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Tech Industry

Apple pruning back dealers

The Mac maker is trimming back the number of computer dealers and integrators authorized to sell its products to cut costs.

Apple is trimming back the number of computer dealers and integrators authorized to sell its products in an effort to cut costs and invigorate remaining dealers with a sense of mission.

The company, which once sold its products through several thousand computer dealers worldwide, is reducing its dealer relationships to "Apple Specialists"--computer dealers who get 75 percent or more of their revenue from the Apple platform--or dealers that can otherwise can demonstrate a special commitment to the Macintosh, said Apple computer dealers.

The weeding effort will result in Apple selling its products through a "handful" of dealers, said an Apple spokeswoman. Apple will also look to trim its mail order partners, she said.

"Everything is being evaluated. Everything is being streamlined," she said.

While the move will cut costs, it has angered a number of dealers who have stuck by the company for years, but may not now fit the qualifying criteria Apple is imposing.

"Honestly, I don't know what they are trying to achieve with this," said one Apple dealer.

It is unclear what the overall market impact could be. Reducing the number of authorized dealers will likely reduce expenses for bringing its products to market. Other computer vendors, including Compaq, are in the midst of streamlining their dealer network.

Earlier this year, Apple launched an effort to de-authorize a number of dealers who only casually sold Macintosh equipment. Last year, Apple reduced the number of large distributors it works with from five to two. In addition, Apple began selling systems directly to customers over the Internet last year.

Streamlining will also funnel greater revenue streams to those firms that qualify.

"We've been an Apple-only dealer for 20 years," said Larry Moon, a sales executive with Dino Computer, a Pasadena, California-based all-Apple dealer. The geographic presence of other authorized, but casual dealers, has diluted Dino's potential opportunities over the years, he said.

On the flip side, however, Apple will necessarily be cutting back venues where its product has been selling for years.

Apple is launching this effort while dealing with a resurgence in the "gray market", that is, unauthorized dealers who manage to get Apple product and then resell it for prices that undercut authorized dealers.

"The gray market has gotten big," Moon said.