Apple tackles channel unrest

Apple is attempting to soothe the troubled waters of its reseller channel, promising to address the relentless cross-product supply problems besetting the company worldwide.

Resellers at Apple's recent national channel conference on Hamilton Island said the company's executives promised to address its continual failure to supply enough products to meet demand, although it was less clear how this would be achieved.

One reseller--who did not want to be named--said Apple's new Australian head, Tony King, had promised at the conference to address its history of supply failures across the entire range. However, the company did not specify how the problem would be solved, he said.

"I've since had a call this morning from a business development manager within Apple asking people what they were going to be ordering," the reseller said.

He doubted such phone calls--which only asked for order details for the next week--were made far enough in advance to be effective.

"Everybody agrees...these things are hard to predict," he said.

He also questioned the caginess of Apple on its sales figures. At the conference, the company promised to release actual figures to its partners but only "flashed" the figures on a screen briefly, saying the figures weren't to be divulged to anyone.

"We were all trying to write them down," he said. "The figures were pretty interesting. The message from the conference was that the computer industry is getting more and more competitive and you can't count on up-front margins for the box any more."

Adam Steinhardt, managing director at South Australia-based reseller NextByte, said Apple had promised to address supply issues, particularly for the iPod music player.

"The iPod has been of concern in recent times...they under-estimated but we are getting some supply now...I wouldn't say we'll have oodles [of iPods] but things are definitely improving day by day," he said.

Steinhardt said a large shipment expected late last week had been smaller than anticipated. However, although it was hard to predict, all back-orders would be filled for the 30GB iPod at least. Supply of the other models was less good but improving, he said. "We are seeing a positive number coming through," Steinhardt said.

Adam Connor, director at New South Wales reseller Total Recall Solutions, said Apple's promise to redress its supply issues, which were widespread, left him "pretty happy".

"We now have the 30GB iPod," he said.

However, Connor said Apple tended to talk up its channel at the annual conferences, "usually managing to drop a clanger somewhere along the way".

Future success for Apple resellers in the market would be based on whether they could get their head around a business based on peripherals and consumables rather than big ticket boxes, he said.

"The main problem is we can all see millions of dollars of revenue from computers but we can't see the revenue from other little things. [Resellers] need to be directing software and services and peripherals--Apple has been saying the same thing for a while," Connor added.

Arno Lenior, marketing director for Apple Australia, confirmed the company had promised to address its failure to forecast demand across its product range.

"The bottom line at the moment is that we have had much more demand than we originally accounted for," he said.

Lenior would not exactly say how Apple would address the demand-supply problems but added that the company was investigating "a couple" of different options.

Although Apple's policy was not to divulge sales figures, the company was "already" shipping another couple of thousand iPods globally this quarter, he said.

"We do not go into details," Lenior said.

Apple also saw "significant" opportunities for its push into the corporate and government space and could sign more resellers for its x-server range in particular, Lenior said.

Apple posted a global net income of $US19 million for the quarter ended 30 June, on net sales of $US1.54 billion boosted by the iPod range and iTunes Music Store. Some 304,000 iPods were sold this quarter globally.

The company reported net income of $US32 million in the same quarter last year.

The company's net income has shrunk substantially from a 2000 high of $US785 million, reporting a net loss of $US25 million in 2001 before crawling back to a profitable $US65 million last year.