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Roast Channel with Apple Stuffing

July 31st, 2008 @ 12:40 pm

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Tags: Apple Inc., Retail Company, Chances, Retail, Manufacturing, Erik Sherman

Christmas Shopping

If you weren’t sure about your end-of-year holiday dinner plans, not to worry: Apple is serving up enough stuffed channel for everyone. But they only ones happy about it will probably be in Cupertino.

The company has been warning its resellers to place about a month’s worth of orders for top selling iPod models and three weeks of MacBook models:

[T]he Cupertino-based company in recent days issued an advisement bulletin to some of its channel partners hinting at a manufacturing ramp down of iPods and certain Mac notebook models, which will result in limited supplies of those products in the coming weeks.

Thoughtful of them. But according to the story, those long used to dealing with Apple think it means that the company will introduce holiday electronics and Macs in early to mid-September.

For those who haven’t spent enough time in in retail and distribution, channel stuffing is a practice whereby a vendor, generally trying to make quarterly numbers, forces as much product onto resellers as possible. So long as the product ships within the quarter, the vendor can recognize the revenue, although the retailers see higher inventory costs and decreased their profits for the same time period.

But Apple’s angle sounds even more manipulative. They’re ramping down current models to make manufacturing available for the new ones, but they don’t want to take a hit in their revenue, so they move the old popular stuff to the retailers and then introduce the new models, forcing the retailers to drop their prices to clear out the old, because if they don’t, soon it will be an albatross around their necks.

I’d guess that by the time Apple makes the new announcements, the retailers will have had the products longer than the allowable return window, and so end up stuck. What happens if they don’t play the game? They could run out of stock when they need it, because Apple has moved on to something else, as it takes months of manufacturing to get ready for a hopefully busy holiday season. Quick, break out the markdown tags.

Christmas shopping image via Flickr user andreasnilsson1976, CC 2.0

Erik Sherman is a freelance writer, author, and photographer. He's been in or written about the technology industry for longer than he'll admit.

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Erik Sherman

Erik Sherman is a freelance writer, author, and photographer. He's been in or written about the technology industry for longer than he'll admit, but does take time out to write about other subjects, like food. "Will blog to hear his own thoughts" to such a degree that he maintains five blogs on top of the work he does on BNET as well as magazine articles, books, the select corporate or ghosted assignment, and plays. more »

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