Apple UK to terminate reseller contracts

Dealers can re-sign, but only if they guarantee sales

Apple is to terminate all contracts with its UK resellers at the end of February, The Register has learned. The vendor will then re-sign them provided they match a specific set of sales criteria. According to sources, Apple is demanding a minimum quarterly sales target that totals £60,000 per annum, and expects resellers meet its expectations in a number of other areas, including staff size and having "acceptable premises". That smacks of the company's long-discontinued AppleCentre scheme, which applied extensive restrictions on participants, including tight controls on the quality of furnishings in each AppleCentre. The move follows the scrapping of the company's dealer list price and the granting to distributors C2000 and Ingram of the right to charge dealers what they like for Mac kit -- effectively giving benefits to volume resellers at the expense of others. Previously, resellers paid the same per Mac irrespective of the number of machines they ordered. That provoked much criticism from Apple resellers, many of which claimed they would be placed at serious disadvantage to larger, mail order dealers. One claimed it would force smaller dealers to increase their prices by as much as eight per cent. That would effectively cancel Apple's recent iMac price cut. Together, both actions suggest Apple UK is pruning its channel of low-volume resellers in an attempt to break away from image it has in the UK of a minority market supplier. Indeed, one reseller who did not wish to be named, said: "It's highly political at the moment. Apple feels there are too many resellers in the channel," quoted in a UK trade paper. These moves are ways of dealing with that, he added. At the same time, the extremely tight margins on Apple's current top-seller, the iMac, especially now they are being sold in batches of five, to ensure the manufacture of five different colours of machine is economic, has put pressure on Apple and its channel to ramp up volume sales. ®

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