Apple cored in retail market

Summary:Apple Computer Inc.'s plan to cut some computer resellers is part of an ongoing strategy to make the company leaner, meaner, and more focused on its customers, analysts said.

Apple Computer Inc.'s plan to cut some computer resellers is part of an ongoing strategy to make the company leaner, meaner, and more focused on its customers, analysts said.

The Cupertino, Calif., company said Monday it would concentrate solely on retailer CompUSA and pull out of Best Buy, Circuit City, Computer City, Office Max, and Sears. Such companies were not as dedicated to Macintosh line as CompUSA, and some already had discontinued Apple (AAPL) sales.

"These have been very important business relationships, but we believe it's an important time to move away from them," Apple Vice President of Sales Mitch Mandich said in a statement. "This does not represent a retreat from retail, but instead a redefinition of what the retail buying experience will be for our customers."

That experience now will consist primarily of shopping for Apple products online, through catalogs, in small shops, or in special sections dedicated to Apple in CompUSA stores. The company said the store-within-a-store concept launched last fall in CompUSA stores has been extremely successful -- the rate of Macintosh machines sold in those stores has jumped from 3 to 14 percent of all computers sold.

Dataquest analyst James Staten said Apple was interested in pushing the store-within-a-store concept to other retailers, but they balked because of worries about the company's declining sales. "They said they wanted store-within-a-store resellers who are committed to the Mac," Staten said. "The commitment is what Apple's looking for. The other resellers clearly don't have the commitment."

Staten applauded the move, saying tightening the number of vendors would help the company focus on recouping market share. Apple's share of the personal computer market fell to 4.3 percent in 1997 from 6.6 percent in 1996.

Apple already has taken steps to trim costs and competitors, such as cutting its U.S. distributors to two from five and cutting off licensing agreements to clone makers. In November, it unveiled plans to sell products online, a move that put Apple in direct competition with resellers, though the company claimed many people visited the site to configure computers they would purchase later in stores. Some of the resellers still will sell Apple software.

Inter@ctive Investor's Scott Bomboy contributed to this report

Topics: Apple, Operating Systems

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