After thoroughly wowing consumers in the US, Apple is starting to provide its latest wunderbar product, the iPad 2, to global markets. It would seem, given the sold-out status of the iPad in the US, that selling the tablet overseas will be a no-brainer. But any global manager of any company will tell you there is no such animal. Thus, the glitches Apple is experiencing - exacerbated by the real time knowledge base supplied by the Internet - provides an interesting case study for companies planning their own product rollout and subsequent marketing campaign across borders.
Glitches, you ask? With lines forming or expected to form on just about every continent? Yes. Consider the following:
Grouchy US consumers waiting for their iPads 2 see customers in Europe happily playing with their new toy via YouTube. Questions about Apple’s priorities and preparedness follow.
Apple has declined to provide hard figures for US sales for the iPad 2 even as hundreds of customers continue to line up outside retail stores, according to Reuters. With a wait time of between four to five weeks for online orders, people, the wire service says, are becoming more and more frustrated at how difficult it has been to get one.
Global event intervene. Questions about Apple’s preparedness follow.
The tragic earthquake in Japan has led to a shortage of electronic components for many products. It is unclear, thanks to Apple’s tight-lipped description of its supply chain, how the iPad 2 will be impacted but analysts are concerned. More grumbling from US consumers can be counted on, with the added complaint that Apple failed to plan for emergency scenarios.
Weird launch times annoy foreign customers. Debate about Apple’s motives follows, prompting additional questions (as in, why didn’t Apple foresee this problem when it launched in the US?).
Sales of the iPad 2 are not set to begin until 5pm on Friday evening. Why, wonders The Guardian. It didn’t receive a response from Apple on the question and goes on to posit its own theory: to discourage the people would buy up the tablets in bulk in order to ship them to the Far East. Supporting this theory, it said, is the fact that sales in Hong Kong, Singapore and South Korea won't start for another two weeks. The bulk buyers, The Guardian notes, is one reason why the tablets are in short supply in the US right now.
Consumers everywhere compare pricing and exchange rates. Suspicious about Apple’s motives follows.
Case in point: the pricing Apple announced for the UK version of the iPad 2, works out roughly 7.4% cheaper - even after the VAT rise introduced in January - than the first version, The Guardian says. At first glance it seems Apple is cutting its price - a perhaps necessary move as the tablet wars heat up - but in reality it is getting a boost from the exchange rate, the paper said. "So it might seem like Apple is doing everyone an enormous favour by cutting the price (and it certainly won't hurt sales), but it is actually benefiting from the movement in exchange rates - in fact, it's going to make more profit from iPad sales this year than last year, even with a lower price."
The same calculations were done when Apple introduced the first iPad globally and the realization that it was not retailing at the same price in all markets was met with much disgruntlement. Apple, unfortunately, had sometime of a tin ear the first time around. Apple CEO Steve Jobs reportedly responded to a complaining customer in the UK via email to "please educate yourself. UK prices must by law include VAT [Value Added Tax], which is around 18 percent. U.S. prices do not include tax."
Local taxes is, of course, a constant in any global product roll out. However it was clear that Apple has priced its products differently in many markets in Europe, even when these additional taxes were taken into account, according to a chart complied by the Italian tech blog SetteB.it, and reproduced in other publications such as Wired Magazine.
SetteB.it converted all prices to euros and included local taxes such as the U.K.'s 17.5% VAT and sales tax in the U.S. It found pricing variations on both the low end and the high end of the product line, with the cheapest model retailing for €428 in the US, €469 in Canada and in the U.K. and Australia, €505 and €444, respectively.