Looking at this story from 30K feet altitude I seemed to have chuckled to myself and thought serves Apple right for flexing too much of its muscle and telling mobile carriers what they can sell their devices for. The more I thought about it though the more I can sort of see Apples point in this. Basically the Taiwan Fair Trade Commission slapped Apple on the wrists for what they thought were 18 violations of meddling with three different mobile carriers by telling them who much to sell their products for. If Apple does not comply they could be staring at a 50 million dollar fine. The Commission said that these mobile carriers have paid the distribution rights to Apple and have every right after that to sell the devices at their own discretion.

Heres the thing. If you build a premium product should you really allow lesser quality distributors to control pricing? In my experience in unrelated industries, distributors who are smaller, with less sales revenue tend to sell on price instead of on the products merits. Also when they have to buy in to distribution right with a set amount of product and investment to get the “deep deal” they panic and try to liquidate inventory and free up their inventory dollars. These market devaluations can hurt the perceived quality of a product. For example if Apple products were being given away free they would soon be associated with lessor quality phones. Apple sold this program to the three mobile carriers in Taiwan with their retail pricing structure already understood on the front end. So the carriers knew what they were getting into. But apparently the Taiwan Trade Commission does think that Apple has that right to control their market value. I think Manufacturer should be able to control end user pricing as long as all their distributors are on the same playing field when it comes to the buy in program and price structure. The reason for this in my mind is “pull through sales”. I highly doubt that any of these three mobile carriers in Taiwan will need any inside marketing or sales efforts. Apple does an outstanding job of marketing their products and maintaining outstanding quality levels. When a company is this invested into their product and provides so much pull through for carriers, to me they should be able to control market value and end user pricing especially when it is understood on the front end of the supplier agreement.

In any case, what ever I feel about the subject is irrelevant, what is relevant is the Taiwan Fair Trade Commission thinks otherwise and if Apple wants to sell into the Taiwan market they will have to play by the Taiwan rules and allow the carriers to set end user pricing.

Let us know what you think.

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2 COMMENTS

  1. I guess Walmart, being the fat cat in the room, gets an exception on this Apple price structuring. Didn’t they have some incredible deals on the 5c last week, undercutting just about everybody. That hardly seems fair. And be assured that Walmart contributed very little to the extra savings. That’s not how they do business. Brute force comes to mind when dealing with suppliers.

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