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Apple resellers: Change is gonna do no good

Apple's continuing slide in sales and an erosion of confidence aren't likely to substantially change with a new CEO.

4 min read
Gil Amelio didn't deliver.

That, at least, is the opinion of many resellers and companies that sell Apple products. While Amelio's resignation came as a shock to many observers, Apple's continuing slide in sales and an erosion of confidence in the platform's viability aren't likely to change substantially with a new CEO.

A buyer for a West Coast biotech firm that has 4,000 Macintosh computers, played down the significance of Amelio's departure.

"More often than not, the CEO is not the only player. Often, it's the executives in middle management, like Avie Tevanian and [Jon] Rubinstein. Their actions will have more to do with the viability of the company than the CEO," said the Apple customer, who wished to remain anonymous. Tevanian is the company's senior vice presidents for software and Rubinstein is the senior vice president of hardware engineering.

The number of Apple computers shipped and sold during the second quarter of 1997 dropped 15 percent from last year's levels, according to Matt Sargent, an analyst at Computer Intelligence. Apple was No. 6 in the U.S. retail market among manufacturers of units shipped and sold this quarter.

Sales of Apple products have been dropping for the majority of resellers in the country for some time.

Chris Ferry, senior vice president of Graham MicroAge, a large Apple dealer in the Midwest and one of Apple's largest dealers in the education market, said sales have stayed relatively even, but only because of a handful of PowerBook notebook projects with a few customers. Without those, he said, sales would have dropped.

On the other hand, several resellers told CNET'S NEWS.COM that sales have finally rebounded in the last two months. The problem is that the rise comes after sales plummeted so drastically during Amelio's 17-month tenure.

How did Apple get in this predicament? The answer, according to many resellers, was Amelio's weakness in the sales and marketing areas.

"Our sales were abysmal. We've probably had a 50 percent drop. There's a niche in the publishing and the marketing side, but it's much harder to get new customers and really hard to get enterprise customers," said Eric Walton, vice president of product management at Entex Information Services, a large corporate reseller. "We met with them two weeks ago, and they were trying to find out who their customers were, what their marketplace was."

Among the reasons for the decline, Walton and others pointed out, was a lack of direction on Apple's part. For the last year, the company has stated that it wants to get into enterprise computing markets, though this has been their weakest area.

Amelio helped put together a strategy for the company in this area, but Apple still had trouble getting enough products into customer's hands. The supply problems hurt Apple's financial results--and, apparently, Amelio's chances of remaining with the company.

"Looking at the resignation from the big picture, we're scared because the press will say, 'Oh, Apple is doomed,'" says Michael Koidahl, president of Westwind Computing, an Apple reseller. But Koidahl still thinks the move is a positive one.

"Yeah, Gil is gone, but they know where they are going. Now the question is getting it profitable in the interim. That's what they have to do," Koidahl said.

The hardware that Apple is producing is compelling, and Amelio has delivered on those promises. But getting them to customers has been the main shortfall this year, Koidahl said.

"They need more focus on making sure that they keep the supply going and keeping things going to the channel. That's why clones are really taking chunks out of their business," he added.

A constantly revolving cast of characters in Apple's executive ranks hasn't helped either. The company was reorganized three times under Amelio. Three sales chiefs and two marketing heads came and went during that period.

Although several large dealers and distributors requested meetings with Amelio, none were granted. The closest anyone got was a gathering scheduled late last year with executives from most of the major resellers. Amelio canceled at the last minute and met everyone by video.

Jeff McKeever, chairman and chief executive officer at MicroAge, one of Apple's biggest distributors, said Apple's problems began in 1994 when the company started to sell more of its products directly to dealers rather than through distribution systems.

"It destroyed their channel. Apple couldn't handle the complexity of distribution," he said. At the same time, most dealers who bought directly from Apple lost business because they couldn't get product allocation. Lower overall sales resulted.

"By 1996, they were down 75 percent with us of what they were in 1994," he said. In 1994, Apple was 25 percent of MicroAge's product mix. By 1996, it was down to 3 percent. Recently, it climbed back up to 4.3 percent.

"A company like Apple didn't get into trouble overnight," he said knowingly. "It took them years to get there."

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