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    Apple unlikely to get bite of Wal-Mart

2005-04-21 08:26

SAN FRANCISCO: Apple Computer Inc's iPod is winning shelf space for Mac computers at retailers like Best Buy Co Inc, and analysts see more deals ahead.

Even so, Apple's firm pricing policy may leave it at loggerheads with the world's biggest retailer and discounter, Wal-Mart Stores Inc.

The iPod is far and away the biggest selling portable digital music player, even though Apple's global share of the PC market stands at less than 5 per cent.

"With the iPod, Apple's been able to open new doors, and Best Buy is one of the top electronics retailers out there," said Shaw Wu, an analyst at American Technology Research.

By moving to the big retailers Apple has long sold its wares at privately held CompUSA Inc it can also tap into a broader audience beyond the technical sophisticates who tend to compose the bulk of visitors to Apple's own stores.

"When you go to the big box retailers, you're talking about Joe America," said IDC analyst Roger Kay.

Apple, in years past, pulled out of a number of retailers because it wasn't getting enough support in selling Apple products.

Apple in January rolled out the Mac mini, which starts at $499 and is sold without a monitor, keyboard or mouse, taking sharp aim at making its products more appealing to the masses.

The Mac mini is the cheapest Mac to date.

The mini is aimed at consumers who already have an iPod and a Windows computer at home. The hope is that users will use the mini to store and manage their digital music, movies, pictures and other digital content such as music.

"The Mac mini is at a price that's really attractive to Best Buy customers, and, second, the idea of having a Mac-like user experience managing your digital lifestyle is actually catching on," said Tim Bajarin, an analyst at Creative Strategies.

He cited colleagues and acquaintances, who are longtime Windows PC users but switched to the Mac mini to manage songs, movies, pictures and other content with Apple's iLife software programs.

"This is really just extending Apple's reach to an ever broader audience," Bajarin said.

Analysts expect more deals from Apple, but few expect Apple to sell its wares at the biggest retailer of all, Wal-Mart Stores Inc.

Apple co-founder and CEO Steve Jobs likes to keep tight control over how and at what prices Apple products are sold, while Wal-Mart largely dictates terms to its suppliers.

"You have to be really careful with Wal-Mart because they tend to dictate the terms to their suppliers rather than the other way around," Kay said.

Added Bajarin: "I'd be very surprised if Apple went to Wal-Mart, because they're a true discounter."

Cupertino, California-based Apple has long sold its products at a premium to rival PCs in the Windows world, garnering higher margins. That changed somewhat with the iPod, whose margins are lower than on the Mac, Apple has said.

But analysts said they were not worried about margins eroding as distribution expands, because Apple does not discount.

A $299 iPod that holds 5,000 songs will cost the same whether it's bought on Apple's online store, at one of its 100-plus retail stores, CompUSA, Best Buy, or wherever.

For example, on Wal-Mart's online store, an Apple iPod from HP which has a suggested retail price of $299.99 shows a discount of a bit more than $2, reinforcing that Apple doesn't discount.

Hewlett-Packard Co resells the iPod.

"Apple won't go in without an agreement that the reseller won't change the suggested retail price" Bajarin said. "If I'm an investor, I have no concerns about the bottom line."

Agencies via Xinhua

(China Daily 04/21/2005 page14)


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