Why is Israel home to the most costly iPhone on earth?

The Apple smartphone costs $1084 in Israel, as opposed to $790 in the UK, because the market is smaller.

iphone store 311 (photo credit: courtesy)
iphone store 311
(photo credit: courtesy)
As Apple’s latest smartphone hits Middle Eastern markets consumers have noticed one thing: the price.
Often viewed as a hi-tech hub, when is comes to consumer electronics Israeli tech analysts say pricing goes through the roof.
According to a survey by The Marker the price of an unlocked 16 gigabyte iPhone 4 in Israel will set you back $1,084, compared to $790 for the same model in the United Kingdom and $751 in Canada.
It is not possible to buy an unlocked iPhone in the United States.
Israel is also expensive when it comes to data pricing.
A one gigabyte data package with mobile operator Cellcom costs $21 compared to a two gigabyte option for $25 with American operator AT&T.
“The consumer market in Israel is really small and the profit margin for companies is really small,” Gal Mor, an Israeli Technology blogger at holesinthenet.co.il, told The Media Line.
“Its not like in the United States with tens of millions of early adapters and then 150 million consumers, where you can afford to sell consumer electronics at a reasonable price and still make a profit.
“It’s very expensive,” he said in reference to the price of consumer electronics in Israel. “That’s why Israelis prefer to buy on EBay or when they go abroad.
As more people do this there w i l l hopefully be a more competitive edge.”
David Shamah, a tech blogger and technology reporter for The Jerusalem Post, said that the high price of Apple products in Israel is a function of the market dominance of one company, iDigital, which has a monopoly over the distribution of Apple products in Israel. “Basically they do it because they can,” Shamah told The Media Line. “It’s their way of making money.”
This is not the first time that iDigital has been at the center of controversy regarding products in Israel. In April Apple released the new iPad tablet computer in the United States, but Israeli customers that brought iPads to Israel had them confiscated and were forced to pay customs fees for storage of the devices.
The official reason given was that the iPad’s wireless internet system broadcasted at higher levels then are standard in Europe and Israel. The ban was soon lifted after this reasoning was proven false.