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French reseller sues Apple over unfair competition - Page 2

post #41 of 83
Quote:
Originally Posted by ascii View Post

Well really. Who says they have to give the phone to resellers in the first place? They invented it, it's theirs to do with as they please. Shut up and be grateful you silly old frog.

Ah, casual racism. I wouldn't expect anything less from a fat yank like you.
post #42 of 83
Quote:
Originally Posted by thrang View Post

If Apple doesn't want resellers, or a particular reseller, this is their right. But if they do authorize resellers, and those resellers are meeting Apple's guidelines, then Apple should provide them reasonable appropriate access to their products.

Likely, Apple has, and has some formula that determines allocation based on revenue, square footage, etc... - the reseller in question simply may not like the methodology or is questioning the fairness.

Apple reseller agreements are highly detailed, but if there is/are some unfair trade practice(s0 contained in them, governing local laws would supersede the agreement.

No matter how well run a reseller is however, its nearly impossible to compete with Apple selling their hardware - the margins are too thin, and Apple can offer staffing/support options/exchanges that would break the bank of an independent. Their focus needs to be on high quality training, extended (on-site) support, small business focus, third party product expertise, etc...

Best points made on this thread so far. This suit may have a couple issues to be argued:

* whether Apple has been engaging in unfair or illegal retail competitive practices

* whether it has violated the terms of the contract entered into with the reseller

Let's have a trial and see the evidence.

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post #43 of 83
Quote:
Originally Posted by tylerk36 View Post

Apple is not in the business of destroying businesses.

If you knew the history of Apple vs. 3rd party resellers, you'd know this statement is false. The exact same thing happened in the U.S. when Apple opened its stores here. Multiple lawsuits followed. If not for that background, I might find this current French lawsuit suspect, but I fear Apple has a pattern of behavior here that leads me to root for eBizcuss.
post #44 of 83
Quote:
Originally Posted by frenchseb View Post

Apple does not need France...

I think the correct phrasing here would be "Apple does not need the resellers as much as the resellers need Apple."

Which would be correct, but yeah also an annoying, pointless kind of thing to say.
post #45 of 83
Quote:
Originally Posted by jungmark View Post

Of course Apple is going to favor its own stores. They make more money that way. Third party retailers have their place where there isn't enough traffic for an official Apple Store. In addition, kiosks/sections at Best Buy etc may persuade potential Windows buyers into considering a Mac/iPad.

In any case, if the third party retailer wants a lot of product, put down the $$$ to get it. Just like Apple drops $$$ on the supply chain side.

Really? If thats going to create interest in Mac products over Windows, why should Apple not consider placing their products in stores like BestBuy (BB have it now anyways). If Walmart is having a bad reputation with the Americans, why place iPods/Pads/Phones in Walmart? Is it because they have more money to buy products in bulk by paying 100% money in advance?

If Apple does not like resellers, then why even lure them to spend millions at the first place to set up stores the way Apple wants? If the tables were to be reversed, wont Apple demand others not open their store within few hundred miles vicinity for x number of years in future? This is pure greed to keep profits to themselves and minimize sharing it with people who wish to spread the brand.
Compare this to the eBooks and subscriptions offered by Apple. They demand the 30% cut and at the same time put a restrictions to sellers not to sell at lesser price to anyone else. That means, consumers have to shell out more even if a reseller is willing to offer these consumables for lesser margins.

I love Apple products. But that does not mean I should be blinded by the fact that Apple is using its fat bank balance to ruin small players in the market, ruin the competition and make people shell more money.

Coming to the supply chain question, I can not comment if Apple drops $$$ on the supply chain in advance. But its indirect evidence of Apple's tight control on the supply chain that sees Foxconn offering terrible work environment to its employees and Apple turning blind eye to those employees. If Apple can challenge Samsung to move away from their processors, they definitely use the same dominance not to drop $$$ to the supply chain in advance.
post #46 of 83
Quote:
Originally Posted by TallistDah View Post

Spot On

The French are just pissed because they want to control the "design" and Apple cleans their clock on Design.

Sheesh, hardly. First of all there is no "The French". Grow up. This is one individual business suing Apple, not the whole country. Second, it sounds a lot as if they have some highly valid points. You'd sue too if you were treated like this.

And finally, saying "Apple doesn't need France" is like saying "Apple doesn't need money." OK, perhaps Apple is flush. But ask yourself why Apple is undercutting its 3rd party resellers. The only possible answer is that it does need (or at least want) French business. So Apple itself is also undercutting your braindead argument.
post #47 of 83
I'm reading over all these threads and see how many of the readers feel that Apple and big corporations needs to step in and take over the retail process. Do we forget that we created this process. Suppliers and consumers. Mom and Pop stores. That helps to create fair competition in this world. The moment you say forget those retailers and i hope Apple would bring one of their stores to my town so that we can stop going to the local dealers, you've basically given up the chance to compete in this world. Its great when you have choices, this does not always mean that the experience will be the best at the small retailer or at the big department store, but at least you have the opportunity to try out different choices. You see the reason those retailers are there is because not too long ago Apple was struggling to get their product out to the Microsoft Dominated world and had no other way of pushing it out. Now Apple is on top (for the mean time) and no longer feels it has to honor its agreements. Only sure thing in the Technology world is that today your on top and tomorrow another Tech giant is buying you out. So in summary, support your local dealers for they are the ones that help maintain fair competition.
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post #48 of 83
Quote:
Originally Posted by Drax7 View Post

Be a little enterprising and call Tim cook up and tell him what the situation is , and tell him you would like to open their store in Portugal. They need people like you to do it. Do it the way Steve jobs would.

Sure. He should "be enterprising" and open a store only to have Apple come in a year later and run his store out of business as they've been doing all over the globe. Riiight. THIS is exactly how Apple's behavior turns right around and bites them in the butt; they get a reputation for not being a company you would want to be an independent reseller for. They have zero loyalty and will run you into the ground through anti-competitive measures faster than you can spit. So Apple loses potential sales in Portugal and who knows how many other countries & cities?
post #49 of 83
I'd love to hear from some knowledgable person about how favoring their own retail stores is a violation of law in France and whether that is unique to France or applies in other significant countries.

In the US, my (limited) understanding of how&why the government gets involved in retail issues is to protect consumers, not to protect retailers. The two main ways in which the government does this are to prevent anti-competitive behavior and to prevent fraud/deception.

For example, I think maybe the FTC worries about things like CocaCola making deals with supermarkets to crowd out RC Cola from store shelves. But the government only worries about this when a practice actually harms consumers. If it doesn't harm consumers, then the government (quite rightly) doesn't care.

It's not clear to me how favoring their own stores hurts consumers. There are plenty of alternatives to Apple products and plenty of places to buy those alternatives.

Now, if Apple had 90% of the market for smartphones (or PCs or whatever) this would be a very different situation. But Apple, either through wisdom or happenstance, has never had a business model that gives them that kind of market power. So my guess is that at least in the US, Apple is doing nothing that would warrant government scrutiny because they just aren't big enough in any single market to be in a position to use their size to hurt consumers.
post #50 of 83
Quote:
Originally Posted by Michael Scrip View Post

Frankly, I'm surprised Apple has allowed brick-n-mortar resellers for this long.

While I'm sure Apple resellers create a great retail experience... it just seems like Apple would want to be the ones to provide it.

Apple's all about controlling the message... they march to their own drum.

This also explains their tradeshow policy... they don't attend them anymore.

In France, there are 9 Apple stores serving a population of 65M, a ratio that's much lower than the 1 store per 1.2M in NA. Unless Apple decides to shift their focus from China to France and start building more stores (not just in France but in continental Europe), they need the resellers there.

Furthermore, screwing over those who supported you thick and thin is wrong, no matter what drumbeat you're marching to.
post #51 of 83
Quote:
Originally Posted by Ireland View Post

Some of you guys are defensive Apple fanboys that make it uncool to like Apple gear.

I mean, what's wrong with you.

I agree with you Ireland. Xenophobic sneers are inappropriate and offensive.

Those of us who can remember the bad days in the 1990s will know that it was the small independent retailers who kept Apple alive. It seems very unfair that their loyalty to the brand was repaid by being forced to compete with official Apple Stores, which obviously operated on much higher margins and could carry far more stock.

Moral: go and evaluate in an Apple store but buy from your local dealer; Apple can afford the loss of your direct custom.
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post #52 of 83
Quote:
Originally Posted by Blastdoor View Post

I'd love to hear from some knowledgable person about how favoring their own retail stores is a violation of law in France and whether that is unique to France or applies in other significant countries.

In the US, my (limited) understanding of how&why the government gets involved in retail issues is to protect consumers, not to protect retailers. The two main ways in which the government does this are to prevent anti-competitive behavior and to prevent fraud/deception.

For example, I think maybe the FTC worries about things like CocaCola making deals with supermarkets to crowd out RC Cola from store shelves. But the government only worries about this when a practice actually harms consumers. If it doesn't harm consumers, then the government (quite rightly) doesn't care.

It's not clear to me how favoring their own stores hurts consumers. There are plenty of alternatives to Apple products and plenty of places to buy those alternatives.

Now, if Apple had 90% of the market for smartphones (or PCs or whatever) this would be a very different situation. But Apple, either through wisdom or happenstance, has never had a business model that gives them that kind of market power. So my guess is that at least in the US, Apple is doing nothing that would warrant government scrutiny because they just aren't big enough in any single market to be in a position to use their size to hurt consumers.

There was a similar action in the US in 2004:
http://en.wikipedia.org/wiki/Apple_Inc._litigation
(search for 'favor')
It was settled out of court, so it is not clear how the court would have ruled on the resellers' accusations.
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post #53 of 83
Quote:
Originally Posted by RichL View Post

Ah, casual racism. I wouldn't expect anything less from a fat yank like you.

... and I have to admit I would not have expected such support from this source. May be I will have to revise my theory about the hereditary ennemy, you can be proud of this ...
post #54 of 83
Quote:
Originally Posted by Michael Scrip View Post

Frankly, I'm surprised Apple has allowed brick-n-mortar resellers for this long.

While I'm sure Apple resellers create a great retail experience... it just seems like Apple would want to be the ones to provide it.

Apple's all about controlling the message... they march to their own drum.

This also explains their tradeshow policy... they don't attend them anymore.

Here in Helsink, there are 5 or 6 reseller all within a kilometer of each other and they are all doing monster biz because of their service and product knowledge. The experience is outstanding because of the sales personnel.
post #55 of 83
Quote:
Originally Posted by ktappe View Post

Sure. He should "be enterprising" and open a store only to have Apple come in a year later and run his store out of business as they've been doing all over the globe. Riiight. THIS is exactly how Apple's behavior turns right around and bites them in the butt; they get a reputation for not being a company you would want to be an independent reseller for. They have zero loyalty and will run you into the ground through anti-competitive measures faster than you can spit. So Apple loses potential sales in Portugal and who knows how many other countries & cities?

Actually I read Drax's post as suggesting he call Tim Cook and offer to be the one to open an official Apple store in his area.

I'm not surprised in the least that an official retail outlet for a company would be supplied first. I can't imagine that Sony's retail outlets are low on stock compared to Sony products at places like Best Buy. Here in Louisville, I think the only places to get Apple products besides the Apple store, is big box retail like Best Buy and iPods and iPads at places like Target and Wal Mart. If my choices are going to one of the big box stores or going to the Apple Store, I'll pick the Apple Store every time. Besides, it's my kids favorite store in the mall
post #56 of 83
Quote:
Originally Posted by xSamplex View Post

Apple is in business for one reason. To make money. Anything they can legally do to maximize profits, they will do. If disadvantaging resellers achieves this, they will have no compunctions about doing so.

Jobs was smart. Sell a good, proprietary product at a premium price, and you can do quite well in the long term, thank you very much. Cutting out resellers just rakes in more margin for the big A.

This idea that businesses are ONLY concerned about making money is often bandied about. Yet the world isn't that simple.

Apple has historically focused on making the best possible products while still making a profit. It is a constant balancing act. Every business falls somewhere along the spectrum of profit at all costs vs also incorporating other goals.

Reading the Jobs biography provides good perspective on this. Look at how Jobs ran NeXT. He was fixated, indeed obsessed, with the quality of their work. The factory and offices were built with what is often considered reckless disregard of finances. In the end he achieved his goal of making the world's most advanced personal computer and computer production facility. To this day, NeXT is a marvel, perhaps even 15 or 20 years ahead of it's time... but it never turned a profit.

Apple may not care about 3rd party resellers or may even being trying to squeeze them out of the market. But that is a separate topic than if Apple is ONLY concerned about money.
post #57 of 83
Quote:
Originally Posted by dfiler View Post

This idea that businesses are ONLY concerned about making money is often bandied about. Yet the world isn't that simple.

Apple has historically focused on making the best possible products while still making a profit. It is a constant balancing act. Every business falls somewhere along the spectrum of profit at all costs vs also incorporating other goals.

There are many ways in which their products could be better but would inflate the price so much that they would no longer have enough customers to support the R&D and would end up makes far less money. The balancing act is trying to maximizing their total net profits.

It's all about profit. Always has been. Always will be. Giving you better customer service, higher quality materials, etc. are just a means to an end. It's just one way in which a company can pursue profits.

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post #58 of 83
Quote:
Originally Posted by SolipsismX View Post

There are many ways in which their products could be better but would inflate the price so much that they would no longer have enough customers to support the R&D and would end up makes far less money. The balancing act is trying to maximizing their total net profits.

It's all about profit. Always has been. Always will be. Giving you better customer service, higher quality materials, etc. are just a means to an end. It's just one way in which a company can pursue profits.

That seems like a conveniently simplistic and naive world view. Not everyone is motivated 100% by profit and 0% by everything else.
post #59 of 83
Quote:
Originally Posted by dfiler View Post

That seems like a conveniently simplistic and naive world view. Not everyone is motivated 100% by profit and 0% by everything else.

The naivety is to suggest that anything is 100% and everything else is 0%, but the fact is that profits are the reason that for-profit companies exist. This has no barring on the owners of a company wanting to make the best product possible or simply make the cheapest product possible. Creating a for-profit company doesn't mean you have nothing to prove, have no one you don't to impress or make proud, don't wish to make the best product possible, it just means that your goal is to profit. If you don't wish to profit then you start a not-for-profit company. It's that simple.

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post #60 of 83
Actually I have some sympathy for the re-seller here. Firstly they have been an ambassador for Apple since 1977 supporting the companies products through thick and thin. they have invested heavily at Apples request in a POS system only to have the ground chopped away under their feet.

Apple does not need re-sellers now but there is such a thing as ethics and doing the right thing. Apple do not need to treat their re-sellers so badly.
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post #61 of 83
Quote:
Originally Posted by SolipsismX View Post

The naivety is to suggest that anything is 100% and everything else is 0%, but the fact is that profits are the reason that for-profit companies exist. This has no barring on the owners of a company wanting to make the best product possible or simply make the cheapest product possible. Creating a for-profit company doesn't mean you have nothing to prove, have no one you don't to impress or make proud, don't wish to make the best product possible, it just means that your goal is to profit. If you don't wish to profit then you start a not-for-profit company. It's that simple.

Well at least we agree that profits aren't the only motivator... right?

But I disagree that the desires of owners, CEOs, and board members has no bearing on how companies are run. Almost all humans balance profit against other motivation. For example, ethics play a roll in some important decisions. It is frequently possible to get ahead by doing illegal and unethical things. Even when there is no chance of getting caught, altruism often rears its head.

Or another example. Many luxury good companies could increase both short and long term profits by producing lower quality products. Sometimes though they choose to remain only in the high-end because they prefer working at and running that type of company. This tends to happen more at smaller companies or ones that are under the control of relatively few people.

But this is getting somewhat off topic. I'm harping on it only to rebut the myth that companies care about nothing other than profit.
post #62 of 83
Quote:
Originally Posted by dfiler View Post

Well at least we agree that profits aren't the only motivator... right?

But I disagree that the desires of owners, CEOs, and board members has no bearing on how companies are run. Almost all humans balance profit against other motivation. For example, ethics play a roll in some important decisions. It is frequently possible to get ahead by doing illegal and unethical things. Even when there is no chance of getting caught, altruism often rears its head.

Or another example. Many luxury good companies could increase both short and long term profits by producing lower quality products. Sometimes though they choose to remain only in the high-end because they prefer working at and running that type of company. This tends to happen more at smaller companies or ones that are under the control of relatively few people.

But this is getting somewhat off topic. I'm harping on it only to rebut the myth that companies care about nothing other than profit.

You're talking about "how companies are run" is not the same as the defined purpose of a company. Profits are the goal of a for-profit company. Imagine a trip around the world in 80 days. The goal is get around the world within the alloted time frame. How you accomplish this goal is up to those involved. Within your means you aren't just making choices of whether to take a train or boat but if you wish to use illegal or unethical means to achieve your goal. No matter what path you take physically and mentally/spiritually the goal is still the same: to get around the world in 80 days.

Apple's goal is still to make as much money as possible but they have a long term outlook that exceeds some short term quarterly uptick that a CEO can use to get headhunted by another company willing to pay him twice as much. Apple's goal it make more profit by getting customers to trust their products, trust their ecosystem, trust their customer service. It's still a goal of making money which is why Apple dominates the profits of the handset, PMP, tablet, and PC markets.

I took a 35 day old iPhone 4S that had been dropped in a cup of coffee into an Apple Store on Tuesday. The owner didn't heed my advice to get the extended warranty with the 2 accidental damage replacements for $50. I told the truth as to what happened. It was clear because the back plate was semi-glued on from the coffee residue yet the Apple Store employee replaced it for free because only one of four moisture sensors were tripped (the one at the headphone jack). There is a reason he was allowed to replace this device and it wasn't altruism. It's good for longterm business... if you're in a position to offer it.

The purpose of sex is to procreate. It's only meant to feel good so you'll be likely to push your species. And it's only meant to evoke feelings of intimacy in humans because that gives biological resultant the best chances for survival. There is still the same single goal of sperm production and egg creation. It's not magical. It's not spiritual. It's biological. Everything else just helps accomplish that single goal in nature.

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post #63 of 83
I disagree with your narrow definition of the word "purpose". There are without a doubt, companies that have nuanced purposes that extend beyond simply making a profit.

But we're way off topic so I'll leave it at that. Cheers and happy new year!
post #64 of 83
Quote:
Originally Posted by RichL View Post

Ah, casual racism. I wouldn't expect anything less from a fat yank like you.

Ethnic slur, certainly, but it's not racism unless the commenter to whom you've responded is of non-European extraction, which you'd have no idea about - unless you happen to know the individual in question; which I highly doubt.

And, really? Like Britons don't make more caustic comments/jokes about the French and Germans than nearly anyone else in the world? Really?

BTW, having lived in the UK for over seven years I can attest there are plenty of obese Englishmen (and women) as well.

All in all you've demonstrated rather little by having engaged in the exact same behavior to which you, ostensibly, take offense.

Disappointing, really...
post #65 of 83
While I have no knowledge of French law regarding competition, if the allegations brought by the litigant are factual then it would certainly seem that Apple has engaged in anti-competitive behavior, at least by the standards in the US. My guess would be the playing field has been level all along and the company has simply been dealing with the very same supply constraints that everyone else has had to deal with, including Apple itself.

In case most folks haven't noticed, they have some pretty smart folks running Apple who would certainly know they were laying themselves open to accusations of anti-competitive behavior if the alleged conduct is factual.

If this business sought to engage Apple in head-to-head competition in the retail space, regardless of how long it had been the incumbent prior to an upstart Apple entering the space, then it should expect to have to deal with all the implications of such a decision. If you want to face the bull sometimes you're going to get the horns.

My first question to the business would be, "how have you differentiated yourself from Apple retail to drive business to you, rather than to Apple's stores"?

Here in Vermont we have a very successful Apple re-seller, Small Dog Electronics (with which I have zero affiliation). One of the reasons they're successful is they serve a market that has no other Apple retail presence outside the big box stores, and they've got a very local attitude that works for the target market. They also happen to have gotten started in 1994 at the advent of Apple's dark days, yet still built a very successful on-line business that preceded their physical retail business.

While I'm not a complete fan (I think their repair service leaves a lot to be desired), they nevertheless laid out a business plan that works, and they've been successful. Although that success is, in part, driven by a local culture that very much is supportive of buying local to support local businesses, they are also in an underserved market that faces the choice of going to a big box, ordering on-line, or driving to the nearest Apple Store ~200 miles away.

If you can't compete don't blame the competition.
post #66 of 83
Quote:
Originally Posted by RichL View Post

Ah, casual racism. I wouldn't expect anything less from a fat yank like you.

aasci is a well- known jerk. Not all "yanks" are as boorish as he....
post #67 of 83
Quote:
Originally Posted by RichL View Post

Ah, casual racism. I wouldn't expect anything less from a fat yank like you.

Is that suppose to be irony?

Anyway, it's unfortunate for resellers but Apple's own stores are going to kill reseller business if it's in the proximity of an Apple Store.

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post #68 of 83
It would be interesting to see Dick's take as he's likely the only one to have owned an apple reseller. I merely worked at one during high school.

I wasn't overly impressed with the ethics of the owner...
post #69 of 83
Quote:
Originally Posted by djsherly View Post

Or, apple should BUY France.

Why bother to buy France, they will surrender quickly...
post #70 of 83
Quote:
Originally Posted by jackthemac View Post




Moral: go and evaluate in an Apple store but buy from your local dealer; Apple can afford the loss of your direct custom.






That would hurt Apple.
post #71 of 83
Quote:
Originally Posted by dfiler View Post

This idea that businesses are ONLY concerned about making money is often bandied about. Yet the world isn't that simple.

Apple has historically focused on making the best possible products



You both confuse the strategy of making the best products possible with the goal of maximizing total profits.

Not only that, but you also misunderstand "this idea" by presenting it as the "ONLY" goal of a mega-corporation.

The idea is that corporations have a prime directive, and everything else feeds that. Great products, happy customers and a wonderful ecosystem are all things that are intended to feed profits. It all works very well when skilled people execute it.

But why do they do they make any of that sort of stuff happen? for its own sake? In order to perform charity? Nope. They do it because they think it is the very best way to maximize total profits.
post #72 of 83
Quote:
Originally Posted by dfiler View Post

This idea that businesses are ONLY concerned about making money is often bandied about. Yet the world isn't that simple.

Apple has historically focused on making the best possible products while still making a profit. It is a constant balancing act. Every business falls somewhere along the spectrum of profit at all costs vs also incorporating other goals.

Reading the Jobs biography provides good perspective on this. Look at how Jobs ran NeXT. He was fixated, indeed obsessed, with the quality of their work. The factory and offices were built with what is often considered reckless disregard of finances. In the end he achieved his goal of making the world's most advanced personal computer and computer production facility. To this day, NeXT is a marvel, perhaps even 15 or 20 years ahead of it's time... but it never turned a profit.

Apple may not care about 3rd party resellers or may even being trying to squeeze them out of the market. But that is a separate topic than if Apple is ONLY concerned about money.

You're confusing cause and effect.

Actually, legally and ethically, companies are required to maximize shareholder return.

Now, it is true that different companies have different strategies to do that. Some do so by offering the lowest price possible. Some do it by making fantastic products. Others do so by offering incredible service. But those are the tactics, not the objective.
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post #73 of 83
Quote:
Originally Posted by Addison View Post

Actually I have some sympathy for the re-seller here. Firstly they have been an ambassador for Apple since 1977 supporting the companies products through thick and thin. they have invested heavily at Apples request in a POS system only to have the ground chopped away under their feet.

Apple does not need re-sellers now but there is such a thing as ethics and doing the right thing. Apple do not need to treat their re-sellers so badly.

Nicely put. I am as much of an Apple fan as anyone here, but I agree with you 100% on this issue.

Some of the comments that people have made here are embarrassing.

No, shameful.
post #74 of 83
Quote:
Originally Posted by SolipsismX View Post

Anyway, it's unfortunate for resellers but Apple's own stores are going to kill reseller business if it's in the proximity of an Apple Store.

That is not what appears to be at issue here.
post #75 of 83
Quote:
Originally Posted by msimpson View Post

Why bother to buy France, they will surrender quickly...

Ugh. Retracted. Off-topic.
post #76 of 83
Quote:
Originally Posted by jragosta View Post

You're confusing cause and effect.

Actually, legally and ethically, companies are required to maximize shareholder return.

Now, it is true that different companies have different strategies to do that. Some do so by offering the lowest price possible. Some do it by making fantastic products. Others do so by offering incredible service. But those are the tactics, not the objective.

I'm not confusing anything.

First of all, not all companies have shareholders. And even public companies must hedge maximization of profit against other concerns. As for ethics, sometimes profit should be sacrificed for worker safety, etc.

(Yeah, i though i was done but my ego couldn't take being called confused. )
post #77 of 83
Quote:
Originally Posted by dfiler View Post

I'm not confusing anything.

First of all, not all companies have shareholders. And even public companies must hedge maximization of profit against other concerns. As for ethics, sometimes profit should be sacrificed for worker safety, etc.

(Yeah, i though i was done but my ego couldn't take being called confused. )

Actually, legally, all companies (in the US) have shareholders... shares may be privately held, publicly held, by an individual, by another company, registered, not registered... but by legal definition, all companies have shareholders (and thus shares) of some sort.
post #78 of 83
Quote:
Originally Posted by battlehamster View Post

Actually, legally, all companies (in the US) have shareholders... shares may be privately held, publicly held, by an individual, by another company... but by legal definition, all companies have shareholders (and thus shares) of some sort.

Serioiusly? We're still arguing about this? Well if we are going to be pedantic, not all companies have shareholders (plural).

My point was that neither privately or publicly held companies, even ones with traded shares, are legally or ethically obligated to maximize profit while ignoring everything else. To pick just one example, worker safety can be prioritized over profit.

It is baffling why this is such a contentious issue. I thought it was a pretty obvious that companies are not 100% motivated by profit and 0% by everything else.
post #79 of 83
Quote:
Originally Posted by dfiler View Post

I'm not confusing anything.

First of all, not all companies have shareholders. And even public companies must hedge maximization of profit against other concerns. As for ethics, sometimes profit should be sacrificed for worker safety, etc.

(Yeah, i though i was done but my ego couldn't take being called confused. )

No one said that companies were required to maximize profit. If you're going to participate in the discussion, please stop mis-quoting people.

What I said was that companies are required to maximize shareholder return (technically, shareholder value). It is perfectly legal (and, in fact, often necessary) for a company to sacrifice short term profits to build greater shareholder value. For example, a company might invest a billion dollars in building a new factory. That reduces profits this year, but will improve the business in the long run.

Or a company might choose to donate to charity. That reduces current profits, but if there's a good business justification, it can improve long term value (either by attracting shareholders, getting good PR, or satisfying employees). Or a company might choose to write off poorly performing businesses. Short term, it harms profits, but long term it maximizes the company's value. And, legally, a publicly traded company is required to do that.

You are correct that my statement was too broad. Not all companies are required to maximize shareholder value. For example, a charity can be set up as a corporation. Or a privately held corporation might choose to donate an excessive share of its profits to charity to satisfy the owners' wishes. Even a publicly traded company can choose to be a major contributor to charity (like Ben and Jerry's) - as long as their business plan and 10-K statement spells out that they will be doing so. But, in general, publicly traded companies like Apple are obligated to maximize shareholder value. Doing anything else could open the board of directors up to shareholder lawsuits.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #80 of 83
Quote:
Originally Posted by dfiler View Post

Serioiusly? We're still arguing about this? Well if we are going to be pedantic, not all companies have shareholders (plural).

My point was that neither privately or publicly held companies, even ones with traded shares, are legally or ethically obligated to maximize profit while ignoring everything else. To pick just one example, worker safety can be prioritized over profit.

It is baffling why this is such a contentious issue. I thought it was a pretty obvious that companies are not 100% motivated by profit and 0% by everything else.

I have been on several occasions incorporation and general counsel and I am an attorney.. not trying to be pedantic. I have incorporated high-tech companies with structural protections to shield BOD's in a limited capacity from shareholders who might be demanding profit over other goals, particularly when the founders had concerns about that eventuality. I am not addressing what I think companies should be obligated to do one way or another. As for motivation... I think its easy to draw lines but really what companies are interested in ultimately is survival in my experience. Whether or not they choose a correct evolutionary path towards that goal or just hit an eventual developmental dead-end is often difficult to assess except in hindsight. From what I have observed... it is often the minute goals of the BOD and shareholder that give the aggregate appearance of profit motivation as the factors for survival share much commonality with making profit. That is not to say that worker safety or other concerns have no correlation with survival of the company but it is often harder for a BOD to quantify and assess that quality.
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