Apple Store – flagship presence or direct move?

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This article appeared in the 23rd June, 2008 issue of CRN magazine.

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Apple Store – flagship presence or direct move?
What is the most common channel pain point? Margin pressure? Finance? Skills shortage? All universal complaints, but the issue of vendors taking business direct has to be one of the most contentious and frustrating for resellers to endure.

At CRN we often hear of major vendors (no, I’m not naming names) and their desire to take opportunities, mainly huge enterprise deals, direct. End-users often feel they are important enough to warrant this direct care and the vendor sees the dollars flowing straight into their bank and can’t resist. The vendors on the other hand are always telling us how channel-friendly they are etc. I’ve heard it so many times, the words have lost all meaning.

However, these direct dealings tend not to take up any of CRN’s valuable channel ink. Vendors tend to keep such deals on the quiet. Distributors and resellers partners are too scared to rock the boat, while rival channel players come across as mud slingers if they
cite competitor vendors taking business direct.

However, what if your vendor partner not only makes a direct move, but they invited the whole of Sydney to queue for hours to witness the channel- crippling shift?

I’m of course talking about the launch of Apple’s Sydney store. Being a channel sort of guy, my first thoughts were not “wow I’m going to see an iPhone”. It was “wow what about the channel”. Sad I know, but there you go. Imagine if HP, IBM, Microsoft or Cisco opened a branded store on George Street? I know these firms also have retail presences, but you can’t deny that the new Apple store is going to attract business users, particular small businesses – the lifeblood of the channel – straight into their fancy sliding door jaws.

The Apple channel has always been somewhat of an enigma to me. What Apple classes as an Authorised Reseller is actually what we call a retailer – the most obvious example being Next Byte. But what of Apple’s B2B channel? Surely they can’t be happy with the new store? Or maybe they are. The store is one huge brand exercise for Apple, which could have a positive knock-on effect for Apple’s resellers. Technology consumers are also small business decision-makers. If consumers own an iPod or more likely an iPhone, this could boost interest in Apple’s other offerings (until small businesses realise the price of Macs and that none of their staff know how to use them).

However the channel is more than just an extended showcase for vendor’s product sets. They can add value, too. If resellers have long-term ties with their end-users, the new store could be the perfect excuse for an Apple reseller to drop in a friendly call to have a chat about Apple’s products set. It could go further than that. End-users could be ringing their preferred Apple reseller, with business landing straight on resellers’ laps.

It also worth noting how Apple is pitching the iPhone. Apple has been stressing the corporate usability. The firm has modestly branded the iPhone “The best phone for business. Ever”. It supports Microsoft Exchange ActiveSync, delivering push email, calendar, and contacts. It also gives mobile users secure access to corporate resources with Cisco IPSec VPN and wireless network services.

It seems you can be part of the in-crowd and be professional with the iPhone. What Apple has achieved in recent years should be applauded. However, where the channel fits in all of this is another question.
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