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Source: ThinkSecret.com
Target Corporation and Dell Computer Corp. have both stopped selling Apple's iPod after objecting to details of the company's new dealer contract, sources have told Think Secret.
iPods have been marked for clearance at 1,148 Target stores nationwide, according to eyewitness reports. Sources report the clearance commenced on March 31. One Target employee who spoke with Think Secret said that the 10GB iPod for both Mac and Windows is now selling at a 15% discount, for $339.99 -- below cost. The employee said that most stores won't have the iPod in a display or on store shelves in full-view, instead storing it behind the counter. Additionally, he noted that a recent Target memo instructed employees not to count iPods with the store's annual inventory.
Meanwhile, Dell has also stopped selling the iPod, removing it from its online catalog. At press time, using Dell's product search engine to find the iPod yielded search results of competing MP3 players from Archos and Creative Labs. It's not known exactly what day Dell removed the iPod from its online product lineup, but it appears to have been removed in just the past week.
Last week we reported on Apple's new contracts for resellers, which went into effect April 1. An estimated 50 resellers objected to the content of the new contract and failed to sign by the due date. Among these 50 resellers included large retailers like Dell and Target. Think Secret obtained a copy of the new contract and, in our report, detailed the offending portions: The new contract sharply limits Apple's liability, outlines a new dispute process governed by Apple, waives dealers' right to a jury trial, and allows Apple to inspect dealer locations and request records up to five years after the contract's termination.
Of the dealers which we reported last week had not signed the contract, Buy.com, Fry's Electronics, MicroCenter, and Elite Computer in Cupertino are still deauthorized, according to sources. Some dealers, like San Francisco's Macadam Computer, have signed it with an attached letter of record stating that it was signed under duress. Separately, the 10-dealer lawsuit against Apple has been amended to include mention of the "unusual" adhesion contract.
It is not known exactly what objections Target and Dell had to the contract, but sources confirm the contract was instrumental in the decision of both companies to abandon, for now, the sale of the iPod. It is not known if either company will settle its contractual differences with Apple and start selling the product again, but based on Target's decision to clear out all remaining stock of iPods, it's thought the possibility of such a move is remote.
While retail insiders saw the new contract as a clear response to the multi-million dollar dealer lawsuit filed against Apple in February, pursuing it may have been to Apple's loss. Since larger companies like Target and Dell can afford to simply drop a product rather than sign a confining contract, Apple has lost two significant resellers for a product it has been trying to gain backing for in the Windows and consumer markets.
In October, Think Secret broke the story that Apple would sign on Target to sell the iPod. In that same month, Dell also began sales via both Web and phone.
Spokespersons for Apple, Dell and Target Corporation were not immediately available for comment.
Target Corporation and Dell Computer Corp. have both stopped selling Apple's iPod after objecting to details of the company's new dealer contract, sources have told Think Secret.
iPods have been marked for clearance at 1,148 Target stores nationwide, according to eyewitness reports. Sources report the clearance commenced on March 31. One Target employee who spoke with Think Secret said that the 10GB iPod for both Mac and Windows is now selling at a 15% discount, for $339.99 -- below cost. The employee said that most stores won't have the iPod in a display or on store shelves in full-view, instead storing it behind the counter. Additionally, he noted that a recent Target memo instructed employees not to count iPods with the store's annual inventory.
Meanwhile, Dell has also stopped selling the iPod, removing it from its online catalog. At press time, using Dell's product search engine to find the iPod yielded search results of competing MP3 players from Archos and Creative Labs. It's not known exactly what day Dell removed the iPod from its online product lineup, but it appears to have been removed in just the past week.
Last week we reported on Apple's new contracts for resellers, which went into effect April 1. An estimated 50 resellers objected to the content of the new contract and failed to sign by the due date. Among these 50 resellers included large retailers like Dell and Target. Think Secret obtained a copy of the new contract and, in our report, detailed the offending portions: The new contract sharply limits Apple's liability, outlines a new dispute process governed by Apple, waives dealers' right to a jury trial, and allows Apple to inspect dealer locations and request records up to five years after the contract's termination.
Of the dealers which we reported last week had not signed the contract, Buy.com, Fry's Electronics, MicroCenter, and Elite Computer in Cupertino are still deauthorized, according to sources. Some dealers, like San Francisco's Macadam Computer, have signed it with an attached letter of record stating that it was signed under duress. Separately, the 10-dealer lawsuit against Apple has been amended to include mention of the "unusual" adhesion contract.
It is not known exactly what objections Target and Dell had to the contract, but sources confirm the contract was instrumental in the decision of both companies to abandon, for now, the sale of the iPod. It is not known if either company will settle its contractual differences with Apple and start selling the product again, but based on Target's decision to clear out all remaining stock of iPods, it's thought the possibility of such a move is remote.
While retail insiders saw the new contract as a clear response to the multi-million dollar dealer lawsuit filed against Apple in February, pursuing it may have been to Apple's loss. Since larger companies like Target and Dell can afford to simply drop a product rather than sign a confining contract, Apple has lost two significant resellers for a product it has been trying to gain backing for in the Windows and consumer markets.
In October, Think Secret broke the story that Apple would sign on Target to sell the iPod. In that same month, Dell also began sales via both Web and phone.
Spokespersons for Apple, Dell and Target Corporation were not immediately available for comment.
