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The iPhone 5 and Apple's profit fetish

  • 17 September 2012

Ahead of his Australian visit earlier this year, Apple co-founder Steve Wozniak criticised the company for subjecting local consumers to 'horrible' price-gouging. Last week's release of the iPhone 5 has reinforced perceptions of Apple as an odious corporation that exploits consumers, alongside the likes of tobacco companies, big banks, McDonald's, and Coles and Woolworths.

Commenting in Technology Spectator on Friday, Professor David Glance of the University of Western Australia said Apple is about maintaining a very high margin of profitability, usually 30 per cent. 

They know everything about manufacturing, supply and corporate consistency. They can deliver a consistent, scalable and profitable service on a global scale. What they aren't are reckless innovators, experimenting with radical ideas.

The iPhone 5 announcement appeared to be a demonstration of Apple's greed and contempt for the consumer. Apple explained the need for the new 'Lightning' connector to allow for a thinner phone and a larger, longer-lasting battery. Unfortunately it will prove costly for many consumers because most existing iPhone accessories will be rendered obsolete without the purchase of a $35 adapter. 

Apple's strategy of profit maximisation compounds the inconvenience and cost for consumers. A 'fair go' approach would have the company include the adapter in the box with the iPhone 5, or at least selling it at cost, which could be as low as $1. Other companies would seize the opportunity to create good will, but that is not necessary for Apple because it is still widely regarded as the arbiter of style and innovation, which Glance argues is unwarranted.

In his commentary on the new iPhone, Glance also points out what he believes is the reason for Apple's decision not to include the NFC wireless payments technology, which could become the standard for purchases in physical retail stores. He says Apple failed to convince banks to pass on charges when phones are used to make payments. It appears Apple is not interested unless it is able to replicate the 30 per cent commission it charges publishers and other vendors for 'in app' purchases of magazines and other products.

The Australian Government has shown itself capable of asserting the rights of Australian consumers against the disdain of Apple. Following the release of the most recent iPad, the Australian Competition and Consumer Commission took successful court action against Apple for misleading consumers about the capacity of Apple's '4G' iPad to connect to any 4G network in Australia. Its chair Rod Sims last
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