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Apple Resellers and Service Providers Speak Out Following Simply Mac Closures

GameStop last week announced it is closing a number of non-productive Simply Mac locations throughout the United States, less than four years after acquiring and expanding the Apple Authorized Reseller and Service Provider, which effectively serves as a third-party Apple Store in smaller markets.

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Following the reports, we received a tip from a disgruntled Apple Authorized Service Provider owner who said the underlying issues prompting Simply Mac's downsizing are "far deeper" than it would seem. He noted his own AASP is closing because Apple has "slowly strangled" him on margins and with "free labor" demands.

Another longtime Apple Authorized Dealer and Service Provider told us that AASPs have been "under siege" for years. The person, who wishes to remain anonymous, said profit margins are "appallingly low" and that Apple views its authorized service partners as "nothing more than glorified TV repairmen."

"I am sad to say that I do not see this changing," the person said. "Apple is highly aware of our concerns and do not seem to care. As an Apple reseller for over 20 years, I thought that when Apple became successful we would participate in that success, but we did not," the person added.

Given the polarizing comments from a few, we decided to reach out to a number of Apple's authorized sales and service partners in the United States and Canada to see if there is any validity to the claims.

A number of the Apple Authorized Resellers and Service Providers we spoke to refuted the allegations, noting they are stable if not growing, but we did learn that Apple has made one adjustment in particular that might explain the pressure felt by some sales and service partners—especially smaller ones with fewer sales.

Since August 2015, Apple has lowered its profit margins for resellers, requiring them to pay more upfront for products. Apple then rebates the difference as part of the monthly Business Development Funds checks it sends to resellers, but this method requires resellers to wait longer to be fully paid.

In other words, while the margins did not change overall, resellers are now forced to pay more upfront for Apple products to sell, which restricts cash flow that could otherwise be used for day-to-day operations, employee wages, and other expenses. For smaller resellers, the change can be particularly burdensome.

Meanwhile, one reseller believes Apple's arguably lackluster 2016 was a contributing factor to its own year-over-year sales decline.

On the service side, one person told us they "don't know that there is any truth" to the statement about Apple demanding "free labor," which a separate source said is likely an exaggeration for certain items that Apple used to compensate resellers for but now considers "non-revenue repair."

"I would not say that Apple has been demanding any kind of free labor," a service manager told MacRumors. "However, they are increasingly sending customers to us for iPhone repairs, which do not pay very well. We get paid more for a ten minute Mac repair than we do for an hour-long iPhone one."

"I am pleased to say that Apple really values their service partners and has increased our compensation for warranty work," another reseller said. "If you can achieve Premium Service Provider status, you get some nice perks along with higher compensation. While not perfect, Apple service really seems to care about us and is constantly trying to make things better for us."

MacMedics, an Apple Authorized Premium Service Provider with two locations in Maryland in Severna Park and Lanham, and another in Philadelphia, agreed to comment on the record to shine positive light on Apple.

"We're doing very well, we've expanded, and we opened a new pure retail location in 2015. Apple give us great support and guidance," said Dana Stibolt, President of MacMedics. "We're very encouraged by the upward trends over the last year, and in fact we're hiring more staff for all locations for both in-lab and on-site."

The other sources asked not to be identified. Apple and GameStop did not respond to requests for comment.



Top Rated Comments

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27 months ago
So the moral of the story seems to be, as with all things, YMMV. Some are doing badly, some are getting by, and some are thriving. Welcome to this thing we call life.
Rating: 33 Votes
27 months ago

So the moral of the story seems to be, as with all things, YMMV. Some are doing badly, some are getting by, and some are thriving. Welcome to this thing we call life.

After finishing the article I was confused to what it is saying. All I got is some folks like being an Apple reseller and others don't. I think you summed it up well.
Rating: 8 Votes
27 months ago
Opinion 1

"We're doing very well, we've expanded, and we opened a new pure retail location in 2015. Apple give us great support and guidance," said Dana Stibolt, President of MacMedics. "We're very encouraged by the upward trends over the last year, and in fact we're hiring more staff for all locations for both in-lab and on-site."

Sounds good to me.


Opinion 2

It's so sad. Really, Team Cock/Crook/Crack?

Hope, doesn't becomes the same story from MacRumors one day. "We were a Apple news site for 20 years..
https://www.change.org/p/apple-bring-back-the-17-inch-macbook


Two people read the same article and come away with diametrically opposed opinions. Guess it all comes down to where Apple lies on your emotion meter. It's apropos of nothing, just an interesting thing that popped into my head. The article doesn't come down one way or the other.
Rating: 7 Votes
27 months ago
Considering Apple is squeezing the profit margins of Authorized Resellers, I wonder how the smaller retailers can compete selling Apple products at retail prices while huge sellers like B&H Photo or even Best Buy can offer massive discounts.
Rating: 7 Votes
27 months ago
Apple has never been nice to the Apple VAR. It's been years in the making. From the time they opened the first Apple Store. They would price compete with a VAR. Ironically, it's the VAR that kept apple afloat during those dim days (90's before the iMac).
Rating: 4 Votes
27 months ago
Sounds like Apple is a commercial company.
Rating: 4 Votes
27 months ago
Sad to continue to see this. Not long Ago, Minnesota lost First Tech computer sales, which was part of the original Team Electronics chain. One of, if not the first official corporate reselles of Apple computers.
Rating: 4 Votes
27 months ago

Honest question ... are the low value jobs of assembling iPhones (and other gadgets) the types of manufacturing jobs that we really want in this country?


Many voters of MI, WI, and PA would say yes and turned the election. This kind of manufacturing was a big part of the election rhetoric as well as Trumps late campaign strategy, one that won the race. Carrier moving to Mexico was mentioned how many times? Car manufacturing... the whole "we don't make anything anymore" line.

Not everyone has or wants a college degree and also manufacturing jobs in the U.S. tend to pay well, even the non-union shops. Unemployment among the lower educated is at a historic high but they want to work. So yes, these are the types of jobs they want to see back. I doubt they would see these jobs as "low value" because they put food on their table and give them a sense of purpose. Moreover, your categorizing it as "low value" seems at odds with the fact people line up for these manufactured products, and compliantly vociferously here when they can't get them -- the AirPods of late.
Rating: 3 Votes
27 months ago
The decline of independent mac resellers is actually OK with me. Apple does a better job of selling and servicing its products.

For example, Best Buy doesn't do a great job of selling Apple products, at least at my local store. The products are farther away from the door than nearly all the other computers. The sales people are overbearing and not knowledgeable about Macs. Also, the Simply Mac in my area has a bad reputation for being poorly managed. As an Apple investor, I'm actually relived this store is shutting down.

So, I would like to see Apple slowly take over all of its own retail. I think it would be a good business move and good for its customers.
Rating: 3 Votes
27 months ago
While I did notice when working at Simply Mac that the cut Apple gave us was small (relative to some other products we sold, like Otterbox cases and such), I think Simply Mac's problem has more to do with Gamestop's ownership than something Apple changed- as noted above, other Apple resellers are thriving.

Before Gamestop bought the company, Simply Mac stores were all quite profitable- they gave a great customer experience so people kept coming back, even if the margin on Apple products wasn't all that huge. If Simply Mac/Gamestop had kept focusing on that, valued their employees more (sales goals were close to impossible to hit at that store, and even if you did you could never bring home the type of paycheck reps at phone carriers enjoy), and maybe partnered with more carriers than just AT&T (which doesn't work that well where I live anyway), their stores would likely be doing much better.

But nope, Gamestop management was too focused on making a quick buck by selling used computers (up to 5 years old) and charging silly service fees for every little thing we did. It cheapened the store, so people just skipped the place and went straight to Apple, even though it's an hour's drive away- which I can hardly blame them for.
Rating: 3 Votes

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