With surgical precision, Apple Computer seems to be phasing out the current generation of iMacs by "dumping" the consumer systems through retailer warehouses.
Numerous MacCentral sources report availability of 350MHz blueberry-colored iMacs, 400MHz iMac DVs and 400MHz iMac DV Special Edition models is drying up fast. Observers pointed to the dwindling numbers as corroborating evidence that Apple CEO Steve Jobs will debut a revamp to the iMac line during his Macworld Expo/New York keynote speech on July 19.
"We're definitely seeing iMac availability tightening as we get closer to the debut of new models. I would say it is going to be very difficult to buy a high-end iMac beginning July 1 through July 15," Kevin McCarthy, Apple analyst at Donaldson, Lufkin & Jenrette, told MacCentral.
Apple dealers watch stock closely
Five Apple independent dealers located across the United States told
MacCentral they have fewer than five units left of each iMac model and
in some cases have no inventories of certain models at all.
"I've got three 350MHz iMacs left, four 400MHz models in two different colours, and three SEs left to be sold," a Kansas City Apple specialist said. "I'm just not going to be stuck with those models. If a customer wants one, I'll order it with money down."
Another dealer said he is taking more orders for new, unannounced iMacs than he is for existing models.
"It's funny, but I've got customers putting down money on new iMacs that we have no price or specific details about," said the dealer, who asked not to be identified. "When I've got customers giving me money for a ghost product, why would I inventory soon-to-be discontinued iMacs?"
Two other independent dealers confirmed they have taken advanced orders on new, anticipated iMacs.
Availability tightening
As for inventory numbers, sources report that almost any iMac model a
customer wants can be found, but supplies are growing tighter.
"You might have to wait for a specific model or colour, depending on who you try and buy from," one independent Mac dealer said.
A check of available iMac inventory through Ingram Micro, a computer hardware and software distributor to retail stores, showed fewer than 1,000 low-end 350MHz iMacs, fewer than 5,000 iMac DV models and fewer than 700 DV SE units left in the United States. Of the most popular model -- the Blueberry-coloured iMac DV -- Ingram has inventory of fewer than 600 units across the United States, sources reported.
Costco joins 'Operation Dump'
Apple has recruited Costco, a US-based retailer warehouse, to get rid of
a large chunk of its remaining iMac inventory. The models are being sold
exclusively in the United Sources, according to Costco sources, with the
largest inventory being of 350MHz iMacs and DV SE models.
At one Costco branch ". much to my surprise, they were selling iMacs in both regular and DV flavours," MacCentral reader Luke Brannon wrote. "The iMac DV had a promotion program running and was located at the very front of the computer section."
Costco sources tell MacCentral that part of the agreement with Apple was to provide prominent placement of iMac DV or DV SE models at the end of an isle, or what is known in the retail industry as an "end cap."
In what one Costco source called "Operation Dump," the retail warehouse is selling the 350MHz iMac for US$949, 400MHz iMac DV for US$1,249, and the 400MHz DV SE for US$1,449 - 50-bucks less than the normal street and mail-order prices. Not all models or colours are available at all Costco locations, and none is available for purchase through the company's Web site.
Sources report Costco has almost 2,000 iMacs in inventory nationwide, and the chain is not receiving price protection from Apple. Price protection is a policy many PC makers use by guaranteeing retailers a rebate on the difference in their cost after a new model is released.
Warehouse strategy an Apple staple
Increasingly, Apple is using retail warehouses such as Costco to clear
out their remaining stock of soon-to-be-discontinued products.
"Having been burned in the past and having to clear out a lot of excess inventory, Apple has now learned how to bleed the channel all but dry before coming out with new models," Donaldson, Lufkin & Jenrette's McCarthy said.
While it might be logical for Apple to push iMac inventory through independent Apple retailers, Apple is finding it more difficult to convince dealers to buy products that will soon be discontinued.
"Forget the fact customers are not buying iMacs in anticipation of new models," one dealer said. "Apple refuses to give me price protection on old models. They can't expect me to take that kind of risk."
A number of years ago, Apple did grant price protection on certain Macintosh products, but it has since dropped the practice because it feels it is a money-losing proposition for the company.
While Apple continues to improve its ability to control inventories and remaining stock, Steve Fortuna, Apple analyst at Merrill Lynch, said he thinks there will always be situations where Apple will use retailers such as Costco to clear inventories.
"Although I'm sure Apple dealers, CompUSA and catalogers don't like it, they need to accept the fact Apple will use warehouse retailers more and more to clear stock if they have to," Fortuna said. "Business is business."
