SOME ELECTRONICS ONLY WORK IN THE U.S.

[Anonymous]

Electronics with borders: Some work only in the U.S.

To Save Money,Chris Caine, a resident of Fiji,Always orders computers made by Apple ComputeR INC from the U.S., where they are significantly cheaper. Recently, he purchased Apple’s newest desktop, the iMac G5.

Soon after the computer arrived from the U.S. he plugged it in. There was “a big bang, like an explosion, and white smoke out of the speaker grilles,” he says. The machine then died.

Mr. Caine didn’t have a defective unit. It turns out that, unlike the 17 other Apple computers that he had purchased in recent years for his DVD-rental business, the new iMac G5s sold in the U.S. are designed to work only with the electric power systems in the U.S. and Japan, which pump out a lower number of volts than in most other countries.

Mr. Caine fell foul of a little-noticed trend: Some consumer-electronics companies are designing products so they will work only in the U.S. For example, some of the latest printers from Hewlett-Packard Co. refuse to print if they aren’t fed ink cartridges bought in the same region of the world as the printer. Nintendo Co.’s latest hand-held game machines are sold in the U.S. with power adaptors that don’t work in Europe.

Such measures prevent thrifty foreign consumers and gray marketers – traders who sell goods through channels that haven’t been authorized by the manufacturer – from taking advantage of the decline of the dollar against the world’s major currencies to buy lower-price products in the U.S. In terms of euros, pounds or other strong currencies, U.S. retail goods are much cheaper today than they were two years ago.

U.S. multinational companies want Europeans to continue to buy their goods in Europe, however, rather than seeking out bargains in the U.S. The companies make more money if Europeans pay in euros for their goods at current exchange rates.

For example, H-P’s European revenue in its fiscal fourth quarter, ended Oct. 31, rose 11.3 percent from the year-earlier period, while its U.S. revenue shrank 0.3 percent. The company said its total revenue, which is reported in dollars, was boosted by sales in euros and other strong currencies.

In the U.S., Apple sells the most basic version of the iMac G5 for $1,299. In the United Kingdom, the same machine costs GBP 765, or $1,430, before sales tax.

Of course, there have always been products, particularly electrical ones, that don’t work universally; different countries have different voltages as well as incompatible television and radio broadcasting standards. But in the era of the global economy, with business people toting laptops, cellphones and digital music players around the world, the electronics industry had been moving toward making more products that work everywhere.

Now, there are signs that manufacturers feel that this kind of globalization has gone too far. H-P has quietly begun implementing “region coding” for its highly lucrative print cartridges for some of its newest printers sold in Europe. Try putting a printer cartridge bought in the U.S. into a new H-P printer configured to use cartridges purchased in Europe and it won’t work. Software in the printer determines the origin of the ink cartridge and whether it will accept it.

The company introduced region-coding on several printers in the summer so it won’t have to keep altering prices to keep pace with currency movements, says Kim Holm, vice president for H-P’s supplies business in Europe, the Middle East and Africa. H-P eventually plans to introduce the concept across its entire line of inkjet printers, he adds.

This comes at a time when the sliding dollar has meant that H-P ink cartridges sold in Europe are becoming much more expensive than equivalent ones in the U.S. “We are not trying to make money on this,” Mr. Holm says, adding that European customers will benefit from H-P’s new approach if the dollar begins to rise in value against the euro – because H-P used to increase prices in Europe when the dollar rose in value to ensure consistent prices around the world. Under the new policy, H-P plans to leave prices in Europe the same even if the dollar rises.

But tech-savvy consumers already may be plotting to circumvent the system. A message recently appeared on an Internet bulletin board for people who specialize in refilling used printer ink cartridges to save money. “Does anyone have a solution to beat the regionalization that H-P has placed into the new 94 series cartridges?” it asked. (No answer has been posted yet.)

H-P is taking the same approach Hollywood has used with DVDs – and one that prompted a huge consumer backlash overseas. Movies sold in the U.S., which generally are cheaper, are designed not to play in European or Asian DVD players.

The European Commission in Brussels has been scrutinizing such practices including DVD pricing “for quite some time, and we are still investigating,” says Jonathan Todd, the European Commission’s spokesman for antitrust policy.

In the meantime, in response to consumer complaints, many manufacturers now sell DVD players in Europe that can be altered legally so they can play films bought in any country.

Consumer groups are also opposed to the latest region-coding measures. “Manufacturers don’t like global commerce when it doesn’t line their pockets,” says Phil Evans, principal policy adviser at Which?, a British consumer watchdog. “In the long term, it’s not a clever thing to do from a customer-relations standpoint.”

Indeed, Apple shopper Mr. Caine says he felt ripped off. The iMac G5s Apple sells everywhere except the U.S. and Japan are dual voltage, meaning they can cope with the electrical systems in Fiji, Europe and most of Asia, as well as those in Japan and the U.S. Mr. Caine’s new $1,500 computer is “a nice, pretty paperweight,” he says.

Other Apple products including iPods, the new Mac Mini and its laptops are dual-voltage. Steve Dowling, a spokesman for Apple, which is based in Cupertino, Calif., declined to explain why the easily transportable iMac G5s Apple sells in the U.S. aren’t dual voltage. He said only, “Apple does not discourage anyone, anywhere from buying an iMac G5.”

Ironically, tweaking products for different regions can increase a manufacturer’s costs. It is often easier and cheaper for a company to alter the power adaptors to work in the different voltage systems in Europe, Asia and the U.S. rather than make changes to the product itself.

Nintendo sells the same Game Boy Advance SP everywhere. But the ones sold in the U.S., which cost nearly 30 percent less than in Europe, come with a single-voltage power adaptor that won’t work in Europe. (So does the new Nintendo DS hand-held game machine, although it’s not yet available in Europe.) Nintendo’s older Game Boy Advance operated on batteries, which could be bought anywhere, but the newer machines must be recharged with a power adaptor.

That means the newer game consoles sold in the U.S. can’t be recharged in Europe. The result: a cottage industry of substitute power adaptors. One dealer, Matthew Hudd, owner of U.K. online retailer Console Plus, says he sells 500 to 600 multivoltage adaptors a year, at about $10 each, that are specifically designed for U.S. or Japanese Game Boys used in Europe.

“Nintendo’s power adaptors are designed to comply with the regulations found in the region in which they are sold,” says Beth Llewelyn, a spokeswoman for Nintendo of America. “While the effect on gray-market trafficking is helpful, it is not Nintendo’s primary design concern.” She declined to elaborate.

[Author]

January 22, 2005 at 10:30 AM