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COMMENT: In a move to try and rationalise why they are price gouging, Sony Australia today pumped out a press statement in an effort to justify why they are charging Australians consumers up to 125% more for the same products than what a US consumer pays.

The issue came to a head when a consumer electronics trade site ran a story accusing Sony of price gouging with the launch of their new OLED Walkman which they said was $280 more expensive than the same product being sold in the USA. The Australian price for the Walkman is $800 for a 32GB model.

The same model in the US is $399. Which when an exchange rate is applied this equates to $518.00, or $280 lower than the Australian retail price of $800.

Sony claimed the following:

“The Australian versions of products need to be adapted to comply with Australian standards and local regulations.”

Really Sony: Then so do products from Apple and Nintendo.

For example the Apple 32GB iPod Touch sells in the Apple Shop in Australia for $549.00. The same product sells in the US Apple Shop for $399 which when today’s exchange rate is applied equates to $525. A difference of $24. Not $280 as is the difference with the new Sony OLED Walkman.

But just to give Sony the benefit of any doubt we also compared the price of a Nintendo Wii starter pack with 3 games which in Australia is being sold for $399 at JB Hi Fi.

The same pack at Best Buy in the USA is $318.99 which when today’s exchange rate is applied comes in at $420 making the Australian Nintendo Wii cheaper than the US price.

We also compared the price of a Sony PS3 Playstation and an Xbox 360 from Microsoft. Both are competing products and both are sold by JB Hi Fi and Best Buy in the USA.

 

The Xbox 360 Pro with games was $399 at JB Hi Fi and $399 at Best Buy in the USA for the same Xbox 360 Pro with the Game of the Year bundle.  This makes the Xbox in Australia some $126 cheaper than the USA.

While the Sony PS3 Playstation was selling in Australia at EB Games for $699.95 the same 80GB model was selling in the USA for $399.00 or $526.00 which makes it $173.00 more expensive in Australia.

To really demonstrate price gouging on an “obscene”scale Sony Australia is asking consumers to pay $6,999 for their 11” OLED TV. In the USA the very same product is selling for $2,499 or $3,332 in Australian dollars. This is a massive price difference of $3,667.

The other excuses given by Sony Australia for their price gouging are:

Australian marketing expenditure is amortised across a smaller number of products – Really? does this mean that consumers are paying for Sony to pump up a brand that is fast losing it’s gloss. 

Sony does not produce and freight the same product to all markets – Neither does Nintendo, Apple, Microsoft , Samsung or LG and they don’t price gouge to the extent that Sony does.

Retail environments differ from country to country – We know that Harvey Norman demands of Sony a minimum of 17% profit margin, up to 25% in performance bonuses. Thousands in Co Op dollars for advertising in their retail catalogues and TV commercials as well as tens of thousands of dollars to take a stand at a Harvey Norman expo to talk to their employees and franchise partners.

But the same costs apply to Apple, Nintendo and Microsoft.  

 

 

Another reason given was exchange rate considerations but everybody has this issue including other Japanese companies such as Nintendo, Panasonic, Sharp and Mitsubishi.

Part of the statement issued by Sony read “There are various factors that impact on the ultimate recommended retail price of Sony products sold in Australia,” said a Sony spokesperson.

-Other countries, including the US, do not include government taxes in their recommended retail prices

The UK includes VAT. Sales tax in New York in the USA is only 4%. Some States are as low as 2.5%. This for example would only add $100 to the $2,499 US purchase price of the Sony 11″ OLED TV if calculated at 4%. Not  $3,667 which is the price difference in Australia.

It would add $16 to the price of the Sony OLED Walkman not $288 as Sony is currently charging.

What Sony has done is basically try to justify why they are price gouging, but when one takes into account that several vendors who compete with Sony are facing the same trading conditions, with the same retailers and often with similar products, and are not resorting to massive price differences, one has to seriously question the efficiency of how Sony runs their business.

Apple, Nintendo and Microsoft are all making billions in profits as companies operating in the consumer electronics marketplace, while Sony is bleeding billions in losses.

Sony have admitted that none of their core consumer electronic categories including Bravia TV’s, PlayStation consoles, or digital camera’s and camcorders are profitable which is why Sony is sticking to a premium pricing strategy at a time when their brand value is collapsing and the company is using third party manufacturers to make their products.

 

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