Apple lovers, who put off buying the company's trendy devices until the new year, left their purchasing too late as the gadgets have gone up by as much as 20% just as South Africans geared up to go back to work.
Despite the increase, sales of Apple products, especially the popular iPad tablet, do not seem to have been affected, as the hype around the brand name ensures they remain popular.
South African distributor Core says the cost of Apple products increased by between 4% and 20% from 6 January, and a retailer notes that the product most affected is Apple's tablet, which has shot up by as much as R1 000.
Core executive director Rutger-Jan van Spaandonk explains that because of the steady weakening of the rand since September, the company has recently been faced with a “drastic increase in the forward cover exchange rate”.
Van Spaandonk says the company has had to increase the prices of Apple products by between 4.2% and 20% from 6 January. “We are not in a position to give any guidance on future price increases or decreases as a result of the continued instability of the USD/ZAR exchange rate,” he adds.
Core did not indicate which increases applied to which units, but a local online retailer says iPads have been hard hit, with prices moving up as much as R1 000. Globally, Apple sold 11.12 million iPads in the three months to 24 September, a 166% increase year-on-year.
Festive hangover
Christopher Riley, MD of The Notebook Company, says there is price pressure as old stocks have run out and new stocks are brought in against a weaker rand. He notes the top of the range iPad is now retailing for around R8 699, while the iPad 2 16GB WiFi 3G is selling at around R6 699.
Although the price hike is not good news for consumers, it is expected to be the last large computing increase for a while, says Riley.
Towards the end of September, PC prices moved up by as much as 15%, because of the share devaluation of the rand. This was followed by another hike as floods in Thailand led to a shortage of hard drives.
Riley says the iPad price hike led to an uptick in demand as consumers rushed out and bought the tablets, fearing that the price may move even higher. He does not expect the cost to dent sales, pointing out that rumours of the pending launch of the iPad 3 are dampening enthusiasm for the iPad 2.
Apple tablets are the top selling device and outsell the nearest competitor, the Samsung Galaxy, by a factor of 20:1, says Riley.
Research company GfK Retail and Technology SA notes that the local tablet market is dominated by Samsung and Apple, which share about 80% of all unit sales. Samsung is edging on Apple, it adds.
Limited effect
Retailer Incredible Connection says prices have increased and been passed onto end-users as the reseller has to “maintain sustainable business practice”. FD Stefan Marnewick says all products, except iPhones, have gone up and, in some cases, by as much as 20%.
Marnewick notes demand for the iPad often outstrips supply, and the device sold well over the festive season, as anticipated.
“We do not expect this increase to dramatically impact the sales volumes negatively of these items; however, it's too early to comment on the demand and sale impact at this stage on items such as the iMac, Mac Book and iPods.”
Mogen Naidoo, senior research analyst at IDC, does not anticipate prices coming down in the near future, unless the iPad 3 launches, which could see the older version discounted.
Despite the hike, Naidoo does not expect sales to slow as Apple consumers are less price-sensitive. End-users were prepared to wait for stock when Core ran out of products last August, he points out.
Naidoo adds consumers should have taken advantage of the lower price over the festive season.
Mike Sharman, owner of digital communications agency Retroviral, says Apple consumers are the least price-sensitive as the product is a premium and trendy product. “Price is never really a consideration, unless the increase is ridiculous.”
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