Today:
Is CompUSA going out of business?
or Can/will CompUSA reinvent itself?
08/26/1999

Rodney O. Lain , 08/26/1999

I heard CompUSA was going out of business?
- A Best Buy employee, overheard in a bar

But we've always done it this way!
- Seven last words of a dying company

[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

    Speaking of famous last words - that's a doosie

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...

    Oh god. As if it's such a chore that he offers us these pearls of wisdom. People - I'm having a blast doing this because after the layout was done, it takes a mere 30 minutes tops to rip into sophist crap like this. It's beyond fish and barrels, it's more like whales and tuna cans.

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.

    Considering the scruitiny Microsoft has going against it constatly as the largest pile of corporate money in America - this topic has probably been assigned to someone legit. Then there's Apple which gets more glowing praise and hype than scruitiny. If there was more legit press covering this story outside of the hardcover bios, there might be less wholesale acceptance of what Apple really is - a good product surrounded by hype-largesse at best, and at it's worst - an unstable company hawking goods to a choir of people who have lost perspective(or at least caution). I'm betting on both since I've purchased an iMac - but for pragmatic reasons. Other buyers I'm much less sure about.

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...

    Probably because only shareholders, the occasional customer and employee, and perhaps CNBC would give a damn. Oh yes - and Rodney of course whose entire retail model for Apple Computer is about to collapse (unless you consider Sears a serious retail model for Apple).

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.

    A minor admission by the MacJihad - amazing. The incesent internet babble was actually only stopped by the flow of dialogue about Apple's presentation at Best Buy - which only lasted briefly. Think there's a connection?

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.

    This is the scary part of owning an Apple computer. There's not that much support in terms of available channnels. Still given the list of providers, you'd have to be hard pressed to go with CompUSA exclusively - or pay sales tax for that matter. Lord knows, I didn't.

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.

    Sucking up exclusively so far - perhaps he'll go somewhere with this.

CompUSA has been a boon to the growth of Apple's marketshare (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.

    Still sucking.

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

    Oops - I think he meant to say Best Buy. Just because I slam him doesn't mean I'm going to edit him.

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.

    Funny how when CompUSAs stock falls dramatically - "the mighty has fallen". I said the same thing about Apple when their stock took the largest dive ever capping off a loss that wiped out profits back to 1991 in less than a year. This of course earned me great e-mail that I'll have to share with you sometime about how Apple was doing "fine".

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.

    There's a distinct difference between a large scale computer company and a retailer. There are in fact many stories being bandied about the financial trades - actually but they don't merit the same knee-jerk reactions that talk about Apple has resulted in from the MacJihad.

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.

    They also might get customers that don't expect full-scale support from min-wage slaves. Call me crazy.

Discuss it amongst yourselves...

    Note: he's still wrapping up these reports in a condesending tone of schooling. Obviously YOU can't argue any of this with Rodney - he's the TEACHER. So shut-up and sit down and don't ask the guidence advisor why he's despensing advice with a career like his.
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.

    That didn't stop him from pontificating about Apple - and it doesn't stop him from playing fortune teller about Microsoft. Of course, given his predictions about anything industry related - you'd not have to worry about using him for investment advice. Unless you already did - in which case - I'd start some KingDome sized worrying right about now.

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 TheiMac.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.

    The usual conspiracy theory closure: that everyone else not using a Macintosh computer is out to "get you". Pitty that most people don't really care - at most, and don't care for overzelous, overbearing MacJihad users at worst.

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.

    (TEMP Editor's Special Announcement): Considering Rodney's writing this footer - he must want us to love him as much as he loves himself

Well, if you want a double dose of Rodney every week,

    And have a really high pain threshold...

    then you must subscribe to TheiMac.com Newsletter. There will be a bonus column from Rodney every week in the newsletter, so sign up now. Additionally, all subscribers will have a subscriber only contest! This week we're giving away a sim game. :-) Hope you join us, over 10,000 subscribers can't be wrong! --- Rodney O. Lain, rodneyo@macconnect.com.

      This is basically how I turned a time-consuming joke site about the computer industry into a time saving study about the MacJihad and obsessive consumerism. In the meantime here's a comment from one of the BBBS readers:



    Message 11590 of 11599
    macs4none
    Re: An offer you can and will refuse

    Well, if I were Rodney's manager, the first thing I would do is fire his sorry ass. This is the kind of crap that no employee should be saying about his employer--if he expects to keep his job.

    "I do know that I am rooting for CompUSA -- at least until Apple addresses the future of its own retail channel strategy."

    WHAT? The only reason he cares about his employer is because it sells his favorite toy?? Of course, he DID quit Best Buy when they saw the light in the Apple tunnel was a train full of colors that wouldn't sell--and promptly gave up on Apple.

    This guy's grip is becoming more and more loose. Maybe Monty was right--he could become dangerous.

    I never cease to be amazed...

    macs4none



    M.Gabrys, mgabrys@netherworld.com - watching a man who spells loyalty exclusively A-p-p-l-e. If you don't love Apple as much as he does - well, severance is still an option for him I guess.

    _back_

Actual
Crap
08/26/1999
home why remains today ADC