New ‘iPod Index’ currency measure is based on Apple’s 2GB iPod nano cost

“An Australian investment bank has developed a new indicator for tracking international currency values using the cost of an Apple iPod as a benchmark,” Meraiah Foley reports for The Associated Press.

Foley reports, “Commonwealth Securities Ltd. last week announced the creation of its iPod Index to assess the value of global currencies by comparing the cost of a 2-gigabyte iPod Nano music player in dollars across different countries.”

“The index is based on the economic principle that one dollar should buy the same quantity of goods across all countries, and that currencies will fluctuate to close any gaps in purchasing power,” Foley reports. “The theory goes like this: If the price in U.S. dollar terms of an iPod Nano is more expensive in Australia than it is in the United States — and it is — then the Australian currency may be overvalued.”

“In the United States, an iPod Nano retails for $149.00. But in Brazil, which topped the index, a 2-gigabyte Nano costs the equivalent of $327.71. Canada is the cheapest place to pick up an iPod at $144.20,” Foley reports. “In Australia, an iPod is valued at $172.36, which has led the bank to suggest that the currency is overvalued.”

Full article here.

[Thanks to MacDailyNews Reader “dix99” for the heads up.]
In related news, the National Association of Septic Tank Yardmen (NASTY) is hard at work on a new unified system for measuring tank fullness. They call it the “Zune Index.”

“We had no idea of the volume relations of what we call ‘fillage amounts’ between tanks from different makers,” Roy Enuz, King of NASTY, told MacDailyNews while perched atop the group’s famous porcelain throne. “We figured Zune was the perfect name for our biz’s, uh, ‘universal unit.’ After we ratify this crap next week, when somebody tells me their tank’s got 1,000 Zune capacity and it’s up to 900 Zunes, I’ll know exactly what they’re talkin’ ’bout, if you get my drift (laughs) – Time to get pumpin’! Excuse me a sec while I’m up here, will ya? I gotta squirt out a Zune or two myself. It’s good to be the King (winks).”

[Thanks, “fatal.” Reworked to get to “NASTY” as per your suggestion.]

24 Comments

  1. “In the United States, an iPod Nano retails for $149.00. But in Brazil, which topped the index, a 2-gigabyte Nano costs the equivalent of $327.71. Canada is the cheapest place to pick up an iPod at $144.20,” Foley reports. “In Australia, an iPod is valued at $172.36, which has led the bank to suggest that the currency is overvalued.”

    I can’t imagine a bank making this kind of mistake soooo, the author got it backwards. The AUS$ is undervalued, because it takes more AUS$s to purchase the same amount of goods, as it does US$s. If it took fewer AUS$s to buy the iPod, then the AUS$ would be over priced.

    All of this presupposes that the value of the US$ remains constant in relation to world currencies. It does not.

  2. Whoops my bad. The index prices the iPod in US$s everywhere. So after exchanging AUS$ for US$, then buying the iPod in Australia, the iPod costs more than it does in the US. Therefore the value of the the AUS$ is overpriced. Ideally, the iPod should cost the same (in US$) no matter where you buy it.

  3. This is a pretty dumb way for a bank to compare currencies. It’s generally done with staple products. Okay, so the iPod is somewhat of a staple! But not in every country!

    Still, pretty funny, good take too.

  4. That MDN Take is completely uncalled for and totally baseless. I don’t think anyone is laughing, but then what does anyone expect from Apple lemmings? Typical smug, snide and negative commentary from Mac heads.

    You won’t be laughing when Microsoft dominates the MP3 player market with Zune.

    Welcome to the Social.

  5. Any economists out there correct me, but…

    This seems like an incredibly circular way to determine currency valuation, and puts Apple in the drivers seat. Apple will set prices based on the currency valuation they perceive, AND Apple tightly regulates retail pricing of iPods. Thus, retail prices will be whatever Apple thinks the currency is worth. Heck, I’d think any reasonably smart bank ought to be able to come up with at least as good an estimate of currency values without Apple as the intermediary.

    A better indicator, it seems to me, isn’t the comparable retail value but the comparable gray market value for an iPod or price on online auction sites in the respective countries.

  6. I was in a video game store (GameStop) the other day. On the floor was mat with an ad on for accessories for the Zune.
    A floor mat seemed appropriate for the Zune ad. I laughed as I stepped on it to pay for my son’s PS3 game. (It kept me from crying about the cost of the game) ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

  7. This is no different than The Economist “Big Mac” index that measures purchasing power parity among various countries/currencies. It can be a useful economic tool. The surprising thing is that an iPod is considered a universal commodity. You can at least eat a Big Mac. However I suspect the iPod would be better for you.

  8. The Economist‘s Big Mac index is hella more valid than this iPod comparison for determining purchasing power parity. iPods are all made in a single country which has a variety of trade deals with varying nations, are shipped from around the world, and have to deal with price rounding, shipping (it’s cheaper to go from China to Japan than Brazil), and tariffs.

    By contrast the Big Mac contains the same basket of locally produced goods. In Australia a Big Mac is made with Australian beef, Australian wheat, Australian dairy, and Australian produce. In Japan a Big Mac is made with Japanese beef, Japanese wheat, Japanese dairy, and Japanese produce. In Brazil a Big Mac is made with Brazilian beef, Brazilian wheat, Brazilian dairy, and Brazilian produce. Etc. etc. This removes the vagaries of shipping and tariffs.

    And due to it’s smaller price the Big Mac is no subject to the same price rounding that Apple imposes. Depending on currency fluctuations a $249 iPod could be less, more, or the same as a €249 iPod. But Apple will keep the prices the same regardless. McDonald’s will make no such imposition on worldwide Big Mac prices.

    This implies no endorsement of Big Mac as I think that they are pretty gross.

  9. The international index used to compare buying prices has traditionally been the BigMac. The comparison was based on how much was required in the different countries to buy the McDonald’s best selling product.

    All this means the iPod nano essentially became as a reference as the BigMac.

    Zune Tang, in order to make these kind of comparisons the product has to be pervasively present everywhere. What reference index coud possibly be the Zune, to compare buying price between you and ? … Ops, no comparison possible, not even at the level of a city block. Zune that.
    Welcome to the virtual social, only existing in deranged mind, yours and Ballmers’ . Suddenly a crowd: two Zuners.

    Your squirt. Our laugh.

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