The iPhone 5S, how much it costs versus economic realities around the world
When the iPhone 5S first went on sale in the United States, online auction and classified sites lit up with the shiny new devices for sale at substantial mark-ups, with some 16GB iPhones being sold for thousands of dollars.
When you want it, you want it. Right? Well in some places that is easier said than done when you measure the cost of the iPhone versus what kind of money people have on hand. What we are talking about is Purchasing Power Parity (PPP).
PPP is not without its controversy, but it is a widely accepted way to look at how a particular country’s currency allows people making a certain wage are able to buy stuff. There is added complexity when you account for the fact that uniform price levels do not exist. Put plainly, the $650 full retail price (excluding tax) of a 16GB iPhone 5S does not cost the equivalent in British Pounds. In fact, the full retail for the same iPhone 5S in the UK is £457 ($740) before tax, and a whopping £549 ($890) with value-added-tax (VAT).
When you measure that against the overall economy however, that results in just 2.4% of GDP per capita (PPP), even when accounting for taxation. That is based on a median income of $37,500 (2012, £23,150). Compared to the rest of Europe, the UK is ahead of the curve in that regard.
Not surprisingly, folks in the US and Canada are not so bad off, as an iPhone is well under 2% of GDP (PPP). That is aided by the size of the market, median wages and lower overall taxes. Ease of distribution, regulation, taxation, and the size of the market all weigh on the cost of a product before it hits the shelf at a store. Portugal and Italy are two examples where, despite being part of the currently strong Euro currency system, the iPhone simply costs more. In Portugal, the price for a 16GB iPhone 5S is €699, including €131 in taxes. That’s $942, more than the cost of a 64GB iPhone 5S in the US with tax. In Italy, the same exact iPhone is a whopping €729, including €133 in taxes ($980 overall).
Those higher prices, coupled against a smaller, and shrinking GDP, result in a much higher impact on purchasing power, 3.3% in Italy, and over 4.1% in Portugal. If you think they have it bad, do not move to China, the Philippines or India. There, the price of an iPhone is inflated about the same as one might find in Europe, but the product confronts much weaker purchasing power. An iPhone commands nearly 10% of GDP (PPP) in China because wages are much lower. In the Philippines, the impact is nearly double, 18% and in India it is still higher at 22%. In those three instances, the price of the iPhone is between $750 and $850.
We shared some images from an interactive model put together by the good folks at Mobile Unlocked. To see how the numbers stack up in your specific neck of the woods, click on the source link. As you can see from the map however, in the developed world, the economic impact of the iPhone is not oppressive. Be thankful if you do not need to buy a 16GB iPhone in Turkey or Jordan, there, the retail price starts at over $1,000.
source: Mobile Unlocked