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First on TMO - Merrill's Milunovich: Mac mini at Best Buy a "Logical" Step

by , 6:30 AM EST, January 28th, 2005

&freq

Best Buy and Apple (AAPL) teaming up to sell the US$599 Mac mini is a "logical" step that "could accelerate the halo effect", Merrill Lynch analyst Steven Milunovich said Friday.

The Wall Street analyst told clients in a commentary released Friday that news of an agreement between Apple and electronics retailer Best Buy to sell the Mac mini could do nothing but help Apple.

Mr. Milunovich said a pilot program to sell selected Mac CPUs and 48 Best Buy stores ended last year for "undisclosed reasons," but that "the introduction of the new Mac Mini could be the catalyst for Best Buy and Apple to team up." He wrote that the success of Mac mini sales in Best Buy stores will depend on "showing how the Mac Mini connects to peripherals" and being demonstrated by experienced "Apple-badged or knowledgeable Best Buy reps."

He also wrote that "pushing Macs through Best Buy could accelerate the halo effect." Many analysts believe the iPod may be producing a "halo effect" on Apple's core Mac business, in which customers are lured to stores for the iPod but end up also buying Apple computers. Apple has given no definitive marketing evidence that a "halo effect" exists.

Mr. Milunovich said he could not confirm how many Best Buy stores would stock the Mac mini or when it would be available, as representatives of neither Best Buy or Apple would confirm or deny a marketing agreement had been finalized.

The Mac Observer reported earlier Friday that reliable sources had confirmed a deal had been made between the two companies and that all of Best Buy's 780-plus stores would be stocking the $599 Mac mini and $99 iPod shuffle sometime in the next 30 days.

Mr. Milunovich reiterated his "buy" rating on Apple stock "with a price objective of $85 per share."

Observer Comments

Show: Subjects Only | Full Comments
View Name:Guest
Subject: An oxymoron
Close Name:fultonkbd Posts: 121 Joined: 02 Mar 2004
Subject: No doubt

No doubt - Best Buy, CompuUSA, HH Greg, etc. Most of the staff is only knowledgeable about which manufacturer gives them the biggest kickback. (spiff)

Throw in a Mac in the mix… blank stares.

View Name:Guest
Subject: I guess it's good..
Close Name:Mace Posts: 9163 Joined: 07 Aug 2003
Subject: Apple pushing Mac mini and shuffle through retails

Apple strategy is to attract traffic to retail stores. While the shipping dates for online is 1-4 weeks, customers can pick up Mac mini at retail store.

If Apple is willing to push through retail stores like Best Buy, it means either the margin of Mac mini is good or is willing to lower the margin for the sake of volume. With a cash hoard of $6.4 billion, Apple is being more aggressive in pushing products.

Close Name:yoyo52 Posts: 1159 Joined: 02 Feb 2002
Subject:

If you remember back to the days when BestBuy and Circuit City did carry Macs, you might also remember why you don't want these stores to sell Apple products beyond the iPod. The displays, the crashed computers, the ignorance of the sales staff--all of it was a big turn off.

Close Name:AFCdtLoeb Posts: 2533 Joined: 20 Jul 2004
Subject:

This can work if the sales staff is amazingly knowledgeable. Judging by my experiences with Best Buy, however, that may be the biggest "if" of all time.

Close Name:Biff Posts: 1479 Joined: 08 Apr 2004
Subject:

I think I read something that Apple would expect Best Buy to have either dedicated or specially trained staff to work the Apple area. Both companies are aware of the problem that stupid staff memebers create, so I am pretty sure they would prefer to solve the problem one way or the other.

Close Name:Small White Car Posts: 1950 Joined: 02 Jul 2004
Subject:

Quote
AFCdtLoeb wrote:
This can work if the sales staff is amazingly knowledgeable. Judging by my experiences with Best Buy, however, that may be the biggest "if" of all time.


It's weird, at my Best Buy the people in SOME departments are great, but not others.

The digital camera guys and the people who know about business and tax software have always been great. The people selling TVs...not so much.

Anyway, my point is that it seems POSSIBLE for Best Buy to have knowledgeable people. They just need to figure out how to make it consistant.

View Name:Guest
Subject: CompUSA
View Name:Guest
Subject: What about software?
Close Name:Bookman Posts: 543 Joined: 22 Apr 2002
Subject:

Quote
Guest wrote:
Kind of a useless move if they don't stock the software with it...


Exactly. One would hope they would have at least a 6x4 range of shelves with Office, Adobe, Apple software, and games.

Hopefully Best Buy will get it right this time.

View Name:Guest
Subject: Selling at Best Buy is a MUST
Close Name:technoguy100 Posts: 47 Joined: 12 Aug 2004
Subject:

Quote
Guest wrote:
Best Buy is one of the largest and most profitable electronics retailers in the U.S. They have stores everywhere. The average Joe consumer is not going to travel to an Apple Store but is much more likely to stop in to a Best Buy. Apple can only sell PCs in volume when they start selling them where the average person shops.


This is right on the money. They should also get in to WalMart and Target stores. Assuming they can produce these machines in sufficient volume, they need to be mass marketed.

Close Name:Steve W Posts: 482 Joined: 22 Nov 2002
Subject:

Quote
technoguy100 wrote:
They should also get in to WalMart

According to Steve Jobs, hell's already frozen over once. Getting into WalMart would involve Apple opening its books and giving up profit margins, and somehow I doubt they're even slightly interested in that. WalMart's position is that no one but WalMart is allowed to make money. Frankly, I think Apple would be wise to not feed that particular beast.

View Name:Guest
Subject: best buy: the ignorance of the sales staff
View Name:Guest
Subject: Mini at Best Buy
Close Name:tu_holmes Posts: 10 Joined: 22 Dec 2004
Subject:

How odd,

I walked into an store just yesterday, and their were probably 3 or 4 "Geniuses" in there discussing issues.

They were helping out customers who had questions and were completely professional and courteous.

It reminded me of the way things used to, and SHOULD be when dealing with people.

I can't speak on your experience, but so far, mine in the apple stores has been excellent.


Quote
Guest wrote:

After 10 minutes of listening to his banter, surfer talk, and grunge opinions about the hardware he was marketing, I left with a bad taste for this Apple in my mouth.

Sorry Apple, you almost had me until this worm popped his little head from the rotten core.

Close Name:Mace Posts: 9163 Joined: 07 Aug 2003
Subject:

Quote
Steve W wrote:
Quote
technoguy100 wrote:
They should also get in to WalMart

According to Steve Jobs, hell's already frozen over once. Getting into WalMart would involve Apple opening its books and giving up profit margins, and somehow I doubt they're even slightly interested in that. WalMart's position is that no one but WalMart is allowed to make money. Frankly, I think Apple would be wise to not feed that particular beast.
You just bite the dust. Rumor is going around that Apple and Walmart are joining forces to sell iPod shuffle. AAPL had charged all the way to all-time high closing price of $73.98 today.

Close Name:gslusher Posts: 2043 Joined: 13 Nov 2002
Subject: Bad service at Apple store

Quote
Guest wrote:

Well, I scheduled an appointment through their "Genious Bar" and hooked up with a Apple Retail Store Genious. What I got was some cheese eating high school kid with a mind full of chemicals. He went on and on about how he does not know anything about image editing as he's only a musician that uses his Apple for music production.


Did you talk/complain to the manager? That's the best way to get improved service. It helps to be an active customer, rather than a passive one. (FWIW, it's "genius," not "genious.")

View Name:Guest
Subject: name
Close Name:Steve W Posts: 482 Joined: 22 Nov 2002
Subject:

Quote
Mace wrote:
Quote
Steve W wrote:
Quote
technoguy100 wrote:
They should also get in to WalMart

Frankly, I think Apple would be wise to not feed that particular beast.
You just bite the dust. Rumor is going around that Apple and Walmart are joining forces to sell iPod shuffle. AAPL had charged all the way to all-time high closing price of $73.98 today.

How good is the rumor? I still think Apple would be wise to tell WalMart to go to hell. The iPod Shuffle might be sufficient inducement to WalMart that they'll forego their usual scorched-earth approach to pricing, at least temporarily, but I wouldn't count on that for long. They'll get their tentacles in there and start trying to force Apple to do it the "WalMart way," which would be disastrous.

Close Name:Mace Posts: 9163 Joined: 07 Aug 2003
Subject:

Quote
Steve W wrote:
Quote
Mace wrote:
Quote
Steve W wrote:
Quote
technoguy100 wrote:
They should also get in to WalMart

Frankly, I think Apple would be wise to not feed that particular beast.
You just bite the dust. Rumor is going around that Apple and Walmart are joining forces to sell iPod shuffle...

How good is the rumor? ...
No idea. If this rumor is true, I would expect Walmart to drop their download service or Apple will license FairPlay to them. Someone estimated that profit margin of shuffle is 60% for selling online and 30% through retail channel. So, Apple still make a decent profit selling through Walmart.

IMHO: It makes business sense to sell through Walmart only if Apple plans to produce more low cost consumer electronics products in the future. Licensing FairPlay is more of an issue of timing and who to license to. Apple has been selective in licensing iPod technologies.

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