The whys and wherefores of the $20,000 iPhone

0

Apple Venezuela(A guest post from reader/journalist Arnaldo Espinoza)

The Whys and Wherefores of the $20,000 iPhone

Arnaldo R. Espinoza (@Naldoxx)

Prices in Venezuela stopped making sense a while ago, and nowhere more so than at the Apple Store.

Long gone are the days of Dame tu PIN and the bidding wars between carriers. It’s become pricey (very pricey) to get a new phone.

The explanation has two tiers. The zanahoria one is demographic. Venezuela was a market in expansion up until the 3Q of 2012, when the market reached full saturation with one mobile line for every man, woman and child in the country.

At that point, name of the game became replacing phones – stolen phones, in most cases – and promoting other services. An example? In that 2012 Christmas season, Digitel announced it would roll out 4G/LTE technology to gain some ground on the “Movi’s” (Movistar and Movilnet).

But the deeper driver is what you’d expect: dollar madness. Up until 2009, companies were allowed to import directly their cellphone stocks. Then, a dry spell. A regulatory change cut off phone importers from cut-rate CADIVI dollars, forcing them to jump to el permuta to keep up with market demands. A year later, regulation knocked at the door again. Telecom Venezuela (formerly CVG Telecom) was commissioned to import all the devices needed “to stop rampant speculation”. The State centralized the supply. You know how that movie ends.

After a honeymoon year-and-a-half, the first signs of trouble emerged. At the end of 2012, the Grey market (cellphones purchased a dólar negro) started gaining ground. Prices spiked. Telecom’s yearly results showed that they could only import 20,2% of the orders placed by cellphones and VoIP (voice over IP) companies (1.213.538 units out of 6.036.879). The explanation? The usual: there were no dollars.

2013 was worse. With Venezuelans demanding over 10 million new cellphones (most of them stolen as stated in late 2011 by our favorite diputado, Ricardo Sánchez), Telecom only bought 2,7 million.

And, by the time the Comandante underwent his siembra, all hell broke loose. If you can find a phone, it was probably purchased at the black market rate.

In 2008, when I was a junior journalist at Unión Radio, I saved all my aguinaldos to buy an iPhone 3G. My first Apple gadget was 2.880 BsF – a meal for two in today’s Fuerte economy. If I do the same today, I can only pay for less than half of the iPhone 6.

Phones

With virtually no Cadivi dollars, the Grey market accounted for almost 70% of cellphones sales in 2014. The other 30%? Telecom purchases plus Vetelca (a.k.a., Vergatario!) plus manufacturers’ purchases. Samsung and Huawei started to bring their devices directly (with Sicad I dollars, of course, and without Telecom getting involved, of course) and gaining market share.

That’s why a Galaxy S5 is almost one hundred thousand Bs. cheaper than an iPhone 6 in Venezuela, even thou both of them sell for $650 in the US.

By the way, how is that tablet and cellphone factory going? Have they found a location for it yet?

Back in November 2014, when the first iPhone 6 arrived in Caracas, they were selling at 26,000 Cadivi-rate dollars each (distortion, anyone?). That’s 34 iPhones at retail price in the US. For that kind of money, at the same mall where I saw it, I could have bought a 13-inch MacBook Air and a 32-inch LCD TV and still have 3.000 bolos in my pocket (for lunch, and stuff). Nowadays, it sells for 267,000 bolívares or 22,000 Sicad III? dollars. A Black Friday criollo!! Run!! (Ok, no).

In 2014 we saw the first Bs.100K and the first Bs.250K cellphones. In 2015, we will see the first 300K device in Venezuela. It will be the next-generation iPhone. Eight years ago, my girlfriend bought her first car for 20,000 bolívares.

Caracas Chronicles is 100% reader-supported. Support independent Venezuelan journalism by making a donation.

1 COMMENT

  1. Follow these simple steps to destroy any economy and sink a country in a hyperinflationary spiral out of control:

    1) Seize control of the foreign currency used to import goods and supplies for services, the first step to create a monopoly.

    2) Destroy every single other source of the same currency via confiscations and comandeering, shutting down any competition in the same commodity market you’re looking to dominate.

    3) Force everybody to aquire the currency only from you under threat of prison, creating a legal framework cage that traps people with no choice other than buying from you.

    4) Treat said people like shit, you know, for the lulz, you’re not only forcing them to pay you, so why don’t enjoy it while it lasts?

    5) Start complaining because everybody comes knocking your door looking to buy from you, and then tell them to “start giving birth to production” -> http://www.maduradas.com/increible-maduro-invito-a-empresarios-a-parir-para-producir-basta-de-pedidera-de-dolares/

    Y luego dicen que el chaburrismo no es una fábrica de pobreza…

    • If, on the other hand, you were to float your currency and implement daily indexing for monetary and non-monetary items, you would have no shortage in the availability of $$ (the world market supply) and a stable daily indexed economy which would stabilize your currency.

  2. This analogy I found would be hilarious if it didn’t describe so accurately the complete idiocy of maburro:

    “Maduro le dice al naranjo seco ‘primero dame naranjas y luego sabré yo si te doy agua’.”

    “Maduro told to the dry orange tree ‘first give me oranges and then I’ll consider giving you water’.”

  3. “But the deeper driver is what you’d expect: dollar madness. ”

    Sure, but as usual if you wanna go even deeper, feel free to apply the infallible equation:

    Lack of Education –> Ignorance –> Ineptitude, Mass Corruption = $20000 iphone.

  4. You should check a documentary on the situation in Venezuela that is being aired right now on Spanish Antena 3 TV. It is part of a series called “En tierra hostil”, where they visit dangerous places around the globe. In episode 8 they are visiting Venezuela. Pretty impressive to see from Europe.

    It should be available tomorrow online.

  5. it is extremely cheaper to buy a phone via electronic cadivi (I lost track of name changes at this point), that’s the way almost everyone in this country buy electronics nowadays anyway, wether with their own quota (cupo) or a family member’s.

    Can anybody explain me how can people buy a phone otherwise? how can someone spend hundreds of salaries in a freakin phone? where do they get that kind of money? do they sell a kidney or what?.

    • That’s the consequence of the dollar monopoly made by the regime, electronic appliances aren’t priority for them, so every currency auctions and requests remain unanswered or are flat out denied, forcing importers to buy the hyper expensive black market dollars (which are also sold by the same goons from the regime), add the maximum legal profit margin of 30% and the unholy string of taxes that come with any legal working activity in Venezuela (One reason to resort to illegal street vendoring) and you have monstrous prices in the middle of a devalued local currency.

      6,3; 12; and EVEN 190,5 exist only for propaganda purposes, the only one available, or at least 99% is the one at… (Checks the chaburro’s favorite page…) 260,19.

      You wanna calculate stuff at 6,3? Well, then face short transportation tickets at 3$, cheap empanadas at 8$, tiny deodorant sticks at 25$, diaper packs at 635$ and 20k$ phones.

      You wanna use the black market rate? Bad news too, Venezuelans earn TWENTY TWO DOLLARS A MONTH at minimum wage, suddenly everybody in the country except the rotten dome plunged into extreme poverty?

      And then they claim that chaburrismo isn’t a poverty and misery factory…

    • Electrically, there should be no problem, if I remember things correctly. Sockets are the same and I think voltage too. But it has been more than a decade…

      Apart from that no idea, because the whole world of, say, mobile network stuff is very arcane to me.

    • There are two standards used in cellphone networks, TDMA and CDMA.

      In the US SprInt, ATT and T Mobile use one standard And Verizon the other, which is why you can switch carriers within the first group, but not between say ATT and Verizon because the phones are not compatible.

      I do believe that in Venezuela both TDMA & CDMA are used, but I don’t know which local carriers use which standard.

      Voltage wise, the U.S. and Venezuela both use 120 volts, 60 hertz for standard household electric and the plugs are the same.

      • TDMA is an older technology that has been outmoded by GSM (the global standard, 2G), UMTS (3G) and LTE (4G). To my knowledge, there isn’t a TDMA carrier active in the US any longer. As far as “SIM”d phones go from a GSM carrier in the US, usually, you can get the carrier to give you the unlock code (if you’ve had service sufficiently long enough) and send it anywhere in the world.

        Movistar, Digitel and Movilnet all use the GSM standard. I do not know about their CDMA capabilities; usually the two are incompatible. I have an old HTC phone I take whenever we go and my wife usually takes her old Samsung; both are unlocked and have no issues with the VZLA carriers. As I recall, only one of the 3 carriers has (or had, last time I went) LTE.

        Whenever we swap out phones, there’s usually a family member that visits and carts them off or we take them with us as there’s always someone who wants one.

        Another aside: I never understood the fixation with Blackberries in Venezuela.

    • Unless you have friends or family that you would be sending them to, and have a secure way of making sure it gets to them, I wouldn’t recommend sending anything of value to Venezuela right now. The GNB (National Guard) has the authority to inspect all packages that enter the country, and basically “confiscates” (steals) anything they want. If you live in Florida, your best chances would be to find someone in your local area who travels to Venezuela to visit family. I’m sure they would know someone who needs the phone, and would be able to physically give it to them.

  6. Guess the price, people!

    The next item is a shiny brand new desktop computer! Here are its speccies:

    Desktop Lenovo M73e, Intel Core i3-4130, 4GB RAM Memory, 500GB Hard disk, Small Form Factor, Intel HD Graphics, 10/100/1000 Gigabit Network card, No operative system.

    Who offers more? Who offers less? Do I hear 1.000 dollars over there? Do I hear 5.000 dollars over here? You’re getting closer, people, keep the good mood! The other respectable customer over there claims 10.000 dollars! Now that other one says 20.000 dollars?

    Time’s out, people, let’s see the price tag!

    At “official, the only and one, the one which those who are not pendejos buy” rate: THIRTY SEVEN THOUSAND DOLLARS! (37.600 $)

    Oh, wait, that’s the cost from the importer… so, let’s add the 30% allowable profit margin, and 12% from IVA, and we have… FIFTY NINE THOUSAND DOLLARS! (59.680 $)

    …Oh? You want to know the price in bolivars? Well, let’s check, this plus that, and then we multiply by this and that… square root over here… and he get… oh, boy, this is a bargain! Any family from the glorious emancipated working obrero class can get this at any time in their house with minimal effort because it’s their bolivarian right! Just have to shell the little, tiny amount of THREE HUNDRED SEVENTY FIVE THOUSAND BOLIVARS! (375.984 Bs)

    This has been Guess the Price! Thanks for watching! Good night!

    Source: Price list sent to me this morning by one of my suppliers…

LEAVE A REPLY

Please enter your comment!
Please enter your name here