Apple MD Headed for the Big House?

For those that don't know, Tony King is currently the Managing Director of Apple in Australia. He has presided over a massive change in the way that Apple does business in Australia, not all of it good.

Apple has been incredibly successful in the last few years, but at what expense? The ACCC (Australian Competition and Consumer Commission) has recently announced that it will be going after big companies that use their market power to crush smaller companies in the same market. There are many instances of this happening in the Mac market in Australia, and I'll cover just one today.

History: When Tony King took over at Apple he came and visited a few resellers to find out our pain points. I clearly remember telling him it was ridiculous that we couldn't sell to education customers, and I know a lot of others did too. Some time later it was announced that we'd be able to sell to some education customers under strict conditions. It never became a large proportion of Total Recalls business, however it was nice not to have to turn people away just because they qualified for a discount!

Fast forward a year or two, and everyone knows that one of Australia's largest reseller chains is using some creative bookkeeping to buy more discounted machines than they are entitled to. This spreads far and wide, but Apple either can't or won't investigate and punish the transgressors, so they just announce that the scheme is over, and many people will only be able to get the education discount online. We now know that they can and will punish people for breaking their reseller agreements, so why not do it back then when the problem was fixable?

At the channel conference where the death of the scheme was announced, I overheard a conversation when another reseller spoke to Tony King. Reseller 'you can't do this, surely your reseller business is worth more than the business you get from mass merchants?' Tony King 'not by next year'. It's pretty clear Apple has been planning to get rid of their traditional channel for some time.

Could it be that they wanted to direct as much business to the website as possible, more margin for themselves? By the way, it is now easier than ever to scam the system- try ordering something at education price online and see if you get asked to supply ID (resellers were required to ask, and take copies). Apple states on their Education Store website-

'Purchase Quantity
Faculty, Staff and Students purchasing from the Apple Store for Education Individuals will be allowed to purchase the following quantities of product per academic school year:

Desktop: One (1) may be purchased per academic year
Mac mini: One (1) may be purchased per academic year
Notebook: One (1) may be purchased per academic year
Display: A maximum of two (2) may be purchased per academic year
Software: A maximum of two (2) per software title may be purchased per academic year
Apple TV: There is no limit on the quantity of Apple TV purchases per academic year
iPod: there is no limit on the quantity of iPod purchases per academic year'

Try logging on and see if you can order more than this- you can. In direct contravention of their own policy!

These actions are not only against their own policy, they're anti-competitive. Hello Graeme Samuel!

A Question For Apple Australia

Now that the time of my execution is coming nearer, I've got some questions that others might ponder- especially Apple.

Apple is the world's 2nd most recognisable brand. You would think that selling its products would be good for the seller, right? Wrong. In my 15 years in this business in Australia, I've seen many Apple dealers go bust, some spectacularly, but virtually no-one sell out at a profit- I can't think of any! Granted, there are some still in the business and doing well, but think about it- I don't know of anyone who realised their dream of selling out and retiring. They all went bust. Clearly something is clearly wrong with this picture. What gives, Apple?

It's kind of ironic that Apple is number 2 behind Coca-Cola. Why? Because when Steve Jobs was trying to poach John Sculley from Pepsi as head of Apple, Steve asked John 'do you want to sell coloured water, or do you want to change the world?'

Perhaps I should have chosen coloured water.

Apple is a dirty word.

This blog will only contain statements of fact so there should be little chance of Apple getting legal. OK, more legal!

Journalists- I've served on many industry round tables, been interviewed on channel issues and am a regular commentator. My business activities have won many awards, including being a BRW Fast 100 company. If you are interested in talking to me about my experiences with Apple please call me on 04111 7 9999

Hi,
My name is Adam Connor. I live in Sydney, Australia and for 15 years between 1991 and 2006 I sold Apple computers. The company was called Total Recall Solutions, and we were also known as Applecentre North Sydney for a while. We rose through the ranks of being an Associate Reseller, Apple Solutions Reseller, Apple Specialist Reseller, Masters Of Media Reseller, Applecentre, and came pretty close to being an Apple Premium Reseller.

Why am I telling you this? Because after 15 years of loyal service to the brand, we went bust. Going from being the only Apple outlet in North Sydney to one of 5 Apple outlets (and one of 9 iPod resellers) definitely had an effect, but I take full responsibility for my bad decisions, I wish someone would take some responsibility for some very poor decisions by Apple.

It was an unconventional failure- the company was making profit, but we were overdue because we were between book keepers. Effectively an administrative mistake. I begged them not to punish us, and our overdue was (on the day in question) 30% less than I had predicted. Apple caused a cash crisis by restricting our credit. I employed an accountant with a Masters Degree in an attempt to satisfy Apple. I didn't know it at the time, but we were already dead.

I'll go into details in a later post about finance- but here's the kicker-

They are suing me for $300k
I got them to the negotiating table by threatening a minor shareholder revolt (my mother is a shareholder)
I offered a small settlement (all that I could afford)
After committing to get back to me twice and missing both deadlines, they
Sent me a letter offering to settle for more than 5 times my offer!

This is way more than I can possibly pay, and they know it. Looks like they will be sending me bankrupt.

The offer I made would cover their legal costs, and leave a little left over. Their chosen option of sending me bankrupt will get them a few boxes of old rubbish that probably won't be worth auctioning.

This actually decreases shareholder value, so my mother has a valid reason to turn up to the next shareholders meeting and ask Steve Jobs why..... I'm going to book the flight for her. It will be too late for me, but I really want to find out what got into their tiny little heads.

I've made millions of dollars for Apple in my career, you might ask why they are being so unreasonable. I'll explain this and more in later instalments. Here's some hints-

1. Inside Apple Australia
2. Dirty tricks in the computer game
3. How Apple controls their market
4. When is a recall not a recall?
5. Service tips and tricks
6. Sell PC's or go broke
7. Apple is your friend
8. Apple is your enemy
9. Why can't you fix my computer?
10. From a consumers point of view

I welcome your comments and questions. Trolls, if you insist on telling me to 'suck it up you whinger' be aware I'm only going to post your contribution if it adds something to the debate.

Now, I've got one more question. I worked closely with Apple for 15 years. I know most of the traditional Apple retailers- in the whole country. In that time I can think of no one that sold their business at a profit. None. There were many failures. How is this possible?