nettime's_roving_reporter on Sat, 22 Jan 2005 15:59:29 +0100 (CET)

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<nettime> taking IPR to the next level

     [slashdotted? fine. amazing nonetheless. it's more than a
      little interesting to speculate about what region-enocding
      could infect next. money? :) --mod (tb)]

<,,SB110593238031627672-IFjgYNmlad4nJysa3qHa6yAm5,00.html >

   Electronics With Borders:
   Some Work Only in the U.S.

   Staff Reporters of THE WALL STREET JOURNAL
   January 17, 2005; Page B1

   To save money, Chris Caine, a resident of Fiji, always orders
   computers made by [40]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
   [41]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% from the year-earlier period, while its U.S.
   revenue shrank 0.3%. The company said its total revenue, which is
   reported in dollars, was boosted by sales in euros and other strong

   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 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

   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

   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

   Nintendo sells the same Game Boy Advance SP everywhere. But the ones
   sold in the U.S., which cost nearly 30% 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.

               ---- James Kanter in Brussels contributed to this article.

   Write to David Pringle at [42] and Steve Stecklow
   at [43]


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