Weaker rand means soaring iPad prices

All South Africans are feeling the impact of the weakening currency: we see it in the record price of petrol when we fill up.

We know the boring economic “stuff”. On a macro level, the weakening rand means the cost of imports is rising (with little to no benefit from increased exports) which translates into a surging trade deficit (no matter how Sars adjusts the data). This also means spiraling costs of large infrastructure projects like Eskom’s two new coal-fired power stations.

But, we can’t not buy petrol, so we don’t notice it too much. Every month, a tank costs R10, R20, or R30 more. Within a year, suddenly you’re paying R680 to fill up. But you’ve forgotten that a year ago, it used to cost you R550.

Gadget addicts – and those shopping for gifts to spoil loved ones – are in for a rude surprise this festive season.

The entry-level (!) model of the new iPad Air (16GB Wi-Fi) will set you back a massive R6 000 (R5 999 to be exact). Two years ago I bought a mid-range, mid-spec iPad 2 (with 3G) for a similar price.

This comparison is not about the prices of the iPad in different countries. It’s not about how “we’re being ripped off” (we aren’t). It’s not about duties. Or tax.

It’s about the single variable in pricing over the past 32 months: the currency. And in obviously practical terms: our purchasing power is being eroded.

Almost exactly a year ago, the fourth-generation iPad (16GB Wi-Fi and cellular model) cost R6499 when it launched in SA.

On Wednesday, the exact same model of the new iPad Air would’ve cost you R7 799 when it launched in the country.

That’s a 20% difference!

This is also not about newer, improved devices costing more. Both of these cost $629 (excluding sales taxes) when they were launched in the US. In fact, the price of this variant of the iPad (16GB Wi-Fi and cellular/3G) has remained constant at $629 in the US since the iPad 2 was released in early 2011. This makes the iPad an almost perfect comparison. And, besides, it tops many a Christmas wishlist!

Between the launch of the iPad (fourth generation) a year ago, and Wednesday’s iPad Air release, the rand has weakened by 17% against the US dollar. Of course, using the exchange rate at the end of November 2012 and the 10.43 reached on Wednesday is itself an inexact science.

Core Group – the official distributor of Apple products in South Africa – uses forward contracts to hedge against currency risk. It also adjusts pricing for the various models (by rounding up or down) to get to ‘round’ or ‘simpler’ prices (R5 999, not R5 857.46, or R8 999, not R9 103.77 for example).

16GB Wi-Fi + cellular Launch date Price at launch $/R exchange rate* US price
iPad 2 Apr-11 R5 599 6.55 $629
iPad (3rd generation) Apr-12 R6 299 7.74 $629
iPad (4th generation) Nov-12 R6 499 8.90 $629
iPad Air Dec-13 R7 799 10.43 $629
*Exchange rate as at last week of the month

It’s not 20% across the board, though. The price of some models has only increased by 15% since last November’s launch; 20% is the upper end on the increase.

iPad 4 launch iPad Air launch Difference
16GB Wi-Fi R5 199 R5 999 15.4%
32GB Wi-Fi R6 399 R7 399 15.6%
64GB Wi-Fi R7 399 R8 699 17.6%
128GB Wi-Fi R8999** R9 999 11.1%
16GB Wi-Fi + cellular R6 499 R7 799 20%
32GB Wi-Fi + cellular R7 499 R8 999 20%
64GB Wi-Fi + cellular R8 599 R9 999 16%
128GB Wi-Fi + cellular R10399** R11 499 10.6%

Either way, shoppers hoping to fill a Christmas stocking with an iPad will pay considerably more this year. That’s if they can afford it at all…** These two devices were available in SA in Q2 2013, nearly six months after the fourth generation launch in November 2012.

Source: Moneyweb

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Weaker rand means soaring iPad prices