Apple dealers biting back - Mac sellers say computer maker cuts them out in favor of its outlets -- and they're fighting mad
Apple Computer Co. has been hit by a growing number of lawsuits filed by Mac dealers who are upset by the company's alleged efforts to lure their customers to outlets that Apple owns. They are also fed up with what they say are long-standing problems in the company's service and billing systems.
Tom Santos, owner of San Francisco's Macadam, one of the largest Apple- authorized storefront dealerships in the nation, filed a multimillion-dollar complaint last month that accuses the Cupertino company of fraud, breach of contract, unfair competition, false advertising and even violation of the federal RacketeerInfluenced and Corrupt Organizations Act.
Santos isn't alone. Jack Kohler, owner of Mac Tech Systems of Bend, Ore., filed a similar case last fall. A Los Angeles dealership, Computer International, filed a suit last week.
And Elite Computers & Software of Cupertino, the owner of four Bay Area stores that operate under the ComputerWare name, plans to get on the bandwagon later this month, according to its chief executive officer, Thomas Armes.
Lynn Fox, Apple's corporate media relations manager, declined to comment on the suits by dealers.
Tensions between Apple and its resellers are nothing new, and similar problems have frequently arisen in relations between other computer manufacturers and their dealers.
But the slump that has plagued the entire industry for more than two years, combined with Apple's move toward a distribution system less dependent on independent dealerships, has apparently heated the conflict to the boiling point.
"They've just been cheating us for years, making us look bad and screwing our customers," said Santos, 47, who has operated Macadam for 14 years and last year recorded sales of more than $6 million. "I've got six big binders full of horror stories, all carefully documented.
"It's not about the money," he said. "The only thing I've ever asked until now is that they fix the problems." But his San Francisco attorney, Marcus Merchasin, said: "We figure the company probably owes Tom close to $12 million -- that's our target." That's not counting the punitive damages, which could treble the total on some counts, and legal costs the plaintiffs are also seeking to recover, he said.
No timetable for the case will be set until a dispute over the venue is resolved, but state rules require that such cases go to trial within one year, according to Merchasin. All the suits have been filed in Superior Court for the County of Santa Clara, but Apple's lawyers have sought to move them to the U.S. District Court in San Jose.
In recent years, Apple has pushed to boost Mac sales through company-owned channels -- its direct sales force, its online store and the boutiques it has recently opened in Emeryville, Palo Alto, Santa Clara and 48 other upscale locations around the country.
Since launching the Apple-owned stores, Jobs and other company executives have repeatedly said that the purpose of the initiative is to increase the visibility of the Mac platform and attract "switchers" from Windows, not to take business away from the independent authorized dealers who still account for most Mac sales.
*** But Santos said Apple gives its own stores a variety of advantages not available to dealers, including the first shipments of hot new models, and discounts and promotions, such as free memory and printers.
What angers him the most, Santos said, is that Apple's own sales representatives, when talking to customers, regularly disparage the competence and even the integrity of independent dealers, including dealers like him who have a long record of success and have been certified by Apple to service as well as sell its products.
More here:
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/02/03/BU197497.DTL
Apple Computer Co. has been hit by a growing number of lawsuits filed by Mac dealers who are upset by the company's alleged efforts to lure their customers to outlets that Apple owns. They are also fed up with what they say are long-standing problems in the company's service and billing systems.
Tom Santos, owner of San Francisco's Macadam, one of the largest Apple- authorized storefront dealerships in the nation, filed a multimillion-dollar complaint last month that accuses the Cupertino company of fraud, breach of contract, unfair competition, false advertising and even violation of the federal RacketeerInfluenced and Corrupt Organizations Act.
Santos isn't alone. Jack Kohler, owner of Mac Tech Systems of Bend, Ore., filed a similar case last fall. A Los Angeles dealership, Computer International, filed a suit last week.
And Elite Computers & Software of Cupertino, the owner of four Bay Area stores that operate under the ComputerWare name, plans to get on the bandwagon later this month, according to its chief executive officer, Thomas Armes.
Lynn Fox, Apple's corporate media relations manager, declined to comment on the suits by dealers.
Tensions between Apple and its resellers are nothing new, and similar problems have frequently arisen in relations between other computer manufacturers and their dealers.
But the slump that has plagued the entire industry for more than two years, combined with Apple's move toward a distribution system less dependent on independent dealerships, has apparently heated the conflict to the boiling point.
"They've just been cheating us for years, making us look bad and screwing our customers," said Santos, 47, who has operated Macadam for 14 years and last year recorded sales of more than $6 million. "I've got six big binders full of horror stories, all carefully documented.
"It's not about the money," he said. "The only thing I've ever asked until now is that they fix the problems." But his San Francisco attorney, Marcus Merchasin, said: "We figure the company probably owes Tom close to $12 million -- that's our target." That's not counting the punitive damages, which could treble the total on some counts, and legal costs the plaintiffs are also seeking to recover, he said.
No timetable for the case will be set until a dispute over the venue is resolved, but state rules require that such cases go to trial within one year, according to Merchasin. All the suits have been filed in Superior Court for the County of Santa Clara, but Apple's lawyers have sought to move them to the U.S. District Court in San Jose.
In recent years, Apple has pushed to boost Mac sales through company-owned channels -- its direct sales force, its online store and the boutiques it has recently opened in Emeryville, Palo Alto, Santa Clara and 48 other upscale locations around the country.
Since launching the Apple-owned stores, Jobs and other company executives have repeatedly said that the purpose of the initiative is to increase the visibility of the Mac platform and attract "switchers" from Windows, not to take business away from the independent authorized dealers who still account for most Mac sales.
*** But Santos said Apple gives its own stores a variety of advantages not available to dealers, including the first shipments of hot new models, and discounts and promotions, such as free memory and printers.
What angers him the most, Santos said, is that Apple's own sales representatives, when talking to customers, regularly disparage the competence and even the integrity of independent dealers, including dealers like him who have a long record of success and have been certified by Apple to service as well as sell its products.
More here:
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/02/03/BU197497.DTL