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MacBytes
Jul 31, 2005, 11:17 PM
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Category: Apple Hardware
Link: Why the iPod no longer needed HP (http://www.macbytes.com/link.php?sid=20050801001744)

Posted on MacBytes.com (http://www.macbytes.com)
Approved by Mudbug

fixyourthinking
Aug 1, 2005, 09:59 AM
From the article:

Back then the iPod only sold in a handful of stores and was only fractionally as popular as it is today.

No, the iPod was already in some 7800 locations worldwide. The HP Deal expanded that to almost 14,000 and it stands close to 17,000 locations today.

Even with Radio Shack picking the Apple iPod up (instead of selling the HP iPod) - they are not doing it in full distribution.

{HP} scrapped its original plan of building and selling its own blue iPod and instead decided to simply buy iPods from Apple and etch its own logo underneath Apple's.

Again, wrong, the blue iPod Carly held up at a press conference was a painted iPod. It was never intended for distribution. HP and Apple decided jointly that more iPods would sell if there was no physical difference. Besides ... the powder blue was ugly.

When it came to the portion of iPods sold that bore the HP logo, however, something was wrong. While the percentage varied from quarter to quarter, the HP iPod never accounted for more than about eight percent of all iPod sales.

At 5% the profit HP saw was close to 9.1 million. I HARDLY doubt they see close to 10% margin on ANY product other than ink!

With numbers like that, it was reasonable to assume that customers were bypassing the HP iPods they saw in places like WalMart and RadioShack in favor of buying "real" iPods elsewhere. Naturally, that kind of thing wasn't going to make places like WalMart and RadioShack happy.

No, both were always out of stock at peak demand times.

... would seem that the company felt so jilted that it preferred to sit on the sidelines for the next year rather than continue taking part

Most notable analysts have called it correctly - it was an Anti Carly move and part of a massive HP restructuring ... it had nothing to do with margins or with feeling "jilted"

Side note: HP also brought the very cool tattoos and tattoo paper and templates AND connectivity to their printers to print photos and playlists.

Applespider
Aug 1, 2005, 10:02 AM
HP are still keeping iTunes pre-installed on their PCs which to be honest, I think is more useful than them selling iPods.

birdherder
Aug 1, 2005, 10:15 AM
The HP iPod was nothing more than a stopgap measure by HP to have an MP3 player in the face of its PC-side rivals [namely Dell]. Instead of buying an odm product from Taiwan, it struck a deal with Apple. A sweet deal with Apple if you think about it: it was called the Apple iPod by HP. Any advertising or shelf display for the product mentioned Apple by name. Apple got iTunes installed on every one of HP's consumer PCs.

It was also a nice way for HP to give the finger to MS for its "music innitiative". But I would imagine the next MP3 player from HP will use WMA and "Plays for Sure".

The HP customers who bought iPods from HP will still get to use the best MP3 player on the market and iTMS. Apple sold a bunch of iPods and gained new iTMS customers. HP had an MP3 player. Everyone gained from this.

njmac
Aug 1, 2005, 10:24 AM
The tables had turned to the point that not only did Apple no longer need the HP brand name to sell iPods to Windows users, HP now felt it needed the Apple brand name to make the sale.

Ah, the sweet irony. Although, it could always be said that Apple did have a solid, well regarded brand name.

GodBless
Aug 1, 2005, 02:45 PM
I think it is great news that HP will no longer sell iPods. Why? Well the answer is simple. The iPods are such an asset to retail stores since they are a fad product that the retail stores that distribute HP iPods will not want to stop selling iPods even though HP won't be the retail store's provider. This means that retail stores will go to Apple and ask to be a authorized retail provider which means that Apple will have an easy foot in the door to sell other Apple products such as the Mac mini! :eek:

Pretty cool isn't it?

fixyourthinking
Aug 1, 2005, 04:23 PM
I think it is great news that HP will no longer sell iPods. Why? Well the answer is simple. The iPods are such an asset to retail stores since they are a fad product that if the retail stores that distribute HP iPods will not want to stop selling iPods even though HP won't be the retail store's provider. This means that retail stores will go to Apple and ask to be a authorized retail provider which means that Apple will have an easy foot in the door to sell other Apple products such as the Mac mini! :eek:

Pretty cool isn't it?

I would go with that, but wouldn't make the stretch into computers!

GodBless
Aug 1, 2005, 04:55 PM
I would go with that, but wouldn't make the stretch into computers!I said that their hardware has an easy foot in the door since the retail stores will already do relations with Apple. What I didn't say is that some, not all, of the stores will pick up other Apple hardware. Statistics would guarantee that at least some stores will pick up other Apple products besides just one set of products (the various iPods).

If Apple encourages retail stores to sell other Apple products then the chances of stores that sell Apple iPods also selling Apple computers will be even higher. I'd say that as much as 33.3% of the stores that become Authorized Apple Resellers (to sell the iPod) will also sell Apple computers. If Apple encourages them to sell other Apple hardware then about 50% of the stores that become Apple Authorized Resellers will pick it up.

Apple needs to play it smart here with their business strategy and I am very hopeful that they will. :)

fixyourthinking
Aug 1, 2005, 06:40 PM
If Apple encourages retail stores to sell other Apple products then the chances of stores that sell Apple iPods also selling Apple computers will be even higher. I'd say that as much as 33.3% of the stores that become Authorized Apple Resellers (to sell the iPod) will also sell Apple computers. If Apple encourages them to sell other Apple hardware then about 50% of the stores that become Apple Authorized Resellers will pick it up.

Walmart and Radio Shack are very doubtful to EVER sell "other apple hardware" unless it's something like the iPod that is cross platform and is just a gangbusters seller like the iPod. These two chains accounted for close to 7500 exclusive HP locations - granted some Walmarts and some radio Shacks are selling Apple iPods now - but it's doubtful they will ever sell even the Mac Mini.

By the way, great fantasy stats! Reality check?

nagromme
Aug 1, 2005, 08:51 PM
Walmart and Radio Shack are very doubtful to EVER sell "other apple hardware" unless it's something like the iPod that is cross platform and is just a gangbusters seller like the iPod.

It would be a change for sure--but there ARE cross-platform stores that sell Macs too.

FWIW:
http://www.appleinsider.com/article.php?id=1191

"If iPod sales at RadioShack boom -- and they are expected to -- sources say both companies will be open to a pilot program that will test sales of Apple's Macintosh computer line in the electronics stores. RadioShack currently markets computers from both HP and Compaq, but its arrangement with HP is said to expire at the end of the year."

Now, I don't expect Windows PCs to be gone from Radio Shack, even if HP/Compaq does not renew. SOME PC maker will be there. But could half that space--or even just one station--go to Minis and iMacs? Maybe so.