The suppliers on an Apple higher education framework worth an estimated £100m annually have been reshuffled following a retendering process, after the number-one supplier asked to relinquish its top status.
Academia, Insight, Stone and XMA were all awarded places on the HE National Apple Equipment & Services Framework Agreement last April. It was lauded as "game changing" by partners after Apple chose not to compete against its resellers in the tender process.
Stone Group was awarded the top spot on the framework, but earlier this year a retendering process was triggered after Stone declared it no longer wanted to be ranked number one.
Speculation in the industry has been that Stone asked to have its ranking lowered because it could not cope with the large volume of orders moving through the framework, but Stone CEO Simon Harbridge said that this is not the case.
Harbridge told CRN that the framework has less of a focus on services than Stone would have liked, with more box-shifting involved than expected.
"When the opportunity to bid for this framework came up in April last year we bid for it and we obtained number-one status because of the high level of services that we provide, and that's clearly what the framework set out to value," he said.
"We worked very hard on it, got into as good a shape as we could and we did a lot of business. We had 60 or 70 per cent of the business that was going through the framework, so we were dealing with over 100 universities, which is a large market share in that sector.
"A lot of the transactions in higher education are ones and twos, and for people buying the hardware a lot of it is direct shipped from UK distribution so really you're just facilitating those types of purchases in a large volume and a lot of it isn't adding any value to anybody. When we looked at it we were clearly doing really well, but it wasn't our area."
Harbridge said that Stone's intention when bidding to be on the framework was to focus far more on services than it has been able to and leave the volume orders to other suppliers.
The framework was originally intended to have two lots, with Lot 1 for hardware sales and Lot 2 for products bundled with services, Harbridge explained.
Lot 1 was initially delayed, as CRN reported at the time, but was eventually scrapped, meaning that the two Lots were combined. Stone had originally bid only for the services Lot.
"Given that our original bid was for Lot 2 of the framework, which bundles product with value-added services, we were not anticipating the huge volume of business for box ship alone," Harbridge added.
"We met the challenges of holding that number-one slot but going forward we are keen to remain focused on our core business, harnessing our long-standing reputation for quality and service and putting our loyal customer base first and foremost. We will continue to supply Apple products where there is opportunity to demonstrate value-add."
Academia go top
All four suppliers on the framework were asked to resubmit their bids, with Academia now in the top spot.
Academia CEO Mike Bacon said the win is a "game changer" for the education reseller.
"The universities are happy that Academia is ranked one - it was probably their expectation that we would be anyway but we were ranked two before - and Apple are delighted because they know we do a good job across the company, so it's good news," he said.
"It's absolutely a game changer for us and it sits so naturally with what we do anyway, which is why we're so chuffed.
"It's what we do every day, just with another £20m on top. Our financial year ends in June, so we'll see some of it this year, but our aspiration is to be a £100m group of companies and I expect that we'll turn over £70m in FY18. It's all good news."
While the framework has been retendered, the timeframe has not been reset, meaning suppliers are currently six months into a two-year contract, with the option of a further year's extension.
According to the tender document the framework is worth between £400m and £500m, but Bacon said that a more accurate estimate would be £100m a year.
The framework was met with unanimous praise when first announced last year, given Apple's historic indifference towards the channel and tendency to bid direct on frameworks.
However, CRN spoke to a number of channel insiders who said that the framework has been plagued with problems since its inception last year - with one referring to it as "a mess".
The source claimed that universities have become increasingly frustrated with the service coming from the channel, having grown used to working with Apple directly.
"There have been some significant challenges with the contract in general," he said. "[Since] Apple opened it up to the channel it has been a mess.
"Moving it to a distribution model, trying to put stuff in distribution and allowing resellers to service, has just meant that the actual service experience for universities has not been what they're used to.
"The lead time is a lot longer and my understanding is that, across the whole of the channel, the experience is not what the universities are expecting."
Another source told CRN that universities were always going to find it difficult to adapt to a different supply chain, with products now having to come through a distributor and a reseller instead of straight from Apple.
"If universities are dealing direct with Apple then they're dealing with a sophisticated retail supply chain. There are a large amount of Apple stores worldwide; they've got a very sophisticated online shop and Apple build products in factories all around the world," he said.
"Whoever you are, if you order something from that factory it's going to take a minimum of three weeks to be built and a week to get to you, whether you're Apple or anyone else, but Apple will know when products are changing and will forecast and stock.
"The universities have moved away from that model and gone to a model of dealing with four resellers who all deal with the same sort of UK distributors, who don't stock as much Apple product as Apple do. A UK distributor won't stock all different types of iPads, especially if Apple aren't going to tell you when the model is going to change. They don't want to get caught holding duff stock.
"You've got a situation where it's a different supply chain altogether that the universities are dealing with. They're dealing with a reseller that, if the product is not something that a UK distributor holds in stock, will get it ordered to an Apple factory somewhere with that three or four-week lead time."