Friday April 8, 2011 3:39 pm
The real story on why Apple is less than pleased with Best Buy over the iPad 2
Over the past couple of days, rumors have been spreading that Best Buy has been ordered by Apple to halt sales of the iPad 2. The story is that Apple got wind of the fact that Best Buy had been stockpiling iPad 2 units, and didn't like that. However, we've got a very reliable source who just hit us up to give us the real scoop, and it turns out that it's a bit more sinister than a plan to stockpile iPad 2 units for a big weekend event.
You see, if you're familiar with Best Buy, you know that they offer an insurance plan that is typically not that good a deal on most items. However, if you bought that plan with the original iPad from Best Buy, it turns out to be a fantastic deal--if you are a Best Buy employee, or a friend of a Best Buy employee. Why? Well, simply put, a bunch of Best Buy stores have been allowing these customers who bought the original iPad with the insurance plan to trade them in for the iPad 2. I'm talking about an even swap, so you bring in your 16 GB iPad + 3G, and you walk away with a 16 GB AT&T iPad 2. Again, you've gotta know a guy, so it's mostly been Best Buy employees, and their friends and family who've been taking advantage of this, and it's been happening a lot, all over the country. A couple of stores in particular have gone way overboard with this.
Now, you might be wondering, why does Apple care about what happens to the iPad 2 units once they arrive at Best Buy? Isn't it out of their hands (literally) at that point? Well, yes, except for one key thing. When Best Buy does an insurance trade replacement for an item, it doesn't count as a sale. In other words, every iPad 2 that is traded out as a replacement for the original iPad isn't counted as a sale, and that is precisely where the problem lies for Apple. They want to sell the iPad 2. An Apple exec want to hit the stage at WWDC, and give us an update on iPad 2 sales, and they want that number to be as high as possible. The whole reason Apple even sends iPad 2 units to Best Buy in the first place is to increase sale numbers for the product--especially in areas where there is no Apple Store retail presence. Again, some Best Buy stores have gone way overboard with their trades, to the point where some have completely depleted their iPad 2 stock with barely any sales numbers to show for it.
Now, we aren't saying that Best Buy keeping a bunch of iPad 2 units off the shelves in order to have a big weekend event wouldn't perturb Apple, but the thing is, Best Buy does that kind of stuff all the time. They've done it with Apple products in the past, as well as video game consoles like Wii and Xbox 360 when they were hot commodities. However, delivering a bunch of iPad 2s that don't translate to sales numbers? You can bet that the folks in Cupertino would be pretty miffed about that.
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