Apples for Teacher Cut by Competition

Confused product placement, decreasing marketshare in the coveted education sector, and post-GST business burnout are all likely contributors to Apple's disappointing third-quarter earnings, says one analyst.

The PC manufacturer said it would check in with earnings of $US110 million ($A200 million) globally for Q3 2000 - around two-thirds of that expected for the period.

The company said that the earnings slump was caused by an overall slowdown in business globally, disappointing educational sales and slow uptake of some new products.

Bernie Esner, analyst at IT industry reseracher IDC, said it was likely that those factors had affected Apple's business locally.

He said a general slump in business on Australia following the introduction of the new tax system in July and leading up to the Sydney Olympic Games, had slowed the overall enterprise PC market here.

Accordingly, Apple said the revenue slump was partially caused by slower than expected takeup of its new Power Mac G4 Cube. Esner said the graphics-centric Mac had proven unattractive to low-end users due to relatively high pricing, and unattractive to enterprise users due to the perceived lack of computing power inherent in its small size.

"The Cube is not very appealing to an IS manager," he said. "It [the Cube] hasn't been positioned correctly. It sits in the middle uncomfortably."

Esner said Apple had earlier this month suffered a local blow in one of its key global markets: education.

The manufacturer lost footing in local educational sales in September when competitor Hewlett-Packard won a tender issued by the Victorian Department of Education, Employment and Training to supply 8000 desktop PCs to that state's universities.

Apple typically dominated the Queensland, NSW and Victorian university arenas, Esner said.

HP plans to install almost half those PCs by the end of November, typically one of the hottest months for Australian educational IT spending -- and one of the hottest months for Apple's local operation.

"There's 8000 units that have gone to the Wintel world. To recoup that would be difficult," Esner said.

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