept deflation away - it was a great idea.

      1. TheTick

        Re: All according to plan

        "I've got some news for you. There's no such thing as a free lunch. If you save your money with a bank, you are lending it, at risk. The risk being the bank going pop, and you losing your money."

        That's not news to me, I agree entirely, and it can't be said often enough that money in the bank is actually a loan to the bank and you no longer own the money - just a claim on it.

        However as I mentioned some of my savings are in gold, but some of my family members, who mocked me when I mentioned the yellow metal, have the majority of theirs in bank deposits or sterling denominated shares. Although I feel a little smug about it, I take no pleasure in them being 10-15% less wealthy than they were not so long ago.

        I can't agree with your assessment of QE saving the banking system but it's a bit late so don't feel I can go into detail without messing up my post. Yes, QE can theoretically be clawed back when the cash comes back to the central bank. But really, do you think that will ever happen? It's not happened in 25 years of doing it in Japan where it was invented. I can't think of a single instance where a CB has removed the QE from the system. QE is de facto money printing.

        And that's an easy way out, a way that has been tried, tested, and failed from ancient Greece, through Rome, via the Wiemar Republic and a thousand other realms in between and on to us today. It will fail again ultimately, and the longer we stretch it out the worse it will be, we should have let it all go to pot in 2008 and rebuild, because now it's going to be even worse when it goes.

    3. Doctor Syntax Silver badge

      Re: All according to plan

      "Adam Smith's invisible hand of awesomeness"

      Which seems to have developed arthritis these last few years.

      1. TheTick

        Re: All according to plan

        "Which seems to have developed arthritis these last few years."

        It's been tied behind his back by the central planners in the central banks of the world.

    4. streaky

      Re: All according to plan

      It actually increases the debt where it's foreign denominated which a chunk probably is and has zero net effect on Sterling denominated. It does however increase the costs of imports and decrease the cost of exports to foreign customers helping to attack the trade deficit (to the extent anybody outside the US gives a toss about trade deficits) - so yeah all according to plan on that front. Don't see the problem.

      FWIW Carney is a clown who should be fired at the first opportunity - and gold isn't any more real money than a bag of dirt.

    5. Ian Joyner Bronze badge

      Re: All according to plan

      I agree with you. Although not living in the UK, it is in my advantage that the pound is low so I can come back for a cheap visit.

      However, selfish motive aside, it seems that governments are all to pleased to devalue our savings in order to prop up industries that should be more efficient because they could cut out middle (and even upper) management doing rubbish jobs.

      http://www.economist.com/blogs/freeexchange/2013/08/labour-markets-0

  2. Anonymous Coward
    Anonymous Coward

    US prices?

    Didn't US prices go up as well, meaning that it's not a 20% price hike just for the UK?

    1. Uncle Slacky Silver badge

      Re: US prices?

      European prices are higher too.

      1. Anonymous Coward
        Anonymous Coward

        Re: US prices?

        What's so hard? US prices went up because UK prices went up. UK prices went up because Apple had to raise the price to cover them bothering to raise the price. Global prices are about to go up because we are blessed to have Apple on Earth. Clearly you're not a Appletologist...sorry, Scientologist...shit...Earthling or you wouldn't question it.

    2. Mark 85

      Re: US prices?

      They had to rise. Apples revenue and profit dropped on few products being sold. Can't rake in less cash now, can we? So if you can't sell more product, raise the prices on what you can sell....

      1. Doctor Syntax Silver badge

        Re: US prices?

        "Apple's revenue and profit dropped on few products being sold."

        True, They've got to make up the shortfall on sales of those watches.

    3. ThomH

      Re: US prices?

      The most expensive non-build-to-order MacBook Pro 15.4" on store.apple.com is £2,699*. So that's £2249.17 without tax. At the current exchange rate, that's the same as US$2740.84.

      The US price (also without tax) is $2,799.

      * I didn't bother playing with the build-to-order options to get to El Reg's quoted £2,999 but it trivially goes quite a lot over that if you want: e.g. adding a 2TB SSD adds £1,080 immediately. Getting to £2,969 was easy but still not what I was aiming for exactly to match the story.

    4. Anonymous Coward
      Gimp

      Re: US prices?

      @AC Yes, Apple needs to pay for their new HQ, so everyone gets to chip in! :)

  3. Anonymous Coward
    Anonymous Coward

    This is news how?

    People will still pay for their new shiny shiny.

    We, as a consumer society, have simple forgotten how to say "no".

    Apple could quite literally double the price and people would still buy them.

    It's ingrained...

    1. Will Godfrey Silver badge
      Meh

      Re: This is news how?

      Well this non-consumer doesn't have any difficulty at all in saying 'No'. Odd that. I seem to be able jog along quite comfortably.

  4. Spanners Silver badge
    Facepalm

    20% ???

    They obviously think the pound has further to fall.

    In the meantime, just think of it as advance Gullibility Tax.

  5. Anonymous Coward
    Anonymous Coward

    Maybe they're assuming another 5% is in the offing

    Once the UK pulls the trigger and gives Article 50 notice in the spring? I have to think there's some amount of "maybe they won't really follow through" built into the current exchange rate, so there's probably a bit further to fall once Brexit is irrevocable.

    1. Jess

      Re: "maybe they won't really follow through"

      Or even maybe they will limit Brexit to meaning what was actually asked on the ballot paper, rather than extending its meaning to what they need it to mean for their own political benefit.

  6. handle

    Win-win

    Don't they sell more the more expensive they make them?

    1. ThomH

      Re: Win-win

      Like some sort of upside-down Laffer Curve: don't price anything as mid-tier?

      1. Paul

        Re: Win-win

        Look up Veblen Good

        https://en.m.wikipedia.org/wiki/Veblen_good

  7. Anonymous Coward
    Anonymous Coward

    >Cynical Apple gouges UK with 20 per cent price hike

    The 6 year UK statutory warranty and legal requirement to note it prominently on the UK Apple Store starts to bite.

    http://www.apple.com/uk/legal/statutory-warranty/

    (unless you're Scottish then it's only 5 years)

    1. I ain't Spartacus Gold badge

      Shouldn't the Scots demand them a few quid cheaper then?

      1. Anonymous Coward
        Anonymous Coward

        >Shouldn't the Scots demand them a few quid cheaper then?

        One Scot managed a full refund several years down the line - though it took a while. Essential reading if you own a Macbook that's had a couple of repairs in the last 5 or 6 years.......and quite a worry if you're Apple.

        https://charlieegan3.com/blog/2016/06/24/getting-a-full-refund-for-a-faulty-macbook-under-uk-consumer-law.html

        Numerous full refunds of mis-sold AppleCare have now been made - it's another sword of Damocles for Apple in UK (and EU) if the final ruling goes the way expected - the PPI companies will jump all over it

  8. Vimes

    The price on the French site is slightly higher than the new British price once the price in Euros is converted back to Sterling, so either this is down to the exchange rate or we're not the only ones who've had price rises.

  9. Michael M

    MSFT at it too

    "Microsoft to raise prices by up to 22pc after slump in pound" is another headline from the Telegraph.

  10. Wam

    Do the Math(s)

    e.g. If the pound was to fall 50%, then prices would rise by 100% - so 15% crrency drop vs. 20% price rise isn't so far off the mark

    1. Jason Bloomberg Silver badge

      Re: Do the Math(s)

      I wouldn't blame them if they also wanted to recover some of their lost profit of the last three months.

    2. John Savard

      Re: Do the Math(s)

      Oh, dear, you're right. It would work out exactly if the currency dropped by 20%, then the price would have to rise by 25% to keep up - if 5 quid is only worth 4 quid now because the value dropped by 20%, then to get 5 quid for every 4 one charged before one needs a 25% price rise.

      So a 15% currency drop should translate into a 17.64% price rise or thereabouts. Still not 20%, but not quite shocking price gouging.

  11. John Smith 19 Gold badge
    Meh

    Shocking. US company does what it can get away with.

    And....

  12. TheProf
    Megaphone

    Which bank was that again?

    "with Deutsche Bank last December predicting Sterling would fall to $1.15 in 2017.."

    Oh that bank!

    http://www.spiegel.de/international/business/the-story-of-the-self-destruction-of-deutsche-bank-a-1118157.html

    (The first paragraph is a hoot. A hoot I tells ya!)

    1. markw:

      Re: Which bank was that again?

      Great. I can cut 'n' paste that first paragraph and apply it to so, so many things ...

  13. Anonymous Coward
    Anonymous Coward

    UK left the EU

    Other companies are doing this to the UK thanks to The UK leaving the EU. Sent the best idea, was it?

  14. John Savard

    Momentum

    Well, they don't want to be bothered raising prices again if sterling falls some more. This way, they can wait until it falls a bit more than another 5%.

  15. Dan 55 Silver badge

    Could be worse

    iPhone 7s are £599 (€665) in the UK but €769 in continental Europe...

  16. Slx

    It's OK Sterling plummeted again today due to the Northern Irish court decision that they had no jurisdiction over Brexit.

    Don't worry though. You'll be able to use those lovely БЭСМ computers as soon as your Russian trade deal is ready.

  17. HAL-9000

    The pound had been driven up to nosebleed levels from 2011 to 2015

    Actually the roots of this problem date back to the poster girl of the neo-liberals: one Margaret Thatcher, whose mantra was strong pound, strong pound, and strong pound. Unsurprisingly she didn't have a lot of time for UK exports except of course oil and financial services. while the UK paid for people to sit on their arses doing nothing, wiser countries invested their windfall money in future productivity.

    1. P. Lee
      Flame

      Re: The pound had been driven up to nosebleed levels from 2011 to 2015

      Whaddyamean what goes up must come down?

      What kind of economics is that?

      Heretic!

  18. I Like Heckling Silver badge

    Well... they've got do something to recover those billions they'll be paying in back taxes.

  19. niico

    Buy cynical you mean a profit making organisation seeks to keep its margins at the same level due to huge currency fluctuation - because of an insane tangible benefit free Brexit decision.

    Or sorry did I get it wrong - are Apple a charity that should sell products to the UK arbitrarily for less money when the currency goes down?

  20. Truth4u

    All the good engineers are dead

    Apple will take credit for popularising touchscreen phones but now that all other vendors make touchscreen laptops they are still stubbornly refusing to do it, giving you a crappy ribbon touchscreen and all because their OS on the desktop is so terrible and all their good engineers have been dead for so long, they just don't care anymore. Right now they are basically giving you the finger with this price hike, because they know the Hillary supporters of this world will pay any price to fit in. For a computer that smells like a cheeseburger when you take it out of the box.

    1. Ian Joyner Bronze badge

      Re: All the good engineers are dead

      >>touchscreen laptops they are still stubbornly refusing to do it, giving you a crappy ribbon touchscreen and all because their OS on the desktop is so terrible<<

      So many errors in less than a single sentence.

      For other companies it is about the electronics - yeah let's put in a touchscreen and sell that. Oh, OK, it's not about electronics, it's about marketing. But what do you use that for and how do you use it? These are the questions that Apple asks and solves before it just adds hardware features.

      Apple is still full of excellent engineers who ask and solve these problems.

      1. This post has been deleted by its author

      2. Truth4u

        Re: All the good engineers are dead

        Obviously you've never used Windows 10 with a touchscreen because if you had you would know it's actually very good. Now try to imagine instead of having a full touch screen, letting you touch any icon, any button, you have another tiny screen in a different place, with a weird shape, that does almost nothing. And Apple literally charge more for that than a full touch screen. How is that better?

        1. Ian Joyner Bronze badge

          Re: All the good engineers are dead

          >>Obviously you've never used Windows 10 with a touchscreen because if you had you would know it's actually very good<<

          It's still Windows - I need say no more.

  21. Stratman

    The more Apple raise their prices

    the more money I save.

    Yippee

  22. Hans 1
    Windows

    Nobody around with an MBA or other business strategy-relevant education ?

    I have said it already, el reg ... when you hike prices, you have to hike prices just that little bit more to offset a predictable fall in sales (in terms of "number of items"). The effect of a price hike IS NOT linear, how hard is that to understand ? Note, there's no Apple fanboy here, I wrote the same about Dell, HP, or was it IBM ? No, I think I wrote the same about my favorite scapegoat, Microsoft.

    Yours,

    Hans 1

    MHP (Microsoft Most Hated Professional)

    PS: If you want to become MHP as well, all you need is basic arithmetic skills ("addition" and "comparison" are sufficient) OR a calculator with required skills to make additions.

  23. Ian Joyner Bronze badge

    Is it that bad?

    I complained about Apple doing this in Australia. But their reply made sense. Apple does not put up and down prices at regular intervals. That is so people buying their products don't wait because 'currency might rise' making it cheaper. Apple are setting their prices seeing pound is continuing to fall. That way you can expect the Apple price to remain stable for six months, even if pound drops more and even more than 20% - then Apple will take the loss. Who will be complaining then? It is not Apple's fault - it is the fault of Farrage, Johnson, and those idiots that voted for Brexit.

    This creates a stable price for consumers. Even among different stores the price remains the same.

    While most marketing people love to create a plethora of options and price differentials, Apple goes against this. I think this is good for the consumer. You don't pick up your iPhone from one shop and then pass the next and find it is £50 cheaper which results in dissatisfaction.

    So, I was brought to understand this, and I hope that helps others to understand that Apple have a stabilising strategy.

  24. Fenton

    Which Market is Apple trying to target?

    I'm really getting confused about the market Apple is trying to target these days.

    Creatives? So if you do photographic/Film work you need lots of memory! But you can't go beyond 16GB.

    If you want to be creative on the move and use all of that processing power, your battery won't last with such a thin device.

    Any creative I know is very particular about desk appearance/tidyness, yet no Apple docking station, so you have endless adapters clogging up desk space that can easily fall out when working. And you probably have a number of external devices. Cameras/Screen Calibration devices/Tablets/Scanners, etc

    Remember when Apple released the Dustbin MacPro with two Graphics cards? Where was the 5K monitor to go with it. They released the iMac with a 5K Monitor at the same time.

    Business users? Well at this price point, strained corporate budgets will not stretch to these prices, and do you want to risk the chance of loosing that VGA/HDMI adapter before you turn up to a customer site?

    Apple need to refresh MacOS to make it tough friendly and catch up with convertibles, consider who actually uses a MacBook Pro.

    Alas they have become the B&O/Bose of the IT world when it comes to computers. Form over function!

    MS have really managed to out Apple Apple with the new Surface range. (regardless what you thing of Windows 10)

  25. PassiveSmoking

    Ars Technica did an analysis on the pricing and found that once UK VAT (which is included in the list price versus US Sales Tax which isn't) and import duty is taken into account the difference in UK and US pricing is minimal, probably no more than 50 quid.

    Of course that statement doesn't generate many clicks and ad impressions.

    Now their SSD options on the other hand, there's a legitimate ground for beef. If you select the maxed out SSD option (2TB versus .5TB) the price jumps by more than a grand. I know OEMs don't give good deals on storage or memory upgrades, but that's just plain ridiculous. As I don't know if a user-upgrade is an option or whether this new machine is a sealed unit you can't upgrade yourself that's a very big deal.

  26. martinusher Silver badge

    Isn't Apple an Irish company?

    I thought Apple's operations were nominally in Ireland in order to take advantage of the lower corporate tax rate there. So if there was a price hike because of currency movements then you'd expect to see it relative to the Euro rather than the US dollar.

    But then PR people are always good at coming up with excuses for gouging customers. Its what they're paid to do. Unfortunately PR will never quite overcome the problem of competition -- Apple products are now very much middle-of-the road in terms of performance and features but are still ridiculously overpriced.

    1. Slx

      Re: Isn't Apple an Irish company?

      Same applies against the Euro.

      €1.00 cost about 75p a few months ago.

      €1.00 costs about 90p now.

      Whether you're paying in $ or €, the £ is significantly weaker against both. So, you're really not paying more (or at least not much more). You're just paying the same price with a weaker currency.

      Companies cannot afford to give the UK a 20%+ discount. It doesn't work like that. You're just going to have to either cough up or start running your economy sanely again.

      The uncertainty is absolutely killing the British economy. You just haven't felt the real pinch yet, but believe me ... it's coming!

  27. Howard Hanek
    Childcatcher

    Rename Whitehall to Weimar?

    .....it follows. Our misery has a purpose then?

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