Rodney O. Lain - 1999.08.26
This article was originally published on The
iMac.com, a site which no longer exists. It is copyright 1999 by
RAC Enterprises, which also seems to no longer exist. It is thus
reprinted here without permission (which we would gladly obtain if
possible). Links have been retained when possible, but many go to
the Internet Wayback
Machine.
[CompUSA is] getting the crap beat out of them
quarter after quarter financially."
- Roger Kay, analyst with International Data Corporation
Replace the word "CompUSA" with "Apple" in those
types of comments, and that puts into proper perspective. Apple
bounced back. So will CompUSA
- A Minnesota Apple rep that I had a conversation with about
this
I have avoided writing this column for a long time.
You see, I work at CompUSA and therefore have a hard time giving
the company a totally honest critique, due to the obvious conflicts
of interest. But since no one else on the Mac web sites appears to
be concerned with anything other than the iBook lately, I am
compelled to speak up and do my duty as a good little
columnist...
One of the popular maxims incessantly preached to us in
Journalism School is that the journalist's job is "to comfort the
afflicted and to afflict the comforted." A sarcastic comment, this
is - if you concentrate solely on the meaning of the last phrase.
The journalist's job, some believe, is to make the rich, fat cats
uncomfortable every now and then by pointing out their foibles,
reminding them that they are not infallible, that they are not the
untouchables. The fat cat could be a corporation, a mogul, or both,
in the case of that latest media whipping boy, William H. Gates,
III, and his Microsoft Corporation.
But there is another fat cat that hasn't really been publicly
discussed that much. I am talking about CompUSA (NYSE symbol: CPU).
Now, I don't know if you know this, but CompUSA has not been at its
financial zenith for a good while. And Mac users should be
concerned, for reasons I hope to argue cogently. Check this
out...
Lest We Forget
For the past year or so, many Mac-centric columnists (me
included) have egocentrically trashed CompUSA, saying that Apple
products aren't showcased on par with the Wintel stuff. But think
about this for a moment: how far would Apple have gotten without
shelf space in this self-styled "super computer store"?
I think that, second only to Microsoft, CompUSA is the most
important third party in Apple's recent turnaround. Just where do
you think iMac buyers purchased their Bondi-blue bundles of joy
over the past 12 months - I mean, other than Best Buy, mail-order
houses, on-line resellers, and independent Apple Authorized
Resellers? Yep, CompUSA. For those of you living in the
hinterlands, CompUSA has a big presence in the major U. S.
metropolitan areas and in the computer-shopper's consciousness;
hence, Apple has a big(ger) presence there, too. And Mac sales
figures at CompUSA (which rose from a mere 2% to 15% after
implementing the Apple Store-Within-A-Store) are not to be
overlooked nor taken for granted.
True, some CompUSA locations need more Mac-knowledgeable sales
staff. Yes, some stores need to carry more Mac software and
peripherals. Granted, some stores need to give more attention to
their Mac section. But we should be grateful that they have the
peripherals, software, and staff that they do have. CompUSA should
be complimented for allowing Mac users to have a superstore to shop
in.
CompUSA has been a boon to the growth of Apple's market share
(being the only national chain with Apple's blessing doesn't hurt
either). And, again, Apple hasn't been too bad for CompUSA's bottom
line (I remember one weekend that I worked at CompUSA, I noticed
that if it were not for the PowerBook and iMac sales, revenue would
have been piss poor that weekend; abysmally piss poor).
So, for the time being, the assured success of the Mac is tied
to the success of CompUSA. That's why we need to be mindful of the
stock symbol CPU just as much as we watch the wax and wane of
APPL's fortunes.
How Bad Is 'Bad'?
Beneath Apple's success at CompUSA, problems are afoot (see the
end of the article for more news links). But it isn't just CompUSA.
Every brick-and-mortar computer store is being affected by
razor-thin profit margins that have resulted from computer makers'
race to produce the cheapest PC.
But it appears that CompUSA is affected more than the others
are. Sears and CompUSA sell more than just computers, so a
recession in one type of product doesn't hurt them that much. But
CompUSA sells nothing but computers and computer-related products.
Therefore, so goes the PC industry, so goes CompUSA.
And it's reflected in CompUSA's stock price nowadays.
Over the last eight years, the highest CompUSA's stock price has
ever been is right below $40 a share. The lowest it been is below
$5 a share. As of Friday, August 20, it trades at $7 a share.
In that respect, the mighty has fallen.
What surprises me is that more people aren't talking about
CompUSA's future and its fortunes (remember all of those "Apple is
dying" articles, as APPL fell to $12 a share?). I don't say these
things out of glee. I am concerned about CompUSA health (maybe it's
because I hate Best Buy with a passion; I don't know). I do know
that I am rooting for CompUSA - at least until Apple addresses the
future of its own retail channel strategy.
Until then, CompUSA has its work cut out. For example, it's hard
to get good, quality employees. It's hard to make money if your
bread and butter (the PC) keeps getting cheaper and cheaper,
reducing your profits. They also have to deal with customer
dissatisfaction, stiff competition from the Internet retailers, and
the evolution of the PC industry, as it moves towards embracing the
digital-appliance model as the replacement of the beige box
approach.
Discuss It Amongst Yourselves...
I was going to pontificate about what CompUSA should do to right
itself, but who am I kidding? I have no crystal ball. I have no
MBA. But I do know that CompUSA will have to perform some minor
miracles and make some hard decisions in the upcoming months and
years...
Meanwhile, what are your thoughts on this topic? Take some time
and e-mail me your thoughts, or post tell me in The iMac.com
forums. Me, I wish CompUSA the best. A turnaround for them is
possible. Hang in there, guys. You can do it.
Apple did. And they had the whole Wintel duopoly wishing them
ill will. At least the industry is one on your side, CompUSA.
For those wanting more background info, be sure to read these
articles, some of which were quoted above on CompUSA's financial
health and the future of computer retailing:
Editor's Special Announcement: Did you like this editorial? I
always love Rodney's view of our world, as I'm sure you do, too.
Well, if you want a double dose of Rodney every week, then you must
subscribe to The iMac.com Newsletter. There will be a bonus column
from Rodney every week in the newsletter, so sign up now. Hope you
join us - over 10,000 subscribers can't be wrong! [Editor's note:
If you have these bonus columns, please email them to
Dan Knight
- thanks!]
Rodney O. Lain, a former university English and
journalism instructor, works full-time as a software developer and
works part-time at a local CompUSA Apple Store Within A Store. A
card-carrying member of the local Macintosh User Group Mini'app'les, Rodney writes this
column exclusively for theimac.com. His greatest desire is to
become an African-American Guy Kawasaki. A self-professed
"workaholic writer," he waxes prolifically about race, religion,
and the "right OS" at
"Free Your Mind & Your Behind Will Follow", his unabashedly
pro-Mac website. When he's not cranking out his column, he collects
John Byrne comic books, jogs, and attempts to complete his first
novel. He lives in Eagan, Minnesota, a southern suburb of St.
Paul.
