Apple Computers G4 Snafu Essay, Research Paper

In fulfillment of the periodical paper assignment, I have chosen a recent story concerning Apple Computer Inc. as the topic for the first paper.

Summary of Situation:

After setting off a storm of consumer complaints earlier this week, Apple Computer Inc tried to make amends Friday by reversing a retroactive price increase for a small number of customers who had pre-ordered its new top-of-the-line G4 PowerMacs. Earlier this week, Apple said it was unable to offer the G4 PowerMac model equipped with a 500-megahertz processor until early next year because of supply constraints at its main chipmaker, Motorola Inc. Apple then ratcheted up the price on the 350, 400, and 450 MHz models that it could supply, trying to offset the lost potential revenues that the 500 MHz G4 would provide.

Ethical Implications:

I believe that Apple might have broke even concerning this ordeal; however, let’s examine the specifics of both sides of what transpired here:

When the company determined that the supply of 500 MHz chips was not going to meet the demand requested, they reconfigured its G4 family of desktop computers, offering systems with processors running at 350, 400 or 450 MHz — but at higher prices — instead of the original 400, 450 or 500 MHz machines.

After the company received numerous complaints from customers, both loyal Apple supporters, and potential new customers, the company retracted its new restructuring, allowing the original pricing and megahertz versions to stay.

Apple may have lost the faith of even some extreme supporters. Bill Bryant, who runs a health-care consulting business in Dallas, said he has been a Macintosh loyalist for 20 years. “…I’m thinking of buying a Dell or something. Some people are saying it’s time to go to the dark side,” he added, referring to PCs running on Microsoft’s Windows operating system and processors.

On the other hand, at least this was nothing close to the Intel fiasco of the early Nineties. I feel Apple handled this situation much more smoothly; it decided much faster that it could not incur a loss back onto customers.

How the Situation Should Have Been Handled:

I feel the company made the right ethical decision, despite the fact that this situation should not have happened at all. I think the decision to restructure the G4 line around the lack of the 500 MHz chip, and the corresponding price increase of available models was a very bad business decision, and possibly unethical. The reversal, and reinstatement of original pricing schemes was the ethical decision to make.

After realizing the shortage of the 500 MHz chip, keeping everything intact as far as pricing goes would have been the best decision for Apple. Of course, it would have to announce the shortage of 500 MHz model G4, but jacking up the price for the other lines does not make much ethical or business sense at all. In fact, maybe Apple could drop the price on the 500 MHz G4, as a courtesy for the delay in the product. Perhaps this type of strategy wouldn’t be best for the bottom dollar at the company, but the publicity and word-of-mouth support for the company would foster trust, confidence, and growth, which, by their very definition, will lead to increased revenues.