[CUBE] Apple Purchase Program was Apple's Profitability

[Hal]

ApplePurchaseProgram is a Ponzi scheme. There's a whole thread about it 
on FatWallet.com. For those unfamiliar with it, this is how it works:

They advertise a really great deal, and a few people sign up. They use 
some of the money they collect to make good on a few of the initial 
deals. Word of mouth spreads, and more people sign up. They use a bit 
of that money to make good on a few more deals and pocket the rest. 
Word keeps spreading from people that got the product, so more people 
keep signing up. They tell people it will be a while to get the 
product,. so they have time to collect a bunch of money.

People that don't get the product are told to keep waiting, that the 
company is "working on it" and they get offered a small discount (like 
2-3% off)  or something to keep waiting. When the company has pocketed 
enough money, they shut down the company and go bankrupt. They claim 
that they couldn't get enough volume going to make it successful. About 
60-80% of the people never get their product.

There was a similar program running under the name of JC Morris about a 
year ago. I know because I bought an iBook through it. I got the (at 
the time) top of the line iBook for $930. It was retailing for $1499 at 
the tim I ordered,and I got it in about 3 months. I had to keep 
badgering them and I almost didn't get it. 2 months later, they filed 
for bankruptcy. I know about the scheme because a friend of mine (the 
one who told me about it) got his first product (a dual 1gHz tower with 
a cinema display) and ordered 5 more. He never got them and had to have 
the case handled by CitiBank's fraud division. They kept telling him to 
wait and even sent him a free iPod to keep him from canceling his 
order. In the end was out about $12,000. Citibank refunded him about 
$9000, but because his order was over 90 days old, they couldn't refund 
part of it. There's a thread about JC Morris on Fatwallet.com as well.

Sorry for the long post, but I thought I'd shed some light on it since 
I have some direct experience.

cheers,
-Hal

On Friday, March 14, 2003, at 03:04 AM, John Allan wrote:

> The problem is, whereas Apple's share is 35% or what, the dealer only 
> gets 3
> to 5%.
>
> Think about this, it is incredible! The shop that sells you that new 
> Mac is
> only making 50 or 70 bucks on it.
>
> Every wondered why they really are not interested in all your 
> questions /
> after care problems / always try and force add ons and insurance 
> policies in
> the package !?!
>
> In no other industry, short of high end banking, oil and art dealing 
> could
> such small margins be sustained. It is mad for resellers, worse for 
> small
> independents.
>
> I cant see how purchaseprogram.com can do it with Apples, short of 
> selling
> Grey Imports. In some markets this would work, such as over priced 
> Europe.
> In the Wintel world it would work as manufacturers regularly dump last 
> week
> models but with Apple they don¹t even do that significantly, just offer
> special deals before they are about to realise a better model for 
> cheaper. [
> make a mental note to dodge those Golden Cupertino Carrots ... ]
>
>
> Even bulk buy wont give that much margin as Apple are closing down on 
> that
> too.
>
> Is it a charity of do they be they make their money re-investing all 
> the
> deposits / cash they hold like Paypal?
>
> A free 2c ...
>
> john
>
>
>> Anyways the article talked about Apple's profitablity vs. their 
>> revenue.
>>
>> Apparently at the best of times they maintain a 35% margin on the 
>> highend
>> G4s.
>>
>> That said, there is no way Marbella is going to get the prices they 
>> list.
>>
>> Ed