The Core Dump

A strong conviction that something must be done is the parent of many bad measures

[By Nic Lindh on Tuesday, 04 November 2003]

Apple dealers taking it in the shorts

According to Think Secret, Apple’s updating their dealer requirements for resellers. According to reports from a web cast on Monday, dealers, among other things, must now have an ‘attach rate’ of 60 percent on the Apple Protection Plan, aka APP, aka Apple Pure Profit. APP is Apple’s extended warranty scheme, adding two years to the product warranty, plus free phone support for the life of the extended warranty.

Dealers are up in arms over this for two primary reasons: 1) 60 percent attach means that for every ten machines you sell, six of them have to go out the door with APP; unfortunately, APP can be a hard sell, as some people don’t appreciate spending an extra, say, $349 on the purchase of a $1,599 PowerBook–especially since APP can be added on later through a phone call up to one year after purchase.

Reason 2) is the big one, though. In order for a customer to get APP, the sale has to be registered with Apple, meaning Apple has the customer’s name, email, and phone number. Apple has promised to not use this information to take business away from the dealer, through, oh, say, calling them up and telling them to visit their local Apple Store. According to one dealer who wished to be anonymous:

“One dealer shared with us email forwarded to him by a long-time customer who after just 90 days of signing an AppleCare warranty was contacted by Apple about a ‘special discount offer’ if he bought peripherals from the Apple Store – just miles from the Specialist dealer he originally did business with.”

Of course, anonymous whining from dealers has to be taken with a grain of salt, but it’s still disturbing that this sort of behavior from Apple may be going on, since it’s exceptionally short sighted of Apple to cannibalize their existing sales channel. Sure, the Apple Stores are all nice and Kubrickian, but they don’t provide specialized sales support for vertical markets, and that’s not their purpose.

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