[long post] Dave, Apple just picked up, oh, say another 1500-4000 ANTI-Apple advocates today with their looming de-certification for VARs as announced today...on top of all the anti-advocates they created when they de-authorized Computer City, Circuit City, Walmart, Sears, M. Wards, Best Buy, etc...on top of all the horrible PR they caused when Apple's products were unceremoniously pulled off the shelves of these stores. NOW, even if not a problem before when Apple product WAS in these store(s), go into any of these non-Apple selling computer stores lately and mention you are considering Apple...cover your head to protect from flying tomatoes and rotten eggs...which is what a ton of new computers users do daily. You won't find pro-Apple closet-advocates preaching "buy Apple" on these retailers' sales floor I predict.
I sell Apple product for a living and have done so for 9+ years now; made a great living doing this by staying a few steps ahead of Apple's next "great marketing idea" and unpredictable strategy shifts time and again...I am, by choice, a NON-authorized reseller (Apple's VAR agreement explicitly prohibited mailorder reselling...look at the back of MacWeek to see how many routinely ignore their VAR contract and how Apple, for over 10- years now, has overlooked their own VAR contractual stipulations...so I decided "why bother" ? - but that's a different story and posting)...and today, after reading details about "BLACK FRIDAY" I think it finally dawns on me that this platform is probably doomed in the next 3-5 years, if not sooner. (MacWeek dropping the name and changing direction by end of June was the big jolt last week but clearly predictable given how thin that magazine had become).
You can preach the "BMW" model all you want to...but ultimately a Mac will have to have MAJOR TITLE software to survive, and software developers REQUIRE platform marketshare to develop their products, and decent platform marketshare requires Apple ADVOCATES since they just don't sell on their own as in the old days, I can assure you...advocates WHEN and WHEREVER they can be found. And Apple IMHO misunderstands this last salient strategic requirement...this in a nutshell is the catch 22 which dooms Apple. They are killing off the channel that places and maintains so many of their machines, and keeps a smile on the face of that Mac owner.
Since last summer, Apple has: 1) killed the cloners; 2) killed off (was it 40% or more of) their storefront retail channel as discussed above; 3) killed off 2 of 4 major distributors (Merisel, Tech Data, leaving Ingram and MicroAge) 4) killed off, with no notice, the Newton and eMate....which did immeasurable damage to their credibility for Newton developers and schools that had just invested in & fielded eMates. I personally know Apple's education resellers were strongly trying to sell eMates to our local schools...mere weeks before this announcement. That Apple allowed this to occur was morally unsupportable. 5) And today killed off about half of their [already sparse and arguably lousy] service providers and 1/3rd of their VARs. And they're getting ready to chop some of your favorite mailorder resellers (watch out MacMall & Mac Connection...I predict MacWarehouse and MacZone will remain standing; subjective reasons based on anectdotal observations only). Guess our junk-mail pile will finally dwindle.
WOW.
I can't think of a better way to drive a business into the ground if one were trying. No - no other manufacturer that I can think of *ever* came to these conclusions that these type hatchet actions were POSITIVE and necessary. IBM, in it's darkest hour a few years ago, understood clearly the value of advocacy and channel support. Compaq, sitting on tons of inventory as we speak, is turning to who to move this inventory ? Resellers and distributors.
MAJOR POINT of POST - in my view, Apple is headed for one single goal - a true [exposed] hidden agenda - to DIRECT SELL 100% of their product. PERIOD. All the garbage about "weeding out the non-Apple advocates" and "cleaning up their channel" represent only the cover story as I interpret Apple's actions. And slowly, but clearly, they will wean themself from every other entity that resells Apple and intercepts a penny of their revenue stream - from manufacturer (Apple) to end user (all 4% and declining marketshare). Additionally, I predict Ingram and Microage, and CompUSA and MicroCenter and Fryes and all remaining reselling entities will be dumped when it suits Apple (ie when their built-to-order and AppleStore Online infrastructure can handle the volume). All actions above support this theory. In the short run, this will mathematically yield incremental profits almost without trying (after all - the aggregate dollars from these hot-selling machines *have* to flow somewhere). In the 2+yr window, they have destroyed their viability though. Forbes nails this company and their failed (and veiled) business strategy.
I write this on my PBook 3400c which I dearly love. About to jump to the G3-series notebook in a few days. But darned if I will own a Powerbook, or maintain $100K+ of Apple brand inventory, much less advocate that my mother, sister, brother, brother-in-law, and other relatives and friends use these machines, if Apple keeps their unhindered footrace to direct-sell model at the expense of all of their years-long advocates. As a non-authorized VAR, Apple's rout of their VAR channel today won't adversely affect me - short term again. 2-yrs out - I'm as slammed as 1500 VARs were today.
ANOTHER CONCERN ON THE HORIZON
Literally, and sadly, I await the day if/when Adobe or Quark announces what Intuit threatened...that they are devoting all of their resources to WINTEL platform...and why would they not, since they would *still* have all of their respective segments. Clearly, Mac graphics/printing business owners would have no choice but to follow Quark and/or Adobe at the expense of Apple Mac hardware. Such a move would allow these software companies to save lots of R&D and dual-platform developmental costs directly off the bottom line. MSFT could not consider such an action, since it, for anti-trust reasons, needs Apple more than Apple needs them....er, as much as Apple needs them (that's true strained equilibrium if ever there was such, but that's another post too). The day Adobe or Quark abandons the Mac platform is the final knife in the back. And Quark, being privately-held and accountable to little external influence, is my first choice to execute this (another personal opinion).
As long as Apple has a literal billionaire, non-confirmed (refuses-to-be-named) acting CEO, who has ultra-authority, but no legal liability, and not a penny at risk for his decisions, running Apple...we (public and shareholder alike) all get what we deserve - some very questionable, short-term decisions which doom the long-term viability of Apple in my view.
I have never seen anything like this infatuation by a board of directors with a single person in a modern-day, major US corp. Truly mind-boggling. Jobs has made so many strategic decisions (good or bad - won't debate that much more) to hobble any future CEO's inescapable destiny...I can't imagine any INFORMED CEO candidate will take the job except Jobs himself.
Anyway - I just bookmarked this thread tonight...I have purposefully avoided it since I've been on SI due to other, more opportunistic interests. But today's BLACK FRIDAY action by Apple brings me out of "retirement"...and now I'll have a few things to say about Apple corporate from time to time.
FWIW - I do not own a penny of this stock, nor do I short it. I do sell about $2 mill/annually of their product, IN SPITE OF Apple's attitude towards me as a non-authorized [less-enthusiastic-after-today] advocate.
Lots of money to be made trading this stock for next few quarters as people see short-term profits and think "the strategy is fixed", but I believe this company is history with the directions they are headed lately.
Sorry to barge in on this party...but today, "BLACK FRIDAY", will go down as another huge mistake as Apple attempts to recover.
c-man
P.S. FWIW - I laughed at the iMac specs...I think the article referenced today in this thread correctly nails this machine as a loser (to be proven within months of release). Not unlike the story of the MacTV, introduced in Oct '93, w/ its slick black case, remote control, "ahead of its time" ergonomic design...sold for a whopping $1800+ 4 1/2 yrs ago and failed largely because of this poor price-point and horrible specifications (I still have people call asking if there is *anyway* to get more than the 8MBs RAM design limitation out of their MacTV (there is a trick to do this, but Apple never documented it for the benefit of their consumer)). |
