Why Steve Jobs Might Be 'Spinning In His Grave' This Black Friday
Apple Inc. (NASDAQ: AAPL) has dropped the price of its MacBook Air every year for the last three years. MacBook Air purchaser hopefuls enjoy these cuts in addition to the predictably steep discounts found at retail.
Best Buy Co Inc (NYSE: BBY) is among retailers betting on Apple as a customer lure for the quickly approaching holiday shopping season -- especially next week's Black Friday. The company's Black Friday preview features an iPad Air 2 for $399 (all models are $100 off) and an 11-inch MacBook Air for $779.99, among other sales for Apple products.
"Apple is a valued vendor," Best Buy spokesperson Shane Kitzman told Benzinga. "We know that customers love their products. They're sleek, they're stylish, they're hip."
Kitzman would not go into specifics regarding how Best Buy arrives at its prices, but Target Corporation (NYSE: TGT) spokesperson Jenna Reck indicated that Apple might work directly with retailers.
"I can't really speak to what the negotiations look like with the different vendors, but it's definitely a process with each of the products to come up with the pricing that allows us to be competitive," Reck told Benzinga.
Dan Miller, senior analyst and founder of Opus Research, did not seem overly surprised that Apple's prices have come down over time.
"It's inevitable that the sales channels will assert some power," Miller told Benzinga. "They have to capture share themselves. It [...] reminds me of the old days of Levi's blue jeans. There were Lee, Levi's, Wrangler. Levi's had a lockdown on the sales channel. You could not depart from their MSRP. Over time those things kind of decayed. That's sort of empowering to the customer."
Miller said that it is "amazing how long locking down what amounts to price control actually lasts." He said that tablets and PCs are interesting because they have started to look like commodities, which can also lower prices.
"There really isn't anything to differentiate around except price," Miller added.
'Spinning In His Grave'
Apple co-founder Steve Jobs may not have been happy with Apple's falling prices.
"I've got this mental image of Steve Jobs spinning in his grave because he had this view [that] with a premium-priced product, you typically don't do [Black Friday sales]," Rob Enderle, principal analyst at Enderle Group, told Benzinga. "But Apple is surviving [while] doing it and Tim Cook is a very different guy."
Enderle expects to see more discounts from Apple in the future.
"If anything, because they've had production problems with the iPhone, they're likely going to want an extra boost in revenue this quarter to make up for it," Enderle added.
"I would expect them to be pretty aggressive on Black Friday deals because Tim Cook is really going to want to spike his numbers in the first quarter. He's much more of a tactical quarter-by-quarter CEO than a strategic CEO like Jobs was. That would lead me to believe that he's probably going to be aggressive. I wouldn't say 'aggressive' as someone compared to, say, Samsung -- which is very aggressive. But more aggressive than he has been in the past."
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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