Apple 2.0

Covering the business that Steve Jobs built

How to get on Steve Jobs' naughty list

November 19, 2010: 1:45 PM ET

If T.J. Maxx had dreams of becoming an Apple reseller, it can forget them now

Source: Engadget

Few companies keep as tight reins on their retail partners -- and on the suggested retail prices of their products -- as Apple (AAPL).

Which is why Engadget's discovery Thursday that the discount chain T.J. Maxx (TJX) was selling $499 iPads for $399.99 -- or $350 plus tax if you sign up for a T.J. Maxx credit card on the spot and apply for all the rebates -- created such a stir.

Apple's internal pricing is a tightly guarded secret, but it's believed that its discounts to resellers are in the 5% to 10% range. In other words, even BestBuy (BBY) is paying Apple between $450 and $475 for every entry-level iPad.

So what's going on? Is Apple offloading excess inventory, as some have suggested? Clearing shelves for a new iPad? Discontinuing the Wi-Fi-only model? Slashing prices to kill the competition?

None of the above, if the e-mail below, attributed to Steve Jobs, can be taken at face value.

Source: 9to5Mac

Piper Jaffray's (PJC) Andrew Murphy has heard that T.J. Maxx's total supply of iPads is about 80 units, which could have been purchased as a loss leader anywhere -- including Apple's own stores -- for $40,000, and then re-sold for $32,000.

"It's obviously irritating to Apple that they're getting used this way," says PJC's Gene Munster. "But for $8,000, it's a brilliant marketing strategy."

Maybe not so brilliant, if T.J. Maxx had hoped someday to become an authorized Apple reseller.

"Now they're on Steve's naughty list," says Murphy. "And they're never coming off."

Update: Sherry Lang, SVP of Global Communications for TJX told us:

"We have received many inquiries about a particular famous maker high tech item recently sold in our stores. As an off-price retailer, our business provides an ever-changing selection of great finds of famous maker apparel and non-apparel categories at excellent values. In other words, our mission is to offer a treasure hunt of great values, every day. Earlier this week, a small number of T.J.Maxx and Marshalls stores received a very limited quantity of first quality electronic tablets that were sourced from a retailer. Our customers have come to know and shop us for the exciting and unexpected values we offer on a daily basis."

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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