Um, if dollers gets weaker when compared to Pound, then the price of Apple-hardware should go down in the UK. Apple is an American compnay that bills their good in dollars. If one pound goes up in value when compared to the dollar, then goods that are billed in dollars should get cheaper for people in UK.
No. It seems counterintuitive at first, but Apple does not bill in dollars. It sells its products in the European market at fixed prices, just like in the US. Once the price is established, if the dollar falls, the product becomes comparatively cheaper in the US because the European prices remain the same--they're not reduced to account for the exchange rate change. A weak dollar means lower real profit for Apple in the US, because Apple doesn't change their prices daily, but it gives American customers a modest competitive advantage as a result.
This cuts both ways, however. When the dollar gains strength, European products begin to become "cheaper."
An example: Finland uses Euros, Estonia uses Crowns. Suppose one Euro buys you 10 Crowns, and some product costs 200 Crowns in Estonia. If I went to Estonia and bought the product there, it would cost 200 / 10 = 20 euros. Now, suppose that value of Crown goes down when compared to Euro. Now one Euro gets you 15 Crowns. That product would still cost 200 Crowns, in Euros it would cost me 200 / 15 = 13.3 euros.
Estonia is weaker currency in your example, so that proves exactly the point. The Crowns are the ones with the falling currency. To be accurate, you would have to put the fixed price in Euros.
If the product costs 200 Crowns or 20 Euros, and the Euro gains strength to 15 Crowns (over 10), but the prices remain the same, the 20 Euro product costs effectively
more (because 20 Euros is now worth 300 Crowns, but EU customers are still paying 20 Euros for the same product and Americans, er, Estonians are still paying 200 Crowns). The people in Estonia get a cheaper price. Your basic idea is correct, but not for product pricing--only for daily exchange rates.
Weaker dollar would mean that the product should cost less.
Only if the price is changed to follow the daily exchange rate. It does not, which is why, as I said, this is an instance where the weak dollar hurts UK consumers.
That said, the weakness of the dollar is only one of two factors, as indicated. The other factor is purchasing power. There is a positive PPP working against UK customers--£1 generally gets you less than $1.96 does. For example, the British equivalent of a gallon of milk costs about £2 (~$4) IIRC, where the average US price is just below $3. And the British aren't buying American milk.
While the prices of Apple products in the UK aren't that much higher than the US, you can't just avoid adding VAT to the prices when comparing, as not all of the United States pay tax on sales, do they?
Sure you can. They list prices without VAT on their stores, and that's the comparison price. Apple can't avoid charging VAT any more than you can avoid paying it. If it makes products more expensive (and it does by a considerable margin [the average sales tax paid by US customers is around 7% for comparison]), that's the doing of your government. It's not fair to claim that Apple is ripping customers off when the majority of the price difference is due to a local government-mandated surcharge and not the retailer/manufacturer's actual pricing.
And for all your good points about the strong pound, and the relatively weak dollar, how does that explain that the Adobe CS3 Master Suite
It doesn't. There are absolutely products that are overpriced by a large margin in some markets by the manufacturers. Apple hardware just isn't one of them.
Tax, currency, and the cost of international business can conceivably account for up to about a 35-40% bottom line increases in the UK. Anything beyond that is from some other cause (retailer markup, corporate greed, industry-specific compliance costs [e.g. the higher warranty standards on some products sold in the EU], and/or some other factor).
