Best Buy refuses Apple's iMac rules

Apple's insistence on bundling all colors of its popular iMacs in packages of eight has cost the company shelf space in one major national retailer.

As reported last week, office supply giant Best Buy essentially dropped out of the iMac business this year because of the computer maker's rule that retailers sell all five flavors of the iMac. When the flavors came out, Best Buy stopped ordering iMacs, Apple executives said.

Apple launched the colorful computers in early January of this year, building upon the overwhelming success of the original iMac. Since its introduction last summer, the iMac has been a consistent top-seller, captivating consumers with its space-age design and cool looks. But Apple's decision to make the machine in five new colors has presented problems for stores looking to effectively manage inventory, especially in light of Apple's decision to ship the computers in bundles of each color.

Best Buy stopped selling iMacs after Apple expanded the colors, a spokesperson for the retailer said, because the company could not order the flavors separately.

"When Apple launched the original iMac, the teal-colored version, we launched that in our stores, and we did sell out by the end of January," said Joy Harris, a spokesperson for Best Buy. "Then Apple launched the five fashion color version, and at that time we decided not to carry the five variety because Apple's requirement for purchase could potentially cause inventory problems."

Stores in the U.S. and Japan have reported inventory problems as some colors have sold faster than others, while retailers were still required to buy the computers in packs of five. Some computer retailers complained about being forced to stock unpopular flavors like tangerine, which are slow to sell.

"We do not carry inventory in color varieties," Harris explained. "We're not a fashion retailer, and to have inventory that may or may not sell could become an issue."

In the company's earnings conference call with investors and analysts last week, Apple chief financial officer Fred Anderson confirmed that iMacs are now distributed to computer retailers in packs of eight--four blueberry iMacs sold with each of the other four colors. Some observers have questioned whether the shift in strategy was meant to appease retailers, specifically Best Buy.

"Best Buy is not all that interested in stocking the items unless they are given more control over how much of each color they want," one analyst said, noting that the company will probably not begin offering iMacs until Apple softens its position.

Best Buy has been negotiating with Apple since the company expanded its iMac line, Harris said, but declined to "speculate" on the likelihood that the national retailer will begin carrying Apple products.

"This is one vendor among many vendors that we deal with," she said. "This is similar to negotiations with any vendor." Some sources have said that Apple is very anxious for Best Buy to stock the new 333-MHz iMacs, but are reluctant to make an exception in its bundling policy.

This is not the first time Best Buy and Apple have wrangled over the iMac. Last year, Best Buy broke ranks with the company's recommended retail pricing and began offering the original iMac for $999. At the time, the recommended price was $1,299.

Apple could not be reached for comment.