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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?
But we've always done it this way!
[CompUSA is] getting the crap beat out of them quarter after quarter financially."
Replace the word "CompUSA" with "Apple" in those types of comments, and that puts into proper perspective. Apple bounced back. So will CompUSA
I have avoided writing this column for a long time.
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
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 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.
How bad is "bad"?
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...
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.
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 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.
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
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Actual Crap08/26/1999 |