Feeds

When is a dollar not worth a dollar?

When you're a UK company trying to buy US computer gear

Choosing a cloud hosting partner with confidence

Microsoft's shameless assumption of a 1:1 exchange rate when re-pricing Vista for the UK market brought back memories of the bad old days when most IT companies simply swapped the dollar sign for a pound sign when preparing their UK price lists.

It also rang alarm bells when a call came in about an item we published yesterday, saying that we had the price wrong - despite the interviewee for the story saying that, yes, the UK price would be the US price converted at current rates.

The item in question was EqualLogic's PS3900 iSCSI box, and it's going to list here for £40,000, not the £34,000 originally quoted. Given that the US price is $67,000, that's 1.67 dollars to the pound.

To turn it around the other way, £40,000 would buy $78,000 at the bank today. The $11,000 difference would be more than enough to cover flying to the US to buy the box there, even allowing for the need to pay (and then reclaim) UK sales tax on the way back.

According to the Economic History Services website, the last time the average US-UK exchange rate was below 1.7 was in 2003*.

However, EqualLogic is far from being the only US company that's trying to turn the financial clock back by four years. For example, Adaptec recently announced a NAS box at $15,695 in the US and £9,995 in the UK, an exchange rate of 1.57, and AirMagnet's latest LAN analyser comes in at $9,995 or £6,000, a 1.67 conversion rate.

The tough bit is persuading companies to explain what that 15 to 20 per cent loading pays for. According to EqualLogic's UK rep, the US price is "uplifted and then converted into sterling to account for the cost of business to deliver this product overseas".

We asked for clarification - after all, there's no UK import duty on computing gear, according to HMRC, and you have to fund your sales and support staff and your resellers, wherever they're based. Indeed, many companies provide second-line support from the US office by phone and email anyhow.

We were told that "the European price includes freight, shipping, duty, currency fluctuation cover and support for EqualLogic's European business model".

Oddly enough, you can also find European companies doing similar things when selling to the US. For instance, German thin client developer IGEL quotes all its prices in Euros, pounds and dollars, and while it uses a rate of 1.5 for Euro to pounds (which is about what you'd get from the bank), its dollar prices are only 1.7 times its pound prices.

IGEL's worldwide marketing boss Stephen Yeo said the company had to trim back its dollar prices, otherwise it is too expensive for the US market.

"In my experience, US companies will use currencies to their advantage," he added. "But competition and the internet will always iron this out - people are intelligent and can work out if they're being ripped off." ®

*From a historical point of view, the current rate of almost 2:1 disfavours the pound, not the dollar - a century ago, £1 was worth nearly $5.

Internet Security Threat Report 2014

More from The Register

next story
729 teraflops, 71,000-core Super cost just US$5,500 to build
Cloud doubters, this isn't going to be your best day
Azure TITSUP caused by INFINITE LOOP
Fat fingered geo-block kept Aussies in the dark
Want to STUFF Facebook with blatant ADVERTISING? Fine! But you must PAY
Pony up or push off, Zuck tells social marketeers
Oi, Europe! Tell US feds to GTFO of our servers, say Microsoft and pals
By writing a really angry letter about how it's harming our cloud business, ta
SAVE ME, NASA system builder, from my DEAD WORKSTATION
Anal-retentive hardware nerd in paws-on workstation crisis
Astro-boffins start opening universe simulation data
Got a supercomputer? Want to simulate a universe? Here you go
Microsoft adds video offering to Office 365. Oh NOES, you'll need Adobe Flash
Lovely presentations... but not on your Flash-hating mobe
prev story

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
The hidden costs of self-signed SSL certificates
Exploring the true TCO for self-signed SSL certificates, including a side-by-side comparison of a self-signed architecture versus working with a third-party SSL vendor.
New hybrid storage solutions
Tackling data challenges through emerging hybrid storage solutions that enable optimum database performance whilst managing costs and increasingly large data stores.