Major Computer Makers Face Retail Snub

Strategic Insights -

Best Buy Co. and Radio Shack announced significant shifts in their computer retail strategies, with the latter dropping IBM's Aptivas from its shelves and the former halting sales of Macintosh and other Apple computers. Meanwhile, Compaq Computer Corp. secured an exclusive deal with Radio Shack to stock its Presarios nationwide, expanding its market reach. This move comes amidst a competitive PC market, where Compaq's aggressive pricing strategy, selling computers below $1,000, has contributed to its rise as the No. 1 seller of PCs.

Key Takeaways:

  • Radio Shack will discontinue sales of IBM's Aptivas and instead begin selling Compaq Presarios in March, with plans to offer service support through Compaq's approved service providers.
  • Best Buy will no longer carry Macintosh and other Apple computers, citing a "fiercely competitive PC market" and a desire to "redirect" its focus.
  • Compaq's sub-$1,000 pricing strategy contributed to its sales boom, making it the No. 1 seller of PCs.
  • Compaq and Radio Shack have formed an exclusive deal, with the retailer to stock Compaq's Presarios in its 7,000 locations and participating dealers.
  • Apple computer sales account for less than half of 1 percent of Best Buy's computer business.
  • Compaq also designated Radio Shack as an official service provider for its line of Compaq computers.
  • The deal between Compaq and Radio Shack comes just two days after Compaq agreed to buy Digital Equipment Corp., challenging IBM's dominance in the computer market.
  • IBM's recent sales of PCs have lagged the industry, attributed to its failure to sell a range of computers below $1,000.

Statistics:

  • Radio Shack has 7,000 locations and participating dealers that will sell Compaq PCs.
  • Apple computer sales account for less than 0.5 percent of Best Buy's computer business.
  • Compaq is the No. 1 seller of PCs.
  • Compaq's sales boom can be attributed to its sub-$1,000 pricing strategy.

Sources:

  • "Radio Shack Choses Compaq Over IBM" by an unknown author (date not specified)
  • "Best Buy Drops Apple Computers" by an unknown author (date not specified)