How Did NeXT Count Unsold Computers as Sales?

David Senra, reading Geoffrey Cain, says NeXT booked machines sent to distributors as sales even when no customer had bought one and no money had changed hands. The practice was called channel stuffing. It made the company look successful while unsold machines sat in warehouses.

In the summer of 1991, Jobs invited Andy Grove, co-founder of Intel, to a NeXT retreat. Grove asked the senior team what business they were in. After six years they still could not agree. They counted units given to distributors, not sales to customers. The distributors got the machines on credit. When the machines stayed unsold, they could not pay NeXT either. Reported sales tumbled, and NeXT was owed over $10 million. The company was near bankruptcy again after burning through the $100 million Canon had put in two years earlier. Canon then gave another $40 million.

Jobs kept replacing the vice president of manufacturing after six, nine, or ten months. The other leaders wanted to drop the costly hardware and sell high-margin software. He clung to the machines. Through that stretch they still built an operating system, Next Step, and companies used it to build their own apps five to ten times faster than any other system.