Ap­ple changes app pric­ing world­wide

The Pak Banker - - COMPANIES/BOSS -

Ap­ple Inc. (AAPL) changed the prices of soft­ware ap­pli­ca­tions from Canada to Europe to­day, in one of the company's more com­pre­hen­sive global re­sponses to cur­rency swings in re­cent years.

With the U.S. dol­lar ris­ing, Ap­ple ear­lier this week told soft­ware mak­ers sell­ing pro­grams through its on­line App Store that it's in­creas­ing app prices in the Euro­pean Union, Norway, Canada and Rus­sia be­cause of for­eign ex­change rates and taxes. The changes took ef­fect to­day, with the en­try-level price for apps in Canada ris­ing to $1.19 from 99 cents. In Europe, the ba­sic app price jumped to 0.99 euro from 0.89 euro.

The moves across two con­ti­nents -cou­pled with Ap­ple boost­ing iPhone prices in Rus­sia last month after briefly halt­ing on­line sales there when the ru­ble plunged -- amount to one of the more con­cen­trated world­wide ac­tions by the Cu­per­tino, Cal­i­for­nia-based company to cur­rency move­ments. While Ap­ple has pre­vi­ously raised the prices of pro­grams in its in­ter­na­tional app stores, the company is typ­i­cally re­luc­tant to make such changes, said Slaven Radic, chief ex­ec­u­tive of­fi­cer of app-de­vel­oper con­sul­tancy Tap­stream Net­work Inc.

"This is very unique," Radic said. "They're very mea­sured about this -some­times they'll lose money if they can avoid show­ing too much price move­ment on things."

Tom Neu­mayr, an Ap­ple spokesman, con­firmed the company had sent mes­sages to de­vel­op­ers about Canada, Rus­sia and Europe in­creas­ing app prices. Tech­nol­ogy blog 9to5­Mac re­ported ear­lier this week on the memo.

All ma­jor cur­ren­cies have de­clined against the U.S. dol­lar in the past 12 months, with the U.S. econ­omy on an up­swing. The Cana­dian dol­lar is down 10.1 per­cent since July and to­day touched its low­est level ver­sus the U.S. dol­lar in five and a half years. The euro has de­clined 13 per­cent against the dol­lar in the past six months.

Ap­ple, which gets the majority of its $182.8 bil­lion in an­nual rev­enue from out­side the U.S., has re­cently said it is mind­ful of how the strength­en­ing dol­lar will af­fect its business. In Oc­to­ber, Chief Fi­nan­cial Of­fi­cer Luca Maestri said the company faced "sig­nif­i­cant for­eign ex­change head­winds" from the strong dol­lar, just as the company made new iPhones and thin­ner iPads avail­able for the end-of-the-year hol­i­day shop­ping sea­son.

By rolling out the pric­ing changes, Ap­ple is sig­nal­ing it be­lieves the U.S. dol­lar is poised to re­main strong this year.

"They're clearly read­ing the tea leaves, in terms of oil prices and the rel­a­tive strength of the U.S. econ­omy and weak­ness else­where, and say­ing the strength of the dol­lar is not just a tran­si­tional event," An­drew Bar­tels, an an­a­lyst at For­rester Re­search Inc., said in an in­ter­view. "With­out mak­ing th­ese changes, Ap­ple would be look­ing at a very sig­nif­i­cant im­pact on its rev­enue."

App prices are set by tiers and Ap­ple ad­justs them across the world into lo­cal cur­ren­cies. In the U.S., the ba­sic price for a paid app is 99 cents. Ap­ple pre­vi­ously in­creased app prices in Europe in 2012 and in Asia last year. The company hasn't pre­vi­ously tweaked pric­ing in Canada.

"The Cana­dian prices have not changed once in the six years that they've been here," said Radic, who is based in Van­cou­ver.

Ap­ple's App Store

is a sig­nif­i­cant strate­gic ad­van­tage for the company that keep cus­tomers com­ing back to down­load new games and other pro­grams to their iPhones and iPads. Rev­enue gen­er­ated through the App Store rose 50 per­cent to a record in 2014, Ap­ple said this week. In 2013, cus­tomers spent more than $10 bil­lion in the App Store.

Ap­ple's rev­enue from other prod­ucts may also be roiled by the strong dol­lar. Sales of the iPhone, the company's largest prod­uct by rev­enue, may have risen to 69.3 mil­lion units in the fi­nal quar­ter of 2014 from 51 mil­lion a year ear­lier, ac­cord­ing to an es­ti­mate by UBS AG this week. The net av­er­age sell­ing price was hurt by 2.8 per­cent be­cause of the strength­en­ing U.S. dol­lar, ac­cord­ing to es­ti­mates by UBS an­a­lyst Steven Milunovich, though that was prob­a­bly off­set by other fac­tors in­clud­ing a more ex­pen­sive iPhone 6 Plus. Clau­dio So­mazzi, CEO of Ital­ian app maker Ap­plix Group Srl, said the pric­ing changes may cause some de­vel­op­ers to as­sess how to present their app to con­sumers. His company makes the ed­u­ca­tion app Vir­tual His­tory, which Ap­ple co­founder Steve Jobs demon­strated dur­ing his iPad 2 key­note in 2011.

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