Dollar falls down IT elevator shaft

[sled]

Dollar falls down IT elevator shaft

http://www.theinquirer.net/?article=20069

The effect it has on us all

By Wil Harris: Monday 06 December 2004, 10:55

THE FALLING VALUE of the dollar is a problem that is relevant for both
the top-to-bottom tech sector and the general consumer. I romantically
heard it called "the dollar's post-election swoon" a while ago, but
one might more accurately characterise it as an unfortunate fall down
an elevator shaft.

The weakened dollar has five distinct effects on the tech sector.

US vendors selling into Europe

The chaps that benefit the most from the weakened dollar are American
companies that do a lot of trade in Europe. When people can buy more
for their money, they tend to buy more at a time, and this leads to
increased revenues. AMD, which has 75% of its sales orders placed from
outside the US (here), is particularly strongly placed to take
advantage of the low cost dollar. Such companies get a boost when they
convert their profits back into dollars.

(snip)

The last effect of the low-dollar, then, is on you and me. Let's take
some popular goods. The Apple iPod mini retails at £179 over here in
the UK. If you want to buy it in the States, at a retail price of
$249, you will save around £50. To take a more extreme example, the
17" Apple Powerbook, fully loaded, will cost a UK buyer £1949. With a
US price of $2799, a difference of around £500, you can fly to New
York, get a night's accommodation, pick up the Powerbook and fly back
for the same price as just buying it here. That's pretty extreme. You
have to pay UK customs duty on goods over £140 or so. And the customs
guys know all about the UK/US dollar exchange rate.

[dbt]

1. Thanks, sled!

That last little part about buying a Powerbook puts this dollar bidness into terms that even I can grasp. We're heading into some seriously deep feces here.

:freak:
dbt

[DS1]

2. Would a Euro Mac work with just a simple power converter?

Not that I have any money, but I am curious.

I suppose one could swap out the internal power supply easy enough

[KingChicken]

3. different plug, most computers support both u.s. and euro votage...

[DS1]

4. Yeah, I know the plug is different

and the cables are typically separate from the power supply ( a nice feature more companies would adopt ).

hmmm

[cliss]

5. Nice scenario, except for one thing:

The policymakers didn't count on one thing: that our goods might be boycotted. I consider us to be like Japanese goods were in the 1950's and 1960's: radioactive. They were of poor quality, and they fell apart after a short while.

Now I'm not saying US goods are poor quality; as a matter of fact they're the opposite: the quality is excellent. However, Europe at least is going to vote its conscience. They have already shown us that they are willing to make some sacrifices when it comes to how they feel. Think about all the demonstrations before the war in Iraq. They numbered in the millions.

We should expect them to be willing to forego American goods, even if it means paying more to get them from some other source. Sometimes the Almighty Dollar isn't King.

[fedsron2us]

6. US exporters to the UK

have regularly priced their goods on the basis of a 1:1 dollar to pound conversion regardless of the relative strength of the two currencies. As long as this practise continues I do not see how dollar devaluation is going to make much difference to the balance of trade. Of course, Chinese manufacture are priced far more competively so I expect Europeans will be spending their stronger currency in Asia not the USA.