24 Mar 99
e-mail Archives Markups Subscription Info
Big
Charts: Interactive Charts AAPL
Options & Quote
NASDAQ
Quote NASDAQ
Chart
News.com ran the below news story yesterday and it raised some eyebrows in certain circles:
Ellison: Digital Appliances in Apple's Future.
People asked "What has Larry seen to make him say things like that?" Well, if you had unfettered access to Rubenstein's Locked Vault, as well as knowledge of what is to come, you wouldn't ask that question would you? What made us smile were the references to appliances, etc. that sounded like they were straight out of the NC3 Special Report and later reports.
Some also wondered why Mr. Ellison was touting Apple when he should have been playing up Oracle and its place in this rapidly changing environment and market place. It's simple. Oracle will play an important role in the future as it is positioning itself to exploit it. And, as we have been saying, both Apple and Oracle are inextricably linked in many respects as far as convergence is concerned. Remember what we have been discussing about this issue for oh so long. For in the convergence environment Oracle has found the way to break out of their "Fortune 1000 niche." And with Apple's enterprise solutions destined for unveiling this May, and a possible highlighting at MWNY '99, the markets might finally realize this potential.
Of course, we might hear some developments when Mr. Ellison speaks at NAB '99. And we suggest that those who are wondering what Mr. Ellison saw and what he meant should make sure that his talk become a "Must Attend" event at NAB '99. The same thing goes for Mr. Jobs' talk. Ted Turner might make for lively entertainment, but those looking for intimations about where convergence is heading should listen to both Mssrs. Jobs and Ellison. We'll be straining our ears and trying to read the tea leaves, as well as between the lines. What Mr. Ellison was engaging in was "anticipatory buildup."
How much difference a year makes! Not in respect to Mr. Ellison, as he's long been a proponent of convergence and information appliances; whose back end servers all run Oracle software and even having the front (user) end use Oracle hardware. But if it's going to be Apple branded products (or products using Apple technologies) on the front end, he still wants Oracle to be there as part of it all.
And if there has been a sea change at Apple as far as convergence is concerned, that's only a positive for Apple shareholders. In fact, as early as last fall we intimated that there had been such a sea change at Apple. Just read the old RFI Updates as well as the old RFI Report columns on MacWEEK. Especially the column on "Apple's Set Top Box Strategy." It's there. It's been there for quite some time.
Rumors are starting to surface that Mr. Jobs is going to announce that he's going to drop the "interim" from his title as Apple CEO and make it permanent. Over the past several months Mr. Jobs has quietly stopped using "iCEO" but we don't think that's because he's going to make it official. And as far as The Street is concerned they don't care if he remains as "interim CEO for Life" or whether he decides to change his title from "iCEO" to "Suzy." Whatever suits him suits them. As long as it's not broke, why fix it? We're of the same opinion. He can call his title "Suzy" and we'd wait to see what other CEOs decided to change their title to "Suzy" as well.
Are we being facetious? Yes. While some might cheer that Mr. Jobs has decided to make it permanent, as we would have so done as late as July '98, others wouldn't like that development; most notably the investors and employees at Pixar (PIXR.O). Not to mention a lot of those on The Street. They like the way things are.
As we've been saying, we'll leave the surprises for the shareholders to Mr. Jobs' discretion. If he wants to dish up any surprises at all. We're not going to do a MacNN/AppleInsider and tell people at 0500 what they were going to learn at 0900. Remember? We want any Bullish pop in AAPL to be on news hitting the markets. We've already told you that there are potential surprises and that news coming out of the shareholders meeting should be Bullish for Apple. That's all we really want to know, no?
We've learned the lesson long ago that by publicly discussing what potential surprises there might be only decreases the chances of them being unveiled. As far as public intimations go, it's better to hint at them rather than "break stories just to break stories." Like the "Pro. Go. Whoa!" and other incidents. We knew what was coming. We told you in private at the time. However, we didn't speak of them publicly. Why? It would have dampened or negated the bullish effects on AAPL.O.
Enough said.
While we're all waiting the start of the Apple shareholders meeting, we thought you would like to see RFI's coverage of discontinued iMacs that was kept private as we didn't want to play "Truth Patrol." And once you read our coverage, you probably won't like the motivations some of those spreading those rumors had.
Enjoy! Time to grab some refreshments before they're all gone!
When we received the first reports of iMacs in Costco, we didn't think that an Apple Authorized Reseller would violate the gray marketing restrictions that Apple had placed on their resellers; with the threat of having their reseller status pulled. So, we thought that Apple might be testing the response that iMacs would get in a warehouse type environment. And since Costco has an upscale image, as far as their product lines are concerned, it would have been the natural choice for a test marketing of this approach.
Given the fact that iMacs were turning up in Costco locations all across the United States, it was either a test marketing campaign or Apple Authorized Reseller(s) gray marketing iMacs. You see, they first were reported in a Costco in the San Francisco area and we were fairly certain that someone from Apple would have seen them and would start asking questions. And given the fact that there was no noise as other reports of iMacs in Costco came in, that only reinforced the notion that they were part of a test marketing effort. Well our reports of those iMacs in Costco nationwide apparently caused some resellers to do some digging. Not to mention the reports on the Mac The Knife message boards.
We received reports last week that the alleged culprit had been tracked down by those pesky serial numbers and allegedly had their reseller status yanked. We have been unable to confirm these reports or discover the identity of the alleged violator. However, speculation is rampant as to who it allegedly was.
While we have our suspicions as to who the alleged culprit(s) might be, we aren't going to publicly voice our suspicions. Until and unless Apple officially confirms or denies the rumors that are swirling around the channel, we're classifying these reports as unsubstantiated and unconfirmed rumors.
However, we're still of the opinion that if it was an instance of gray marketing iMacs, that it would have had to either been a large reseller gray marketing those iMacs or more than one reseller involved. Costco doesn't place orders for five hundred of anything. The numbers would have to have been significant.
Bottom line?:
Until and unless Apple publicly addresses these rumor reports, we'll reserve judgment on these rumor reports. But given the below the surface noise on this issue, we decided to use the Fox News Channel motto: "We report. You decide."
Currently there is an open letter to Apple petitioning them to put iMacs into K Mart. Given our stance on WalMart iMacs from last year, we'll use the position from WalMart iMacs to address K Mart iMacs.: It's the best of ideas and the worst of ideas. While it might boost sales of iMacs to consumers, it would probably hack off the rest of Apple's channel to no end. Just as WalMart wouldn't stick to MAP on iMacs (Falling Prices Everyday!), we would expect K Mart to put iMacs on "Blue Light Special" status which would break MAP. Meanwhile, consumers would ask the resellers to meet or beat the price that WalMart of K Mart was offering them.
And if the reports of those iMacs in Costco being gray market iMacs are true, then what would the channel's reaction be to iMacs in WalMart or K Mart? Especially since a lot of the local resellers are placing lots of orders for iMacs? Would the local Apple Authorized Resellers tell the customer who bought their iMac in WalMart or K Mart to get their customer support there? And would they tell Apple that they wouldn't support hardware that was bought there?
Bottom line?:
While Apple is expected to expand its big box retail presence in the future, we don't think that Apple will do so at the expense of hacking off the majority of its channel. If you remember correctly, there was more than a little grumbling over the CompUSA "Salon Stores," as well as when Best Buy received reseller status for iMacs. We shudder to think what the reaction would be in the majority of the channel if Apple announced that it was putting iMacs in WalMart of K Mart. The howl emanating from the channel would probably be heard in Cupertino without the aid of telecommunications.
Working....
©1997,
1998 Echo 4 Holdings / Recon For Investors. All Rights Reserved.
