Apple Sued By Growing Number Of Mac Retailers

by , 11:30 AM EST, February 3rd, 2003

The San Francisco Chronicle's Henry Norr, a longtime Mac writer, is reporting that Apple is being sued by a growing number of Mac retailers. San Francisco area retailer Macadam, Mac Tech Systems of Bend, OR, Computer International of Los Angeles, have all filed suit against Apple, and even Cupertino, CA based retailing veteran Elite Computers & Software is planning to file suit, according to the SF Chronicle.

The source of the suits is what the retailers consider to be unfair competition from Apple's own retail Apple Store, and the retailers are alleging that Apple is giving numerous advantages to its own stores. There are also complaints of other problems in the way Apple treats its resellers. From the San Francisco Chronicle:

Tensions between Apple and its resellers are nothing new, and similar problems have frequently arisen in relations between other computer manufacturers and their dealers.

But the slump that has plagued the entire industry for more than two years, combined with Apple's move toward a distribution system less dependent on independent dealerships, has apparently heated the conflict to the boiling point.

"They've just been cheating us for years, making us look bad and screwing our customers," said Santos, 47, who has operated Macadam for 14 years and last year recorded sales of more than $6 million. "I've got six big binders full of horror stories, all carefully documented.

[...]

What angers him the most, Santos said, is that Apple's own sales representatives, when talking to customers, regularly disparage the competence and even the integrity of independent dealers, including dealers like him who have a long record of success and have been certified by Apple to service as well as sell its products.

Kohler, who is getting out of Mac sales and service after 12 years, agreed. "Our clients regularly report that when they talk to Apple, they're told they'd be better off going through the company" rather than a dealer like him, he said.

The disparagement issue that Santos and Kohler raise underlies several parts of Santos' lawsuit, including charges of unfair competition, trade libel and "intentional interference with economic relationship."

According to Mr. Norr, Apple declined to comment for the article. There is a lot more information in the full article.

The Mac Observer Spin:

There have been complaints from Apple's channel of independent resellers for many years. Thin margins, and issues with returning merchandise (which is discussed in the article) were long the subject of public grousing. When Apple opened up its own Apple Stores, the fear factor kicked in on top of the traditional friction, and we heard from a number of resellers less than pleased with the way things were going. In particular, allegations that Apple Stores got new merchandise first have often been publicly aired.

All that said, there are two sides to every story. Many of Apple's policies are no different than other manufacturer's policies, including the company's policy of only allowing resellers to return 1% of the total dollar volume from that quarter, margins on hardware, etc. It's a changing world in the retail arena, and there are going to be casualties of that change. It's human nature to blame negative change on others, whether or not one should look inwardly for the source of the problems.

Such a philosophical look doesn't make it any easier for someone who has spent the last many years of their lives trying to sell Macs when they see their business suffer, especially while Apple's own Apple Stores are flourishing. The bottom line is that it is very likely that there is some truth to at least some of the allegations coming from dealers, even while other things will prove to be well within industry norms. How the courts look at all this will be very interesting, but it's not going to be pretty, and Apple's reputation is likely to suffer in the process.

San Francisco Chronicle Article