Commentary: Apple and AT&T Independent Resellers Unite!

There was a time, when buying a Mac meant a trip to your neighborhood independent Apple reseller. Just about the time Apple decided to take matters into their own hands and open their own stores, the cell phone industry exploded, thanks in no small part to the growth of independent cell phone providers. All of those kiosks in malls and standalone independent phone dealers add a substantial amount of revenue for AT&T each year. Many offer contracts with different carriers. What better way to get them to get more customers onto your service than to arm them with the most sought-after cell phone around?

Instead, these dealers are left with the unenviable task of talking down the benefits of the iPhone to get customers to purchase a different phone. Even though there are still no superior phones to the iPhone yet, more and more decent touchscreen competitors are springing up. And guess what? They aren't on AT&T's network. So in essence, you're making your own resellers push customers to competitors.

Let's go back to the Macintosh resellers for a moment. These are stores who have stuck through thick and thin with Apple for years and years. They did the heavy lifting for Apple, taking the time to fight the hard fight, to give the best, personalized service, and to evangelize, from the heart, about why the Mac was better. It could be argued that these days Apple gets far more revenue from their own stores than these resellers, so therefore they aren't important. Well, guess what? They are important. And the proof? Well, they're still standing. All those years of building customer relationships continues to pay off. Even as Apple continues to open more and more flashy stores, there is a base of customers who continue to buy products from their tried and true reseller. Maybe the local Apple Store is too far away. Maybe people don't want to brave a mall just to ask a computer question. Maybe the jig is up, and people realize that getting a knowledgeable genius in an Apple Store is really hit or miss these days. Whatever the reason, People still choose resellers.

There have been fundamental clashes before about how products were being distributed, with some feeling resellers were getting shut out. Eventually though, (some) product would arrive. It's a far different story with the iPhone.

I cut Apple some slack on this issue with the original release of the iPhone. After all, it was a new product, and a small(er), controlled rollout could be justified. We're over two years in now, and there's no justification beyond greed. We know the phones can be activated at home, why not allow more people to sell the phone. And with the announced deal to sell the iPhone in Wal Mart, doesn't that shoot the whole theory that this is about controlling the point-of-sale experience? We've visited two Wal Marts (and will continue to do so) and have yet to find a person who could tell us about the phone, or even a working demo model.

The Apple and AT&T resellers would both show far more passion and knowledge in selling the iPhone. It is inexplicable these two groups, who have shown their loyalty to their respective corporate gods, are unable to sell a product they want to sell and could sell with far better enthusiasm than Apple's current third-party iPhone providers. I hope Don Mayer at Small Dog Electronics is right. In his predictions for 2009, Don predicted that "Apple will allow its top independent resellers to sell the iPhone." It's the right thing to do, and way overdue.

Image: Movietonic.com

The Retail Number Not Revealed in The Quarterly Call

One big question remains regarding Apple's plans to weather the financial downturn: Will retail stores continue to open at the same pace?

Apple has plenty of cash on hand, and could easily move full speed ahead with store rollouts, and probably get some deals on rent as well. The downside though, could be for short-term investors. If the economy takes a few years to recover (however you define that), then Apple's strategy of continued store openings would pay off big a few years down the road. However, in the next 12-18 months, the stock price could be in for an even rougher ride. Analysts would be concerned about increasing operating expenses with, at least temporarily, lowered returns. And of course there's always the thought of Steve Jobs leaving Apple. Whether his health is fine or not, at some point, he'll be ready to take a reduced role in the company. He could keep going for another 40 years, or he could decide tomorrow he's had enough. Jobs seems to have been mentioning all the great people at Apple - an implication to remember the iPhones and Macs come out thanks to far more people than just him.

The situation isn't completely unlike Apple's initial retail rollout. After the U.S. financial decline following 9/11, Apple boldly moved forward with retail expansion. Doing the same now could put Apple in a position to reach a whole new market plateau in three to five years. That potential future payoff could come at the price of investor hand-wringing in the short-term.

New product launches from the genius' perspective

Soon, Apple stores around the world will be swamped by people looking to buy the new iPhone. What kind of preparation goes into that kind of launch by the people who have to troubleshoot the devices as they're potentially seeing them in person for the first time? Find out in this segment of Root Access: