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Briefly: Apple outage, retail meeting, 17-inch MBP

post #1 of 30
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An outage affecting its online store on Wednesday likely cost Apple a pretty penny. Meanwhile, the company is reported to have dropped its retail employee bonus structure and then commissioned a meeting of store managers in Calif. Finally, it appears the wait for the new 17-inch MacBook Pros will continue.

Apple's multimillion dollar blunder

Apple on Wednesday experienced a technical issue with its US-based online store, resulting in a lengthy outage that likely cost the company several million dollars in sales.

After taking the store offline around 8:00 am eastern time to prepare for the launch of its new 13-inch Core 2 Duo MacBook notebooks, Apple was unable return the store to operation until early afternoon.

The outage, which lasted about four and a half hours, is unlikely to have a material impact on the company's financials. However, it should be noted that approximately 50 percent of Apple's revenues these days are generated through its direct sales channels, of which its online store is the major component.

Retail bonus out the window

It looks like Apple's retail segment is expecting tremendous performance this holiday quarter and may have done away with its employee bonus structure as a result.

According to reports, last quarter marked the end of its "Million Dollar Club," which awarded retail reps with a $500 cash bonus if they managed to garner over $500,000 in sales. Instead, Apple is said to have raised slightly the hourly wage it pays some of its retail store employees.

The aforementioned move may have been a point on the agenda at a recently orchestrated meeting between Apple retail executives and store managers. The Cupertino, Calif.-based company is reported to have flown in some of its retail store managers to San Diego where it likely discussed preparations for the holiday shopping season blitz.

17-inch MacBook Pro builds delayed

As reported in Wednesday's edition of AppleInsider, Apple has for one reason or another been unable to make good on promised delivery times for its new 17-inch MacBook Pros.

Instead of shipping notifications, customers who ordered the new flagship Apple notebooks received an automated email from the company's online store this week, informing them of an additional week delay related to their orders.

One AppleInsider correspondent with a bulk order for the new notebooks at stake did some additional digging. He was informed through his Apple channel that the company did not foresee manufacturing ramp of the new models beginning for at least another week.

There's still no word on the exact cause of the delay.
post #2 of 30
I was informed that mine would ship on November 14th. No one will say why they're being delayed.
post #3 of 30
Quote:
Originally Posted by AppleInsider

Apple on Wednesday experienced a technical issue with its US-based online store, resulting in a lengthy outage that likely cost the company several million dollars in sales.

So all those thousands of people who went to the online store during those 5 hours we so outraged that they all went to Dell for their purchases????? Really?
post #4 of 30
Quote:
Originally Posted by JupiterOne

So all those thousands of people who went to the online store during those 5 hours we so outraged that they all went to Dell for their purchases????? Really?

Aye, Jupiter One.

My thoughts exactly. If I want to by a Mac, and see that the store is down, I come by the next day and buy it. To say, that they lost several million dollars worth of business is ludicrous. The only sales they probably lost are the impulsive purchases. Please, use common sense.

thanks
indy
post #5 of 30
Quote:
Originally Posted by indyslim

Aye, Jupiter One.

My thoughts exactly. If I want to by a Mac, and see that the store is down, I come by the next day and buy it. To say, that they lost several million dollars worth of business is ludicrous. The only sales they probably lost are the impulsive purchases. Please, use common sense.

thanks
indy

You beat me to it - well said.
-JD
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-JD
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post #6 of 30
my 17" Macbook Pro, i want it now!!

I really hope it ships on time now, because Apple will have to give me more then £50 to keep me happy this time
post #7 of 30
Quote:
Originally Posted by jwdawso

You beat me to it - well said.

The article is correct. I was going to buy several million dollars worth of Apple hardware yesterday morning, but with the store being down I had time to reconsider.

I ended up walking to KB Toys and getting an Etch-a-sketch. It works wonderfully. I am posting from it right now.
-- Jason
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post #8 of 30
Quote:
Originally Posted by jasong

The article is correct. I was going to buy several million dollars worth of Apple hardware yesterday morning, but with the store being down I had time to reconsider.

I ended up walking to KB Toys and getting an Etch-a-sketch. It works wonderfully. I am posting from it right now.



I didn't know Etch-a-Sketch came with a wifi card! Damn, if it weren't for the monochromatic screen, I might have gotten one myself... Can't do much photoshop on that thing, I imagine...



-Clive
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post #9 of 30
Yeah I was planning on buying 38 maxed out Mac Pros and two 30" Cinema displays for each that very morning. When I saw the site was down I got pissed, and purchased from HP instead.

I mean come on, no one should have to understand that an online store can go down for a few hours, after all that's why it's online right? RIGHT!?
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post #10 of 30
Quote:
Originally Posted by JupiterOne

So all those thousands of people who went to the online store during those 5 hours we so outraged that they all went to Dell for their purchases????? Really?

I think we can pretty much all agree that most all of those people went back later. Some might have gone to an Apple store, if one was near, and others might have actually gone to another Apple retailer.
post #11 of 30
Anyone familiar with the wage structure of Apple Store employees?

Proud AAPL stock owner.

 

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Proud AAPL stock owner.

 

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post #12 of 30
You guys are all forgetting that Apple sells a lot more than Macs at the online store. They sell tons of third-party products, including cases, hard drives, speakers, software, and, most importantly, iPod accessories. All of which can be found at MacMall, Amazon, and elsewhere.

So, yeah. Four hours of downtime can easily equal a couple of million dollars in lost sales.
post #13 of 30
But lost to who? If someone is going to the online store, intent on buying a Mac, how many do you really think say, "Ah, f*ck it, I'll just buy a Dell instead"? Or, "Oh hell, I guess I didn't really want to buy a computer anyway." I would think that only the most flaky, impulsive buyers (that don't add up to *millions* of $$ in a 5 hour period) would do that.
post #14 of 30
Quote:
Originally Posted by mrjoec123

You guys are all forgetting that Apple sells a lot more than Macs at the online store. They sell tons of third-party products, including cases, hard drives, speakers, software, and, most importantly, iPod accessories. All of which can be found at MacMall, Amazon, and elsewhere.

So, yeah. Four hours of downtime can easily equal a couple of million dollars in lost sales.

I don't think so.

I'm pretty sure the largest amount of sales on the site are for computers, and other Apple made items.

While I don't know the hourly sales totals, and how they are affected when a machine revision first comes out, it can't be more than about $400 thousand an hour.

I quickly figured that by the number of hours a year dividing the amount Apple is estimated to sell on the site a year.

If most of that is for Apple items, a 4 1/2 hour disruption won't make much of a difference. And if some go to an Apple store instead, it will have even less of an effect, because they will buy some of those items there.
post #15 of 30
Apple's biggest profit margins are on accessories. If the Apple store is down, people buy the same product from someone else.

Likewise, if you are trying to make an order for a new computer, you might just go with Amazon instead.

While CPU units won't suffer, there is a loss in margin on some of the sales. Likewise, sales may have been placed through the call-in numbers, which have higher overhead, and overloads could have led to further disgrunteld consumers.

More importantly, it is a branding issue. Macs? They can't even keep their e-commerce site up! Piss people off frequently enough when they are trying to spend money, and they go elsewhere. You need strong consumer loyalty for them to keep coming back.

If Apple sells 2M CPUs a quarter, that is an average of about 1,000 per hour. Since the outage was during business hours, that particular period might have anticipated twice that number fo sales per hour, or a total of 8-9000 units. If they lost 5% of sales, that could be as much as $600k in revenue, without using much imagination. Same concern for iPods.
post #16 of 30
Quote:
Originally Posted by aaarrrgggh

Likewise, if you are trying to make an order for a new computer, you might just go with Amazon instead.

Amazon? They sell Macs too? Well how do they get their supply of Macs if they don't come from Apple? Oh, wait. They do.

Sure Apple will take a small hit since they sell to Amazon in bulk and at reseller prices but they're still making the most money off of the thing.

As for accessories, any products that Apple resells (i.e. third-party iPod cases, car-chargers, dog-walkers) are NOT going to have a high profit margin. They're on the site for the sole reason that Apple knows they'll be able to make the extra pocket-change off of accessibility convenience b/c most users don't want to order one thing each from five different sites.

Apple won't lose millions, case closed.

-Clive
My Mod: G4 Cube + Atom 330 CPU + Wiimote = Ultimate HTPC!
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post #17 of 30
Quote:
Originally Posted by aaarrrgggh

Apple's biggest profit margins are on accessories. If the Apple store is down, people buy the same product from someone else.

So exactly which accessories do you think people went to buy during that outage, that they then went and bought from another vendor? That Apple still didn't make money off of? That totaled in the "MILLIONS"? If you're planning on buying a Mac or one of their accessories or software, buying the Windows or Dell equivalent is a totally different decision.

Quote:
Likewise, if you are trying to make an order for a new computer, you might just go with Amazon instead.

And Apple doesn't make money from someone buying a Mac from third party vendors???
Quote:
While CPU units won't suffer, there is a loss in margin on some of the sales. Likewise, sales may have been placed through the call-in numbers, which have higher overhead, and overloads could have led to further disgruntled consumers.

And you think disgruntle customers all of a sudden then decided to go with a Windows box instead?
Quote:
More importantly, it is a branding issue. Macs? They can't even keep their e-commerce site up! Piss people off frequently enough when they are trying to spend money, and they go elsewhere.

True, and how often has this happened?
Quote:
You need strong consumer loyalty for them to keep coming back.

I think it is safe to say Apple has this.

Look, no one is saying that Apple didn't lose some bucks during that time. It's just being a little bit of a drama queen to say that they lost MILLIONS in sales during a five hour outage. I mean MILLIONS? Really, millions?
post #18 of 30
I ask again: Anyone familiar with the wage structure of Apple Store employees?.. or is anyone here an Apple Store employee? What kind of starting wage are you under, and what do the store managers make?

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post #19 of 30
I think it's $13/hr for a Mac Specialist and $20/hr for a Mac Genius...at least in the Massachusetts area.
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post #20 of 30
Quote:
Originally Posted by aaarrrgggh

Apple's biggest profit margins are on accessories. If the Apple store is down, people buy the same product from someone else.

Likewise, if you are trying to make an order for a new computer, you might just go with Amazon instead.

While CPU units won't suffer, there is a loss in margin on some of the sales. Likewise, sales may have been placed through the call-in numbers, which have higher overhead, and overloads could have led to further disgrunteld consumers.

More importantly, it is a branding issue. Macs? They can't even keep their e-commerce site up! Piss people off frequently enough when they are trying to spend money, and they go elsewhere. You need strong consumer loyalty for them to keep coming back.

If Apple sells 2M CPUs a quarter, that is an average of about 1,000 per hour. Since the outage was during business hours, that particular period might have anticipated twice that number fo sales per hour, or a total of 8-9000 units. If they lost 5% of sales, that could be as much as $600k in revenue, without using much imagination. Same concern for iPods.

Your numbers are off. By a lot. Apple sold 5.3 million computers this year. Not 8 million. They sold about 20% of their total volume from their web site. I get a total of perhaps $400 thousand per hour max, for everything they sell there.

How can you possibly get 1,000 computers an hour? There are 8760 hours in a 365 day year. Apple sold 5.3 million computers this year. 20% of that is 1,060,000 computers. divide that by 8760 hours, and you get 121 computers sold in an hour, or a total of 544.5 for the 4 1/2 hours the store was down.

If you want to say that sales are better than the average of the year. Fine. Then go to a total of 550 computers.

That's it. Max.
post #21 of 30
Quote:
Originally Posted by JupiterOne

But lost to who? If someone is going to the online store, intent on buying a Mac, how many do you really think say, "Ah, f*ck it, I'll just buy a Dell instead"? Or, "Oh hell, I guess I didn't really want to buy a computer anyway." I would think that only the most flaky, impulsive buyers (that don't add up to *millions* of $$ in a 5 hour period) would do that.


I agree totally, I also don't think most people who are true impulse buyers are doing that impulse buying online. A person who couldn't wait 5 hours for the store to come back online is unlikely to be able to wait for shipping either and would go to their local retailer.
post #22 of 30
Quote:
Originally Posted by ecking

Yeah I was planning on buying 38 maxed out Mac Pros and two 30" Cinema displays for each that very morning. When I saw the site was down I got pissed, and purchased from HP instead.

I mean come on, no one should have to understand that an online store can go down for a few hours, after all that's why it's online right? RIGHT!?

That's why we call it the Apple Offline Store.
post #23 of 30
If it really cost them that much per minute of downtime, they wouldn't ever take the store offline at all - Amazon does not take their store offline to change a product description or add a new product.

Sheesh.
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post #24 of 30
Quote:
Originally Posted by DHagan4755

I think it's $13/hr for a Mac Specialist and $20/hr for a Mac Genius...at least in the Massachusetts area.

Wrong
post #25 of 30
Quote:
Originally Posted by JeffDM

That's why we call it the Apple Offline Store.

Oh Jeff. Bad one.
post #26 of 30
Quote:
Originally Posted by lundy

If it really cost them that much per minute of downtime, they wouldn't ever take the store offline at all - Amazon does not take their store offline to change a product description or add a new product.

Sheesh.

Well, you know, Apple has to be dramatic.
post #27 of 30
Quote:
Originally Posted by melgross

I don't think so.

I'm pretty sure the largest amount of sales on the site are for computers, and other Apple made items.

Not really. Do you know what the markup is on a USB cable? There's a reason why retail stores track UPT (Units per transaction). It's the same reason MacDonald's asks you if you want fries with everything. The profit is in the complete solution. Sure, there may be a couple of hundred dollars to be made on a computer, as opposed to a couple of bucks on the USB cable, but you're going to sell a lot more USB cables than you are computers.

The average Apple retail store will see quite a few customers walk through in a week. Very few of them will buy a computer. Most are there for a piece of software, a printer ink cartridge, an iPod case, etc. Most people buy one computer every two to three years. They go to the store a hundred times in between.

And yes, Apple does make a LOT more money on Macs sold at its online store than it does on Macs sold in the Retail store. The overhead on an online store is far cheaper. (Why do you think Apple dropped the free water, the $20,000 giant screen theater, the white Corian fixtures, etc.?) And it makes a TON more at apple.com than it does at Amazon. That's why they sell direct in the first place.

None of us knows exactly how much was lost in those few hours; I'm sure Apple does. I'm just saying that the article's estimate is probably not as far off as some folks think.
post #28 of 30
Quote:
Originally Posted by mrjoec123

Not really. Do you know what the markup is on a USB cable? There's a reason why retail stores track UPT (Units per transaction). It's the same reason MacDonald's asks you if you want fries with everything. The profit is in the complete solution. Sure, there may be a couple of hundred dollars to be made on a computer, as opposed to a couple of bucks on the USB cable, but you're going to sell a lot more USB cables than you are computers.

The average Apple retail store will see quite a few customers walk through in a week. Very few of them will buy a computer. Most are there for a piece of software, a printer ink cartridge, an iPod case, etc. Most people buy one computer every two to three years. They go to the store a hundred times in between.

And yes, Apple does make a LOT more money on Macs sold at its online store than it does on Macs sold in the Retail store. The overhead on an online store is far cheaper. (Why do you think Apple dropped the free water, the $20,000 giant screen theater, the white Corian fixtures, etc.?) And it makes a TON more at apple.com than it does at Amazon. That's why they sell direct in the first place.

None of us knows exactly how much was lost in those few hours; I'm sure Apple does. I'm just saying that the article's estimate is probably not as far off as some folks think.

So now you're saying that for every $2,000 in computers Apple sells, they sell a couple of hundred cables?

You're kidding, right?

It's not the profit which is the most important area of concern. It's the sell through. The total dollar amounts.

Apple could have greater profits on accessories, which we all know they do. But, dollar wise, it's the computer sales, and then iPod sales which keep the store running. It's always the big ticket items that a store has to sell. It's what pays the rent, so to speak.
post #29 of 30
Quote:
Originally Posted by melgross

So now you're saying that for every $2,000 in computers Apple sells, they sell a couple of hundred cables?

You're kidding, right?

It's not the profit which is the most important area of concern. It's the sell through. The total dollar amounts.

Apple could have greater profits on accessories, which we all know they do. But, dollar wise, it's the computer sales, and then iPod sales which keep the store running. It's always the big ticket items that a store has to sell. It's what pays the rent, so to speak.

How do you figure? It doesn't matter if I sell Lamborghinis at $200,000 or Toyotas at $20,000; if I get the same profit from either, I'm no more or less able to pay my rent. And if I rook you into buying that undercoat sealant, then I may be able to take my family on a cruise.

The reason why they have to sell the big ticket items is because the big ticket items are what bring you into to the store and then back to the store for the little ticket items.

I used cables as an example of one of the hundreds of third-party items sold at apple.com. And yes, for every $2000 computer sale, there's at least $2000 of other items bought. An average Saturday at the Palo Alto Apple store, for instance, might net $80,000 in total sales (at least that's what they were getting a few years ago). In that same day, if it was a good day, there would have been about 15 CPU sales. That's roughly $30,000. (Though that's conservative, considering that more iMacs and MacBooks get bought than Mac Pros and MacBook Pros.) Chalk up another $5,000 in iPod sales, since that's also an Apple product. Chalk another $10,000 to various other Apple-made products, and another $5,000 in repair revenue. That's being very generous, mind you. You still have $30,000 in software, printers, books, and yes, USB cables.
post #30 of 30
Quote:
Originally Posted by mrjoec123

How do you figure? It doesn't matter if I sell Lamborghinis at $200,000 or Toyotas at $20,000; if I get the same profit from either, I'm no more or less able to pay my rent. And if I rook you into buying that undercoat sealant, then I may be able to take my family on a cruise.

The reason why they have to sell the big ticket items is because the big ticket items are what bring you into to the store and then back to the store for the little ticket items.

I used cables as an example of one of the hundreds of third-party items sold at apple.com. And yes, for every $2000 computer sale, there's at least $2000 of other items bought. An average Saturday at the Palo Alto Apple store, for instance, might net $80,000 in total sales (at least that's what they were getting a few years ago). In that same day, if it was a good day, there would have been about 15 CPU sales. That's roughly $30,000. (Though that's conservative, considering that more iMacs and MacBooks get bought than Mac Pros and MacBook Pros.) Chalk up another $5,000 in iPod sales, since that's also an Apple product. Chalk another $10,000 to various other Apple-made products, and another $5,000 in repair revenue. That's being very generous, mind you. You still have $30,000 in software, printers, books, and yes, USB cables.

I think you are pulling those numbers out of a hat.

In the NY Soho store, for example, most of the revenue comes from computer, iPod, and other Apple branded sales.

And that is what we were talking about. Apple branded sales vs. non Apple branded sales, regardless of what that might consist of. And the greatest portion of those sales are for computers, iPods, Apple keyboards, and mice. Then comes Apple branded software.

I used cheap cables as an example, as Apple generally doesn't sell Apple branded items like that, and it would take an awful lot of them to make up a serious revenue stream. Apple simply doesn't sell much of them.
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