I love Apple…but

According to an article in the April first issue of the San Jose Business Journal, former Macintosh retailers are suing Apple for unfair competition. This is not a soar grapes thing. apparently Apple stores have been charging their own stores less for their products then they charge independent retailers. According to Thomas Armes, owner of Elite Computers, who finally closed because they couldn’t compete when Apple opened stores near their stores, Apple is cheating. He said the reseller is charged, for example, $347 for an ipod, which they could sell for $399, but the Apple stores are only charge $324. The problem here, is they can both mark up for the same amount, but only one will make a bigger profit. Armes has launched a website, where he discusses this further.

I miss that store. I understand why he had to close it, and understand it more having read the article. According to one article in the Business Journal, this conflict is known as “Channel Conflict”.

We had an Elite computer (ComputerWear) in Capitola, which I went to frequently. I’m sure the Apple store in Silicon Valley was nice to, but this was a local store, with local people, who could answer questions, and talk about the latest gossip. Now, there is just one funky story in Santa Cruz, MCSquared, or I could go over the hill to Frys, which is usually and experience in frustration


5 Responses to “I love Apple…but”

  • Jack Campbell Says:

    Hmmm… let’s think this through a bit, shall we?
    What if Apple charged Apple zero dollars for the iPod?… and charged its independent resellers a normal price, say, the $347 mentioned here? Would that be even more “unfair” than Apple choosing to charge Apple the $324 stated here?
    See, the issue here is simply that the Apple/Apple resale path is only a vertical channel internally at Apple COmputer, Inc. Whether the profit is booked at the manufacturing, distribution, or retail level, it’s still eiether profit or loss, depending upon the costs involved in that entire process.
    Frankly, the bulk of the “we’re just abused little guys” accusations being tossed out by these (former) Apple resellers is irrational trash to anyone who understands modern business operations.
    Apple isn’t perfect. But, neither are these whiny former dealers.

  • Mike Kaufmann Says:

    Laura, I had one experience with Elite in the store across from Apple on DeAnza Blvd. The first of the new white iBooks had come out and nobody had them yet. Elite had a few and charged a 3% markup to get one right now. Call that a sharp business practice, but it totally turned me off to Elite, even when they rejuvenated the Computerware stores. I used to love that Capitola Store, but after Elite got it, it lacked soul.

  • Winsor Says:

    I know other things like cameras are marketed giving better prices to volume dealers. If you do not good a good job for the manufacturer you have to pay more. Could it be the Apple store is buying ten times the volume of the other guy?

  • stevie west Says:

    Congrats!
    You have been linked to the webs worst apple hater (and yes I do mean hater), paul thurrot.
    internet-nexus.com.
    It seeems that Thurrot reads macsurfer cause he also links a very poorly researched blog entry by iampariah.
    look at the number of entries in thurrots blog about Apple.

  • Jeffsters Says:

    Look Apple charges FULL RETAIL for CPUs at it’s stores. The reason why Elite failed had NOTHING to do with the fact Apple did or did not make a few more $$$ on an iPod sale. Blame everyone but himself I guess. Apple is doing well with the stores in HIGH COST rent stores. I see they are opening another store at the Oakridge Mall in San Jose! Cool! Look, the issue comes down to the fact that when Apple was giving dealers 20-30Pts they lost share! These stores were not moving boxes or giving customers a good buying experience. So Apple was pushed into doing it itself and has done it well. What really “did in” the Elite Computers of this world was mail-order. They never could compete on price and yet never figured out how to add value or make their stores a real destination. Savvy users just bought on-line. Except for Apple’s store which again is FULL RETAIL but again people went cause it was EASY! So Apple has done well in both on-line and retail sales because even though they charge FULL RETAIL they give the customer a buying experience they want.

Leave a Reply