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Apple resellers squeezed out of volume licensing model

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Anonymous Coward

Still surprised?

Why? Ditch Apple and let them go it alone as that is obviously what they want. Why waste your money and resources shifting kit that the manufacturer doesn't want you to make a profit on?

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3rd Parties are Mistaken

"Apple clearly believes that the channel adds no value [where software is concerned] but we provide a single point of purchase for Macs, servers, software, we install and support,"

No, you're describing the Apple store. 3rd parties are now Apple's abandoned stepchildren. Apple is very much about controlling the whole experience, from hardware purchase to support to app sales. Apple has built their own ecosystem and the channel doesn't fit into it.

Frankly they don't need anyone else so why would they cut into their profit margin?

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Alien

Alternate reality

While Apple may believe it doesn't need anyone else, they cannot sustain their current selling just by tying everything to phones and music players. That will pull some consumers into buying Macs, but I would think the channel accounts for a huge portion of Mac HW/SW sales, especially in education.

If anything, this tells me that Apple eventually wants out of the desktop/laptop business, as I'm sure they think most consumers will eventually use a tablet instead.

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Megaphone

If you add value - you'll be find

Demonstrate to your customer that you add value. Charge them appropriately. Profit.

Why are you whining to Apple for a subsidy if you provide a genuinely needed service?

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Silver badge

Yep

To be honest, I bought my iMac from the Apple Store (online). Why (the store not the iMac)? They had the shortest lead time after a refresh and it seemed pointless to go into a store and then have them just perform a similar action with an added delay to delivery - resellers were quoting 6 weeks longer turnaround at that point and with no possible discount. People must resell Apple products purely in the hope that those customers then buy something that has a margin on it.

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Thumb Down

Whining? Since when was asking to wholesale at wholesale prices......

........defined as whining? If you as a retailer purchase from a producer on a wholesale basis (ie many units at a time) it is scarcely unreasonable to be a bit miffed if the producer suddenly refuses to give any discount for bulk purchase. Now, Apple are entirely entitled (if they so wish) to insist that they are now solely in the direct retail business (although it would be more honest of them to openly admit this new policy). However, to describe bulk-purchasers when they (in many cases) have been long-term retail partners of the company as "whining" when their industrial "partner" suddenly decides to keep the whole pie to himself or to describe asking for bulk-purchase prices as asking for a "subsidy" is nothing more than fanboism - and a fairly pathetic example of it at that. I am not surprised you posted that as an AC.

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Devil

Disagreement

Sure, their OSX desktop/laptop business isn't a large revenue generator compared to other things.

But without creating desktops or laptops, what would Apple's staff and external iOS app developers use? Dell hardware and Windows 7 or something?

Can't really see that direction getting approved by Apple mgmt. :)

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FAIL

I keep on wondering

I keep on wondering why that company still has any customer/suppliers/resellers/whatnot. They have repeatedly demonstrated a backstabbing culture the likes of even MS during the Stac-fiasco wouldn't sink to. And their customers keep telling themselves that the company does this to help them.

I've seen less brainwashed cultists.

Anon - because I really fear the rabid responses from the Cult of Chtulhu^WSt. Jobs.

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Angel

Lord post

I don't know about suppliers/resellers/whatnot, but Apple does seem to have a certain number of customers left indeed. A rising number.

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Devil

the penny drops

Resellers, welcome to the exclusive club of publishers who made iOS apps, developers who make things that Apple decide they don't like, people who make products that start with the letter 'i', people who publicly criticise Apple in some way, people who give their company or product a name that Apple subsequently wants....

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Thumb Up

get with the program......

xbox live, pshome, & nintendo will kill bricks and mortar game stores - and I really don't give a hoot (I'm am avid gamer and hate these teen invested hell holes with inept snotty spotty staff).

Why bash Apple because they want to do exactly the same - apart from actually reduce the price of the software..... which the the above group haven't done!

Apple's App Store is just the beginning, Amazon will come on strong and there's also the abomination which is the Android Marketplace.

Welcome to the new world order of digital downloads, 'Reseller' = Middleman = 'Leech' = No benefit to content producer or the customer.

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Go

Apple are doing them a favour on Final Cut

The app is so stinkingly awful, clearly months from being ready but shoved out the door to prop up the launch of the iCrapp Store and almost universally hated, Apple have done the channel a huge favour. The customers who go and buy Death by thousand Cuts Pro from the iCrapp Store are going to go whining to their reseller who can then say "Yes, we have been warning customers that Final Cu*t Pro is awful, can I interest you in the Adobe product which actually works?"

(Written on my macbook pro of course)

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Holmes

What did you expect?

Cutting out the cost of the retail chain is kinda the point of digital distribution. Record and video stores are also feeling the pain, and it's because they're going obsolete.

Just as increased capital investment has greatly reduced our need for farm and factory labour, digital information distribution is reducing our need for retail stockers and cashiers, among other jobs. All those farmers and factory workers found something else to do, I'm sure your clerks will as well. Sounds like their hardware, installation and support revenues are still okay.

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Silver badge

Digital distribution

Apple also has the advantage, through setting up their own stores, of being able to cut out any other reseller/supplier without removing the ability of the public to try before they buy. Cunning bastards.

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Linux

No backstabbing at Buzzards Nest

No. What Apple is pulling is a bit different. CD and DVD stores may be struggling these days but they still can buy product wholesale. They don't have to buy product at the same price that Apple gets to sell it on the iTunes store.

That's a considerable difference and not something to be casually glossed over.

Amazon does well as a web vendor either way. Spinny disks aren't really out of style quite yet.

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They'll soon discover ...

You can only piss off so many people at one time -- or even in one lifetime.

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Flame

Apple's modern model...

They don't want resellers because they want all the money to themself.

When customers come in asking about Macs at our shop, we straight up tell them it's not worth our time or their money. We simply can't buy them any cheaper than the prices they saw online already. None of our regular suppliers sell Apple, and the few "irregular" ones that do don't have much better prices than the RRP Apple set.

On the topic of the online only software - Apple are retarded. While I personally will download software if it saves me waiting a day or 2 for delivery, when it comes to very large software like entire OSes or video editing software, I would rather the discs. What does it save me if the download takes 2 days anyway? I'm just going to have to pay for internet excess charges now instead of freight.

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apple are exiting a lot of the market

specifically the pro end. their enterprise support has been woeful at best. now they've killed xsan hardware. lion server is crippled, xsan client is built in. FCP turns into FCA (final cut for amateurs) with no support for xsan (or any shared system).

Color? $30k a seat till apple bought it. now killed it with no replacement in site. same as shake.

mac pros are the next one to go (really i don't know why anybody bought them anway with fcp only using one core. though they could have after effects running i suppose to justify it)

and with the growth of the ipad, OSX is starting to look risky.

none of these things are about the products - but why waste good talent on products that get very little in return compared to the ipad?

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Silver badge

Get over it

Should be easy.

Sent from my iPhone.

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Flame

orphans

I work for a reseller - bluntly the writing is on the wall - I would say that within 2 years most resellers will have closed down - Apple no longer needs them and will freeze them out. This is how it will happen I expect.

They will.

1. Open more stores

2. Publish software only online

3 Make the T&C's for opening/maintaining a reseller difficult (minimum sq footage etc.)

4. Reduce stock levels/margin to the point where profits are unacceptable.

5. Improve their own repair service so that customers have no need to go elsewhere.

All these things are already happening.

It's just business right?

Always work for Microsoft I suppose. :)

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Who needs or wants Apple resellers?

The hardware is all about image rather than function

When it breaks, throw it away -- accessible service for Apple products is often hundreds of miles away whereas for PCs it's likely to be within a couple of miles

Haven't these resellers been selling people over-priced kit unsuitable for the needs of customers for years?

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t's evens stevens then?

Networks have apparantly made a loss on iPhones for years so why should software sellers benefit?

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New(-ish) world order

I agree with those who've said here, in effect, that the world is changing. It has been for ages. The reason that I, and many people, so often prefer to buy online is that centralised, online retailers have better stocks, it's easy to find the best price available, delivery is usually at least as quick as it will be from the high street (if not actually quicker) and buying online is generally far easier than heading downtown.

If high street retailers wish to stay in business, they have to find ways to provide services that people both want/need and are willing to pay for. If I take my car to be serviced, I do not expect them to charge me extra for any parts needed, over and above what those parts cost them. Instead, I expect them to charge me openly, honestly, fairly and separately (on the invoice) for their own time and expertise. Similarly, if retailers of Macs and related items wish to stay in business, they have to differentiate themselves from the Apple Store and, if they can't do that, then face facts: what is the point of them? If you don't somehow add value, of a sort that people are willing to pay for, then what are you there for?

I liken this situation to that of all the retail stores that failed to compete successfully with supermarkets. In the UK, many just went to the wall after trying to compete on price. A foolhardy strategy, given the immense buying power of the supermarkets, which the small independent shops could never hope to match. In France, on the other hand, such small independent stores chose to compete by differentiating. They specialised, they focussed on offering premium products at higher prices. Products of the sort that the supermarkets were NOT able to source in the quantities that they'd need to stock their shelves. In that way, they offered something different to what the supermarkets did and thus stayed in business.

Bottom line: when you run a business, you have to play to your strengths (if you have any). And for the smaller independent retailers, that means being agile and innovative. It does no good for Apple retailers to complain that they "supported Apple for years", because that's simply not true! Apple supported them for years by providing products that they could sell with a profit margin (albeit, I know, not usually a big margin). They made those profits, which earned them a livelihood and it doesn't mean that Apple still owes them anything. It's all history.

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Megaphone

What Nigel Hamlin said.

I live in Italy at the moment and my nearest Apple store is a long drive away in Rome. I've been there twice in a year, tops.

Meanwhile, my nearest Apple Premium Reseller is rather closer, but—here's the trick—they *don't sell Apple kit*. ( They only have a single Macbook Air, and an older, white, 27" iMac in the shop itself.)

What they do sell is the stuff you *plug into* Apple kit. Lots of it. Hard drives, QNAP NAS drives (yes, they actually stock those!), Wacom tablets, the usual bewildering array of iPad / iPhone cases, etc. Furthermore, they offer training, sourcing of volume licenses (mainly for schools), advice and other genuinely *valuable* services. They'll even do major upgrades and repairs on your own kit while you wait.

You won't find software there either: why try and sell an old version in a box to someone who can just click on a button and have the very latest version of the same app download and install at the click of a button? Buying digital products in a bloody shop makes no sense at all in an age of readily available broadband.

(Incidentally: to those of you complaining about slow download times and bandwidth caps, I strongly suggest you find a better ISP. If a rural village in Italy can get *genuinely unlimited* 10Mb/sec ADSL with 1Mb/sec upstream speeds, what the hell is your excuse? You can't blame Apple for your home town's lousy infrastructure.)

*

If you're not adding value to the chain, get the hell out of it.

Businesses don't *deserve* money simply for existing. If you don't provide a service above and beyond what I can get for *free*, your business serves no useful function and it should either diversify, specialise, or *die*. That's how business is *supposed* to work, despite all the recent evidence to the contrary from the financial sector.

Technology is inherently disruptive. You should *expect* your business models to have to change over time. Deal with it, and quit whining.

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>>>Sean Baggaley

I couldn't agree more with all you said, Sean.

One other point I forgot to comment on was the references others have made here to "Apple moving out of desktop/laptop production", claiming that Apple don't make much revenue from Macs. What a crock! As a shareholder who receives all of the annual reports for AAPL, I know that Mac hardware remains a major contributor to Apple's bottom line. Sure, other product areas are also profitable - well, actually, all of their products are profitable! - but in terms of turnover, Macs are the products that have the highest prices, and they're not far behind in terms of profit. Sure, software products have the highest margins, but they sell for a lot less too, so they have to sell an awful lot of copies of Lion (for example) to make as much profit as they do on a single Mac, especially the high-end models!

So, speculation that this story somehow suggests that Apple are going to drop production of Macs seems based on a major misunderstanding of their products financial breakdowns. I'm really can't follow the logic behind such pronouncements.

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