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Ultimate Electronics plan for rapid expansion hit a major speed bump this past week. The chain is in bankruptcy and all 46 stores are in liquidation mode, yet their going out of business sales are reportedly slow.

Surprisingly, in a consumer electronics market where Apple is a must have, Ultimate Electronics did not sell any Apple products. No iPods, iPads, iPhones, Macs or Apple software — nothing directly manufactured by Apple. Ultimate Electronics only carried a few non-Apple branded cases and minor accessories. Oh and one more thing...

A 25% stakeholder in the company was Hewlett Packard. It is unlikely to be sheer coincidence that Apple products where not being carried by a retailer that had a quarter of their company controlled by Hewlett-Packard. 

Mark Wattles, the founder and CEO of the now defunct Hollywood video, bought half of the Ultimate Electronics chain out of bankruptcy in 2005. Perhaps it's just us, but there appears to be a pattern here. Hollywood video: Bankrupt. Ultimate Electronics: purchased out of bankruptcy. Ultimate Electronics: bankrupt. The company's choice (or perhaps demand by a major shareholder) not to carry any Apple products coupled with an  anti-Apple stance from employees, makes it very easy to say goodbye to this now failed electronics chain.

Maybe this be is lesson for other billionaires thinking of getting into the retail electronics industry — start by ensuring you can prominently display and sell products that customers are looking for — Apple.

5 Comments

1. Adrian ~ February 14, 2011 18:29
   I think your analysis might be a bit overly simple. I'm a mac and iPhone fan, so I'm not trashing your article, just trying to provide a different viewpoint. Best Buy, the big box store, has had an on again, off again relationship with Apple. It wasn't until recently that they started selling Apple products firmly, and only in the last two years or so. In business it requires more than 2 years to run a business into the ground. It tried selling the old fruity iMacs but Apple and Best Buy couldn't agree on the color orders, since Best Buy only wanted the blue ones. CompUSA prominently sold many Apple products, and they ended up closing a bunch of stores and going into bankruptcy. They reorganized and came out of it, and it used to be a favorite store of mine here. Walmart and Target haven't been selling Apple products until recently. They are far from bankrupt. Both these examples completely contradict your analysis. I believe you are simply committing the fallacy that correlation implies causation. It's more likely that the chain was mismanaged in light of competition from online stores and big box stores, and from shrinking margins. Perhaps one bad decision was not to bring in Apple products, and the profits that having such a line of products further squeezed their already slim margins. However, that doesn't mean that it was the sole factor. You'd need more evidence to tie it directly to "lack of Apple."
2. SteveP ~ February 14, 2011 23:59
   The other thing missing (big time) is the fact that Apple AUTHORIZES resellers. This company - whether HP was involved or not - could not just CHOOSE to sell Apple products or not. Article and headline are a major fail.
3. Mark Reschke ~ February 15, 2011 00:35
   RE: SteveP Indeed, Apple must authorize resellers. That said, I talked with a Manager before our local shop opened, and I was told, with no uncertainty, that "Ultimate Electronics did not want to carry any Apple product." A major retailer trying to take on Best Buy, with 46 stores and plans for massive expansion, it would make a great play for Apple to want Best Buy to have competition, ensuring they cannot be solely under Best Buy's thumb. HP owning 25%? Yah, that's your answer right there.
4. Brittan Ashjian ~ March 8, 2011 03:41
   Mark Wattles is a brilliant businessman! My understanding is that he started with zero and sold his company for 1.2 BILLION. Someone name 20 people that have done that! Wattles is the man!
5. t mccann ~ March 8, 2011 16:08
   Apple Apple Apple Do any of you know the average margin a retailer makes selling an apple product? Try under 5% The only reason to carry apple is pure foot traffic to sell other products. And by the way Ultimate Electronics has sold ipods for years.

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