Apple Resellers and Service Providers Speak Out Following Simply Mac Closures

[ih8MRidiots]

One literally CANNOT "make a decision" based on that.
You have one group saying: "we're making more money than ever, and expanding our businesses... there is no issue whatsoever", while others are saying: "we are getting squeezed out of business & forced to do free repairs".
There is ZERO context for which people are more trustworthy. There is no "educated decision" here.
You may blindly choose to believe one or the other; but the EXACT same complete lack of evidence exists for both narratives & we know nothing about the character or motivations of anyone interviewed for this article.

While I did NOT expect Apple to comment (I guess I have a brain, according to you!); I do think that for this piece to be of ANY value whatsoever, the findings would've had to be something like this: "according to the 40 people interviewed, 31 said things are rougher, due to new policies, while only 9 said they're thriving" or vice versa.
THEN, we could've made an educated decision.

Fair enough. Maybe "making an educated decision" was poor phrasing. I just don't see how "HORRIBLE" this article was. Apple is never going to comment and I'm sure their price structure is not available without proving you're actually trying to get into business with them. So YOU can believe who you want in the end. Mac Rumors ISN'T a news organization. They did their DD in actually reaching out to other AASP's and getting their take on it. More than you can say about most sites.

PS. Lay OFF the exaggeration of words.

 

[69Mustang]

More than opinion. It's an actual company owner willing to go on the record with her name. Much more valuable than an unnamed "source."

This is an opinion: "Sounds good to me." -citysnaps

^^That's what I commented on. What you said, not what the company owner said.

 

[lordofthereef]

Most of these stores, I imagine, succeed based on services and not products. Apple's margins are tight (ie basically non existant) even with big box stores. Those "mega sales" you see from Best Buy (and I am sure others) come at a loss for the company. They are done as a loss leader, and you will notice that they generally happen at times of liquidating stock (making room for newer products) and during the holidays, where you come in and spend way more money than you should on a bunch of other things that DO make them money.

Like any business I am sure it is also vary location based. If you are selling solely apple products in a market that isn't buying enough of said producs to keep you afloat, well, bad market to be selling your goods in. I think it's disingenous to blame Apple for this completely. At the same time, they do absolutley make it harder for the little guy than some other companies.

 

[KdParker]

I'm pretty sure that the reason these "simply Mac" people went out of business is because of plain old ****** service. They were not living up to apples standards for quite some time. so frankly it was inevitable. Its always easier to blame Apple than to realize your own shortcomings.

Also, it is a sign of the times.

I would only go to an Apple store if I need to get something replaced or pick up a purchase.
Outside of that - everything else I can do online and I am sure I am not the only one that operates that way.

 

[thisisnotmyname]

Any time you are a value add partner to a larger organization you need to continue to innovate in your own offering or risk having your value add replaced by the bigger organization. That's business.

You're more than a glorified TV repairman? OK, demonstrate that value to your customer base, differentiate from the big box outfits and mail in AppleCare, and thrive.

 

[69Mustang]

Also, it is a sign of the times.

I would only go to an Apple store if I need to get something replaced or pick up a purchase.
Outside of that - everything else I can do online and I am sure I am not the only one that operates that way.

I've never purchased a single Apple product from an Apple store. I've used them to check out products, but I've always purchased elsewhere for less.

 

[Chupa Chupa]

But Apple is almost automating its factories in China so do you think they will hire millions in US instead of Automation? Do you think bringing back production in the form of automated factories is going to help with unemployment? Might be a few technicians jobs but those are not manufacturing jobs and they require certain technical skill.

My use of the term "low value" refers specifically to the task of assembling iPhones. To me, this isn't a manufacturing job in the sense of a traditional, well paying manufacturing job. It's basically using humans to do the job that a robot is much more suited to doing.

Well paying manufacturing jobs in this country are more skilled than putting together iPhones. I don't think those are the jobs that we really want here. And in reality, if iPhone assembly did come to the US, the 1,000's of Chinese laborers we see at Foxconn would be replaced with a few robots and a dozen robot operators, which would be a skilled job.

At the risk of going way off topic, we, as a country, have to follow through on the promise we made ourselves years ago when low value manufacturing was shipped off to other countries. That promise was that low-skilled and unskilled manufacturing jobs were going to be replaced by high-skilled jobs needed to support the offshored manufacturing. The reality is that the high-skilled jobs never materialized here at a high enough rate to offset the loss of the jobs on the factory floor.

Robotics are, and have been, incorporated in manufacturing of all types of products worldwide. It's nothing new and especially beneficial in tasks too tedious for humans. Robotics do not obviate the need for humans oversight and do not accomplish end-to-end production. There are some tasks that humans must do. Robotics lessens employment but do not eliminate it and likely won't for a long time if ever.

I'm unsure why these jobs are deems so undesirable to you especially when there are Americans who would welcome these jobs and local production would also be more environmentally friendly if only to lessen the need to transport millions of phones from China to North America. -- Not to mention the positive economic effect a large factory can have on the local economy.

 

[Quu]

It also seems like they're unwilling to allow many repairs to go ahead, small chip replacements, reworking circuits. Instead they opt for expensive logic board replacements. This drives up customer costs which makes them less likely to get a computer repaired and instead buy a new one which I imagine hurts these shops that could charge $50-$100 for a logic board rework vs $600+ for a brand new logic board.

And now with everything being soldered down including the SSD I imagine a new logic board will cost over $1,500 and no one is going to pay that out of warranty when their laptop breaks, they'll just buy a new laptop instead as the cost is so close to a brand new machine.

 

[macfacts]

...
In other words, while the margins did not change overall, resellers are now forced to pay more upfront for Apple products to sell, ...

Interesting. Now even if stock is sitting on the shelf unsold, Apple already got paid. Tim is a genius.

 

[Swift]

Apple made decisions for itself. Jobs made a huge success of the Apple Stores. The repair and retail businesses that had struggled in the hard times complained then. There's still a few small businesses around that repair Apple stuff, sell used Macs, etc. We have a 2008 iMac that was chugging along in the business, when a rainstorm created a power surge. Apple wouldn't fix it. It's now "obsolete," and so they don't keep the parts like an 8-year-old power supply. In a couple of weeks, a local shop fixed it for $200, the price it would have fetched on the used/parts market. That's the kind of business they've got-- old stuff to fix, and to Apple stuff sell where there's no Apple Store closer. Sad, but...

 

[macTW]

The margins did not change overall.

Stop blaming Apple for bad money management. Instead of getting fully paid up front, you wait a month. Do this every month, and nothing changes - last months money comes for this month, etc. These stores are closing because of their own poor money management. Apple made a change but these stores were so poorly managed, they didn't have the money to embrace a one month delay.

 

[tarkeybear]

It ain't easy. That's why so many of them don't last. When you're entirely dependent on one company for your survival it can be tough. I try to buy small and local/independent when it makes sense. $10-20 difference, I'll buy from the little guy depending on the item. Retail? I have an aversion to paying retail pricing. The Best Buys of the world can afford to give great deals because they aren't solely dependent on one manufacturer. I've found they're much easier to bargain with since the little guy usually doesn't have as much wiggle room.

Agreed, I needed service on a MacBook Pro and Apple offered me the option to send it in, wait for a Genius Bar appt or take it to a local independent Mac repair business closer to my home. The repair shop charged a $25 dollar inspection fee that I would not have paid for at the Genius Bar, but the local convenience was worth it.
Vote with your pocket book and don't be surprised when the stores you don't visit close up shop in a year or so...

 

[Swift]

I'm not familiar with this chain, but chains in general aren't the way to go. There is lots of place for local stores with people who know their stuff, know their local market, and find a niche.

 

[uroshnor]

I'm dating myself here, but I can't help but think of the Mac Clones of the 90's. Some were pretty good. From some stories I've heard, maybe a little too good. I guess they were eating too much into Apple's profits which is why Apple didn't license Mac OS 8 to them. Of course, this is all anecdotal evidence, so take with a grain of salt.

What Apple wanted out of licensing clones, and what it got out of licensing clones were 2 different things.

What Apple likely wanted to do was have clone vendors occupy market niches and price points that Apple wasn't keen in occupying, and Apple would sit on the (relatively) high volume "premium" machines.

Some of the multi-CPU graphics/video workstations were a good example of what Apple wanted the clone vendors to produce. Some of these were up to 32 cores. Very high end, low volume, Macs that kept Mac OS software in play, but were just too niche for Apple to be able to manage as products itself.

What licensing failed to do was deliver low price point Mac clones for price sensitive customers (below the product / feature tiers Apple wanted to keep for itself ).

The clone vendors (mostly) were producing machines that compete directly against Apple's own offerings, as they rightly concluded that that feature set / price point range was where the only was to be made in the market.

Not necessarily much better or worse, but if you have 3 vendors selling something that are about the same, then you'll typically end up with sales being spread across all 3, even if there's not a clear advantage to one or the other.

There's basically no way Apple could have gotten what it wanted without getting very close to anti-trust territory (because it would have likely involved agreements to segment a market, and tier price points between vendors, which is almost always anti-competitive, even if you don't have market monopoly or dominance).

The whole licensing thing was just dumb by the time Apple did it - there was no viable way for them to migrate off their dependency on hardware revenues , and Steve was spot on in shutting down the clone licensing deals, and re-focussing Apple on doing less, but better.

 

[ajfahey]

An interesting marketing idea. The only trouble for me is that, of all the apps available, I have only ever used one and that one I haven't really used in years. And, I'm a Mac user of over 20 years. They're going to have to do better than offer a bunch of niche apps people don't use for this marketing idea to take off.

 

[Apple 26.2]

I personally want to believe Apple isn't gouging these small businesses, but where there's smoke, there's fire. Are they strangling all of them? Obviously not - there's evidence to the contrary. But you'd be a fool to believe Apple doesn't want quite the share of revenue and profits from resellers and one has to calculate that business risk. There's definitely some shenanigans going on here.

 

[apolloa]

Yeap, sounds like the Apple we all know. I mean they do force retailers to price their devices how THEY want and not what the retailer wants, or it it block them from selling Apple products, the iPhone is a classic example of the stringent contracts Apple holds the carriers to.
But at least you can get Apple to fix it, for a price.

 

[ssgbryan]

I'm dating myself here, but I can't help but think of the Mac Clones of the 90's. Some were pretty good. From some stories I've heard, maybe a little too good. I guess they were eating too much into Apple's profits which is why Apple didn't license Mac OS 8 to them. Of course, this is all anecdotal evidence, so take with a grain of salt.

I had one - they were head and shoulders above Apple's offerings - faster CPUs, faster video cards, more expansion slots (mine had 6 - and they were all used). They also had a much faster refresh rate.

Kinda like now.

 

[absynth]

More than opinion. It's an actual company owner willing to go on the record with her name. Much more valuable than an unnamed "source."

Are you really this naive?

With their utter dependancy on Apple, how would their business perspective be, you think, if they bit the hand that fed them on the record? Of course the outlet that has something positive to say will be eager to have it official, and the outlet that doesn't wants to remain anonymous. Jesus. It would actually be more "valuable" - no, I think you were looking for credible - if the opinion that licked Apple's ass would wish to remain anonymous.

 

[Cineplex]

Someday Apple will be closing its stores.....the resellers can then celebrate the fall! Apple will get a taste of the other side soon enough. Especially if they keep going in the direction they are headed. The magic and courage will run out soon enough.

 

[ssgbryan]

At the risk of going way off topic, we, as a country, have to follow through on the promise we made ourselves years ago when low value manufacturing was shipped off to other countries. That promise was that low-skilled and unskilled manufacturing jobs were going to be replaced by high-skilled jobs needed to support the offshored manufacturing. The reality is that the high-skilled jobs never materialized here at a high enough rate to offset the loss of the jobs on the factory floor.

1 party told those workers to go become java programmers and the other didn't even do that. There was never a promise to replace those jobs. Both parties told those folks they were losers and they were on their own.

 

[MariusC]

Most people don't realize that Apple makes it extremely hard to expand your business. The company I worked for that was an AASP for fifteen years had to buy out other AASP's because of Apple's strict rules on expanding. It's great if you have an AASP with no Apple stores around, those were are most profitable stores. That was like two out of the twelve or so. The margins don't change much, but they are very small. The only profit we made were from large warranty repairs. Small ones like iPhones or whole unity replacements bring in barely any money at all. If we didn't sell cellular service and set up new lines, we would barely make any profit honestly.

 

[pincud]

[
I'm not sure what you guys are thinking... being a company in a market economy does not allow you to do what ever you want, or to ask what ever price you want for books or for apps. In the case of Apple, you may ask $14 dollars for a new book, but just because you ask for that, it does not mean you have the right to do that. If you guys thing this is right, you are wrong. Apple should be allowed to ask a maximum of $5, regardless of if this is capitalism or not. If you have other ideas, well, they don't quite matter. If Apple wants $14 for a new epub book, well, the entire company should be destroyed, no matter how cool the iPad or the iPhone are... Apple should go away and be friends with Nokia, in whatever dark whole. Please stop finding excuses for Apple to charge whatever they want. They should not be able to do that ever!!!

QUOTE="MacRumors, post: 24232855, member: 3"]


GameStop last week announced it is closing a number of non-productive Simply Mac locations throughout the United States, less than four years after acquiring and expanding the Apple Authorized Reseller and Service Provider, which effectively serves as a third-party Apple Store in smaller markets.

Following the reports, we received a tip from a disgruntled Apple Authorized Service Provider owner who said the underlying issues prompting Simply Mac's downsizing are "far deeper" than it would seem. He noted his own AASP is closing because Apple has "slowly strangled" him on margins and with "free labor" demands.

Another longtime Apple Authorized Dealer and Service Provider told us that AASPs have been "under siege" for years. The person, who wishes to remain anonymous, said profit margins are "appallingly low" and that Apple views its authorized service partners as "nothing more than glorified TV repairmen."

"I am sad to say that I do not see this changing," the person said. "Apple is highly aware of our concerns and do not seem to care. As an Apple reseller for over 20 years, I thought that when Apple became successful we would participate in that success, but we did not," the person added.

Given the polarizing comments from a few, we decided to reach out to a number of Apple's authorized sales and service partners in the United States and Canada to see if there is any validity to the claims.

A number of the Apple Authorized Resellers and Service Providers we spoke to refuted the allegations, noting they are stable if not growing, but we did learn that Apple has made one adjustment in particular that might explain the pressure felt by some sales and service partners--especially smaller ones with fewer sales.

Since August 2015, Apple has lowered its profit margins for resellers, requiring them to pay more upfront for products. Apple then rebates the difference as part of the monthly Business Development Funds checks it sends to resellers, but this method requires resellers to wait longer to be fully paid.

In other words, while the margins did not change overall, resellers are now forced to pay more upfront for Apple products to sell, which restricts cash flow that could otherwise be used for day-to-day operations, employee wages, and other expenses. For smaller resellers, the change can be particularly burdensome.

Meanwhile, one reseller believes Apple's arguably lackluster 2016 was a contributing factor to its own year-over-year sales decline.

On the service side, one person told us they "don't know that there is any truth" to the statement about Apple demanding "free labor," which a separate source said is likely an exaggeration for certain items that Apple used to compensate resellers for but now considers "non-revenue repair."

"I would not say that Apple has been demanding any kind of free labor," a service manager told MacRumors. "However, they are increasingly sending customers to us for iPhone repairs, which do not pay very well. We get paid more for a ten minute Mac repair than we do for an hour-long iPhone one."

"I am pleased to say that Apple really values their service partners and has increased our compensation for warranty work," another reseller said. "If you can achieve Premium Service Provider status, you get some nice perks along with higher compensation. While not perfect, Apple service really seems to care about us and is constantly trying to make things better for us."

MacMedics, an Apple Authorized Premium Service Provider with two locations in Maryland in Severna Park and Lanham, and another in Philadelphia, agreed to comment on the record to shine positive light on Apple.

"We're doing very well, we've expanded, and we opened a new pure retail location in 2015. Apple give us great support and guidance," said Dana Stibolt, President of MacMedics. "We're very encouraged by the upward trends over the last year, and in fact we're hiring more staff for all locations for both in-lab and on-site."

The other sources asked not to be identified. Apple and GameStop did not respond to requests for comment.

Article Link: Apple Resellers and Service Providers Speak Out Following Simply Mac Closures[/QUOTE]

 

[truthertech]

Considering Apple is squeezing the profit margins of Authorized Resellers, I wonder how the smaller retailers can compete selling Apple products at retail prices while huge sellers like B&H Photo or even Best Buy can offer massive discounts.

As far as small shops trying to compete with Best Buy, Target, on line sales,etc. on price is a fool's errand. Like independent booksellers trying to compete with Amazon on price, it ain't happening. Their only hope is to compete on service and being well run, and it sounds like some are failing at that, e.g., Simply Mac, while others are thriving.

 

[RoccoFan]

EVIL COMMENT ALERT!!!!!

Apple to MacMedics: Yeah...yeah...oh...oh....(O FACE!!!)