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(Nikkei BP Group)

(No.1 High-Tech News Site in Japanese)

  • Uniform iMac Sales Method Prevails at Stores: Apple Japan Director
  • February 18, 1999 (TOKYO) — Apple Japan Inc. has introduced the new iMac PC in five colors and the G3 machine in blue and white, and the speed of those introductions has been brisk, a company official said.
    The new PCs have been marketed since the Jan. 5 announcements at the MACWORLD Expo/San Francisco.

    Is the new distribution system, which was introduced for the first-generation iMac, working effectively? To get an answer, Nikkei MAC interviewed Naohisa Fukuda, director of business operations (and responsible for the distribution system).

    Nikkei MAC: Apple Japan has established a distribution system that enables it to control shop inventories. Is the new system working effectively?

    Fukuda: In October 1998, the first-generation iMac was replaced with the iMac, Revision B. The market conditions at that time and now are quite different.

    In October last year, we sought to reduce inventories of the first-generation iMac at retail stores. Since we knew exactly where the inventories were located and their unit volume, Apple Japan successfully replaced all inventories at the right time so as to ship the Revision B iMacs.

    Apple Japan was able to do this because we initially limited the amount of inventory. It would have been extremely difficult if retail stores had held five to six weeks worth of inventories, as they previously did.

    During that time, some stores may have run out of iMacs. However, I believe it was only for a short period. We worked hard to avoid running out of iMacs at stores so as to safeguard our business opportunities.

    Retailers, which now have inventories representing only several days of sales, may complain about a short supply of products, because they were accustomed to operating with more than a month of inventories over a long period. However, once they become familiar with the current method, we believe that the complaints will be minimal, or even disappear.

    This year, we haven’t tried to replace the entire stock with the iMac in five different colors. Also, we hoped to market the Revision B model (in bondi blue) even after shipments of the new iMac. Because of this, we are not too concerned with inventory adjustments at retailers.

    There may still be some shops with the model in bondi blue. However, we believe the model will be in great demand since the price was cut by 50,000 yen (US$420).

    Nikkei MAC: Apparently, Apple Japan is giving detailed instructions on the proper way to display iMac PCs. What is the idea behind that?

    Fukuda: Apple Japan has a consistent display alignment, such as the sequence of the five colors, and we show it on TV commercials as well as in other advertisements.

    If retail stores can follow that display alignment, it will help multiply the effect of advertisements while also boosting user recognition. It is for this reason that we instruct all retailers to adhere to the recommended display method.

    Nikkei MAC: Retail prices and store displays are important factors for retail stores to differentiate their services. Shouldn’t retailers have the right to decide on displays? And there appears to be a certain limit on the number of iMacs that retailers are allowed to purchase, is that correct?

    Fukuda: Apple Japan decided upon a unified method of services for customers.

    Formerly, some retailers did purchase large amounts of merchandise based on their expectations. However, their expectations were not always met by market demand, and then they had a painful time in reducing inventories. This was a high-risk, high-return business model.

    The iMac’s profit margin is very small. However, retailers are less likely to end up with an oversupply of goods because the amount to be shipped is controlled by the maker. This is a low-risk, low-return business model.

    Apple Japan wants retailers to avoid excessive competition. And although high returns may not be expected, retailers are likely to see stable business. This is another reason why we recommended the same price and exact display alignments. All retail stores that became iMac promotion shops understood our corporate policy.

    When retailers purchase iMacs, they are not allowed to specify the colors that they want. This is because we have no idea which colors will be popular.

    Since our announcement on the five new colors, Apple Japan has received many inquiries from potential customers who want to see all five colors on display. Thus, at least for a while, we judged that it is best to display them all and keep the five colors in stock.

    Nikkei MAC: Is Apple Japan gathering information directly from the market?

    Fukuda: We collect information from retailers. However, direct information from users and prospects is highly valuable.

    Apple Japan is now on solid ground, which enables us to efficiently collect such information. For example, we have increased the number of telephone lines for the customer information desk, so as to answer as many inquiries as possible.

    Our judgments aren’t based entirely on information received from people who contact us, but Apple Japan does consider such information to be very important.

    Today’s Apple Computer is very well prepared to quickly grasp market needs and to take necessary steps to ensure success. Many of our staff members are highly experienced, and we are well positioned for the future.

    Related stories:
    ¥ Apple Japan to Continue Selling First-Generation iMac PC
    ¥ New iMac Model Sells Well in Japan, But Retailers Complain

    (Nikkei MAC)

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