Best Buy Dips into Macs -- Again

The nation's largest consumer electronics retailer is testing the possibility of selling Apple Computer Inc.'s full line of computers in its stores. Currently, Best Buy carries only Apple's iPod music player and accessories.

Best Buy has added Apple computers in seven stores and it's considering expanding Mac sales across the chain, Best Buy Senior Vice President for Merchandising David Morrish said at the company's annual meeting on Wednesday.

Morrish said the test began four weeks ago.

Best Buy stopped selling Apple computers in 1998 because of slow sales, and soon after Apple pulled out of most retailers. It later rebuilt its retail operation by opening its own stores, and now has 133 in the U.S., compared with 754 for Best Buy.

Morrish said the computers are being sold by Best Buy employees who have been trained by Cupertino, Calif.-based Apple. He said Best Buy is watching to see whether the computers can be sold profitably, and whether Best Buy employees can provide the level of customer service that Apple customers are used to getting in an Apple store.

That's what worries Needham & Co. analyst Charles Wolf.

Non-Apple retailers in general "typically have done a terrible job at selling the Mac," he said. That's why Apple opened its own stores, he said, where it could train its own sales force in explaining the differences between the Mac and the Windows operating system, which is what most computer users are familiar with.

"I think it's great that Best Buy is going to carry the Mac. But carrying the Mac, which they've done in the past, is simply not the answer. They've got to sell the Mac. And I don't know if their sales force in the stores are capable of doing that."

The Mac experiment is a lot more important to Apple than it is to Best Buy, said Samir Bhavnani, the Director of Research at Current Analysis, Inc., which first noted Macintoshes in Best Buy stores in a report to clients on June 1.

Apple currently has less than 5 percent of the U.S. computer market but is trying to raise that, and the potential of selling in every Best Buy store would be help it achieve that, he said.

One pitfall for Apple would be that it could end up giving away sales it would have rung up at its own stores.

But Bhavnani said most of Apple's stores are in malls, and they tend to grab spur-of-the-moment walk-in traffic. Best Buy runs mostly stand-alone stores that people make a point of driving to, he said.

"People who are going to Best Buy are going there with their wallets open," he said. "It's rare that you see someone walk into Best Buy and not walk out having purchased something."


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